Jeremy Mark is a senior fellow with the Atlantic Council’s GeoEconomics Center. He previously worked for the International Monetary Fund and the Asian Wall Street Journal.
Beijing grabbed headlines last week by declaring its resolve to address the country’s deep property slump with 300 billion yuan ($42 billion) of central bank funding for state-owned enterprises to buy up vacant apartments. That money, along with relaxed mortgage rules, briefly offered a slight hope that the government finally is coming to grips with a crisis that has undermined China’s economy.
The reality is that Beijing’s measures are a mere drop in an ocean of empty or unfinished apartment buildings, moribund developers who have defaulted on at least $124.5 billion of dollar debt, and hundreds of millions of homeowners who once bet on a now-collapsed property bubble. It also is bad news for an economy that over the past two decades came to rely on the property sector—and the industries like construction that it turbocharged—to provide between 20 and 30 percent of the growth that fueled China’s economic “miracle.”
