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source: market information

mao zhenhua, co-director and professor of the institute of economics at renmin university of china, co-founder and co-chairman of the china macroeconomic forum (cmf), and chief economist of china chengxin international

this article is reprinted from the south china morning post on august 5.

word count: 5845 words

reading time: 18 minutes

scmp: the chinese real estate market fell into crisis after a series of defaults by developer evergrande in 2021. you noted the potential consequences of evergrande's liquidity problems a decade ago. how do you now assess the impact of the real estate downturn on the chinese economy?

mao zhenhua: real estate has become one of the biggest issues affecting china's economic operation. china's real estate was once the focus of investment for the whole society. as real estate prices continued to rise, the unique concept of "only if you have a house can you have a home" has become more deeply rooted in people's minds.

under such circumstances, owning or buying a house has become the "standard" for middle-class families, and even those families who do not have high income capacity are buying houses by leveraging. in a short period of time around 2017, housing prices were pushed to a new high, which was a sign that the bubble was about to burst.