China’s Property Market At The Brink: Not A Lehman Moment But An Economic Threat

China’s Property Market At The Brink: Not A Lehman Moment But An Economic Threat

Tramway passant au milieu des gratte-ciels du cbd le 2 aout 2019, Hong Kong, Chine. (Photo by ... [+] Olivier CHOUCHANA/Gamma-Rapho via Getty Images) Just weeks after investors had to contend with a clampdown on leading technology companies in China, they are now reading about a possible default of the country's largest property developer, Evergrande. The company has $300 billion in debt outstanding, and China's property market has weakened as a result of measures the Chinese government took one year ago to curb booming property prices. These measures contributed to a 21% decline in home sales by developers in August over a year ago. According to a CNN Business report, Ed Yardeni raised the specter that an Evergrande meltdown could have "systemic risks on par with the impact Lehman Brothers' demise had on the U. S. stock market." However, other economists have downplayed the likelihood of global contagion, and U. S. investors appear to concur as the spillover outside China has been limited thus far. My own take is a selloff of China's property market would not play out the same as the U. S. housing market bust in 2007-2009. However, it would have major repercussions for China's economy. The