Right so I had similar vein of thoughts years ago when I thought China was in a real estate bubble and did think that the government can just make certain type of investors take the loss and move on. However, that's only if the collapse is only in real estate. What I'm seeing right now with China is a death spiral, namely
bad policies such as zero covid, tech crackdown, or not resolving the root of real estate crisis -> investor (domestic and foreign) loss of confidence -> companies leaving or shut down -> rising unemployment or reduced salary -> debt bubble gets bigger -> bad policies.
This death spiral is enhanced by demographics collapse which is happening now, not 30 or 15 or 10 years ago, as well as nationalistic behaviors that isolates China. Not to mention global inflation and consumer demand collapse.
In my list of things I also didn't mention
* 20% unemployment rate for new grads
* layoffs from big tech companies
* 70% of China's economy is real estate related, which means China will take an even bigger impact from real estate collapse than other countries that have less % of economy in real estate.
* collapse in demand for real estate due to fast aging population
* 20% of built real estate stays empty (not even rented) due to investment vehicles purpose
bad policies such as zero covid, tech crackdown, or not resolving the root of real estate crisis -> investor (domestic and foreign) loss of confidence -> companies leaving or shut down -> rising unemployment or reduced salary -> debt bubble gets bigger -> bad policies.
This death spiral is enhanced by demographics collapse which is happening now, not 30 or 15 or 10 years ago, as well as nationalistic behaviors that isolates China. Not to mention global inflation and consumer demand collapse.
In my list of things I also didn't mention
* 20% unemployment rate for new grads
* layoffs from big tech companies
* 70% of China's economy is real estate related, which means China will take an even bigger impact from real estate collapse than other countries that have less % of economy in real estate.
* collapse in demand for real estate due to fast aging population
* 20% of built real estate stays empty (not even rented) due to investment vehicles purpose