The implosions within China’s giant property development sector have generally been regarded as a domestic issue, albeit one with implications for China’s wider economy and growth rate and therefore with some spillover implications for the rest of the world.
“Given the size of China’s economy and financial system as well as its extensive trade linkages with the rest of the world, financial stresses in China could strain global financial markets through a deterioration of risk sentiment, pose risks to global economic growth and affect the United States.”The stresses within the ranks of Chinese property developers have been spreading beyond Evergrande, although it remains.
Evergrande, for instance, has payments on three dollar bond issues due this week after using up its 30-day grace periods. If it were to miss those payments it could trigger cross-default provisions within the more than $US19 billion of dollar bonds it has issued.
The authorities have expressed confidence that the risk of the sector’s problems developing into a wider threat to the financial system are controllable but don’t seem to be doing anything of substance to control them, focusing more on protecting home buyers and suppliers than on insulating the wider system against risk.
Very astute of them, blame China after creating trillions of $ inflating an everything bubble 🤦♂️