US Fed warns China property sector stress could pose ‘risks’ to American economy

US Fed warns China property sector stress could pose ‘risks’ to American economy

The US Federal Reserve warned in its semi-annual financial health check overnight that stress in China's real estate sector could pose "some risks" to the American financial system, pointing to the recent concerns surrounding China Evergrande Group, the world's most indebted property developer.

In its latest Financial Stability Report, the US central bank said the ongoing regulatory scrutiny by Beijing over corporate debt levels has the potential to stress the property sector and other highly indebted businesses, which could lead to spillovers to financial firms, a sudden correction in real estate prices or a reduction in investor appetite in the mainland.

"Given the size of China's economy and financial system as well as its extensive trade linkages with the rest of the world, financial stresses in China could strain global financial markets through a deterioration of risk sentiment, pose risks to global economic growth, and affect the United States," the Fed said.