China’s real estate sector and the impacts of its possible disorder on Chinese economy and the euro area

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dc.contributor Bank of Finland
dc.contributor.author Kaaresvirta, Juuso
dc.contributor.author Kerola, Eeva
dc.contributor.author Nuutilainen, Riikka
dc.date.accessioned 2021-12-16T10:52:27Z
dc.date.available 2021-12-16T10:52:27Z
dc.date.issued 2021
dc.identifier.issn 2342-205X
dc.identifier.uri https://helda.helsinki.fi/bof/handle/123456789/18239
dc.description.abstract China’s real estate and construction sector has served as a major engine of economic growth in recent decades and the sector now plays an oversized role in the economy. Much of that growth has been debt-fuelled, with the indebtedness of developers climbing to unprecedented levels. After officials turned off the money spigot last year, housing markets cooled and a wave of financial difficulties washed over builders during autumn 2021. The entire sector found itself under heavy stress, and in December two major developers, Evergrande and Kaisa, defaulted on their offshore debt. In this brief, we consider the current conditions in China’s real estate and construction sector and how a possible sectoral crisis could spread to the national economy and the euro area. While the direct financial impacts on the euro area’s financial sector is likely to be minor, China’s real estate sector problems could spill over widely into the domestic real economy and thereby increase uncertainty internationally. In such case, the indirect impacts on the euro area could be severe.
dc.description.tableofcontents Abstract ...... 3 1. Introduction...... 4 2. The importance of the real estate sector for China’s economy ...... 4 3. Restrictions on borrowing expose real estate sector woes...... 6 Box. The debt struggles of Evergrande and other developers ...... 7 4. The real estate sector’s problems could be reflected broadly in Chinese economic growth...... 10 5. Possible disorder in China’s real estate sector could also impact the euro area.....11 6. Conclusion ..... 14
dc.format.extent 16
dc.language.iso ENG
dc.relation.ispartofseries BOFIT Policy Brief
dc.rights https://helda.helsinki.fi/bof/copyright
dc.subject Bofit-kokoelma
dc.subject Kiina
dc.subject maksuvaikeudet
dc.subject kiinteistösektori
dc.subject Evergrande
dc.subject.other China
dc.subject.other risks
dc.subject.other real estate sector
dc.subject.other construction
dc.subject.other economy
dc.subject.other economic growth
dc.title China’s real estate sector and the impacts of its possible disorder on Chinese economy and the euro area
dc.type Paper
dc.identifier.urn URN:NBN:fi:bof-202112162156
dc.series.name BOFIT Policy Brief
dc.series.year 2021
dc.series.number 13/2021
dc.series.sortingnumber 0013
dc.date.publication 16.12.2021
dc.subject.yso riskit
dc.subject.yso talouskasvu
dc.subject.yso kiinteistöt
dc.subject.yso talous
dc.subject.yso rakennusala
dc.subject.yso rakennuttajat
dc.subject.yso velkaantuminen
dc.subject.yso kriisit
dc.subject.yso vaikutukset
dc.subject.yso euroalue
dc.contributor.orgunit Bank of Finland Institute for Emerging Economies (BOFIT)
bof-internal.includedInCRIS 1
dc.type.okm D4

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