It has been 3 years since the world's largest real estate (RE) developer, Evergrande, collapsed. The RE crisis in China has not only not been controlled… but RE values have fallen even deeper - especially in 2024.
Chinese people have probably lost patience waiting for their home values to rise again. This further causes them to tighten their consumer spending belts - thereby businesses also lose motivation to expand production. July was the first month witnessing bank loan balances in China growing negatively - increasing concerns about the possibility of balance sheet recession on corporate balance sheets - “balance sheet recession" (when businesses stop borrowing capital to produce).
The debate: Whether China is following the path of Japan ("Japanification") or Korea ("Koreafication") also seems unconvincing - especially given the recent decisions of the Chinese government.
