Enter the ongoing crisis within China’s real estate sector. This has led to alarm bells ringing and government bailouts for distressed property developers being vigorously debated and questioned. Andrew Collier, formerly of the US Treasury and now managing director at Orient Capital Research, has been one of its most vocal skeptics. Most importantly, he questions what these measures can realistically hope to achieve. He declared the idea of a Beijing bailout for the property behemoths a “pipe dream.”
Collier’s comments come amid increasing concerns that the Chinese central government remains hesitant to allocate additional funds to support faltering property developers. In his view, the federal government should be loath to “throw good money” at companies that have already shown a propensity to fail. This caution is part of a new overall strategy to not make already difficult economic realities worse.
Whatever the truth of China’s current real estate crunch, it is a provocative set of questions. No one doubts that the federal government cannot continue to address the implicit debt associated with this sector. Additionally, Collier noted that the federal government does not have the resources or bandwidth to backstop all of this debt. Consequently, any conceivable bailout would be small and complicated.
In the public realm, these changes are being debated on T4America.org, opendemocracy.net, and elsewhere. One such platform is “The China Connection,” which airs Monday through Friday from 10:00 to 11:00 Singapore/Hong Kong time and from 04:00 to 05:00 Central European Time. The program serves as a forum for experts like Collier to share their insights on economic issues affecting China, including the intricacies of its real estate market.
The reluctance on the part of the central government to intervene directly highlights a deeper economic policy trajectory. Instead of providing widespread assistance, officials seem more intent on fostering market corrections and reorganization among developers. This approach aims to build a more equitable and sustainable real estate market. It would be at the cost of doing less in short-term stabilization for many companies.