You probably have to have lived through a similar episode to know what is coming in China. It is the same process that we saw in the US property market pre-GFC: a toxic feedback loop of falling asset prices, deleveraging balance sheets, ratings downgrades and default.
In China, it is on the supply side of the property market whereas the pre-GFC adjustment was on the demand side. But the difference is one of degree not kind and the end result will be the same. The entire property market will crash as it is engulfed by a credit crunch.
The issue of whether or not it turns into a Lehman moment is immaterial until that point. It is a Minsky moment and there is no stopping it unless or until policymakers relent. And even they may not be able to turn it if they wait too long as we pass known unknown tipping points.
