Great Wall of China begins to crack

Profits from Real Estate make up about 30% of China's total Gross Domestic Profit (GDP). Currently most of the Real Estate development companies in China are showing huge financial loss as the market has collapsed and the largest company (with over 181 Billion dollars of debt obligations) has gone into default. Many of the directors have been arrested and face possible execution because of criminal fraud charges. Other larege Real Estate companies with holdings in places such as Malaysia and Bermuda are also tottering on the edge of default and bankruptcy. The way the Chinese judiciary handles the bankruptcy of a publicly traded country is not the same as how courts of the Western world handle such cases. In China the penalty for going bankrupt can include execution and some CEOs have in recent years already been executed. 34 of the top 50 Chinese Real Estate developers have already gone into default. The77,000 acre Chinese Market Gardens complex in Malaysia is currently tottering on the edge of default and it's owner is hoping the government of Malaysia will somehow provide capital and bail them out. This is unlikely. The payment on Market Garden bonds is due in mid October. If the firm can not raise the capital it too will join the list of Chinese development companies that own miles of half built high rise complexes that will forever sit empty and unoccupied. China in the past 15 years had encouraged Chinese banks to issue as many development loans and mortgage loans as possible and encouraged recipients to borrow more and use the money to develop and sell as much as possible. This allowed much of China's population to engage in bidding wars for apartment homes in buildings that were never built (or even started) while instantly assuming a mortgage debt on the not yet completed (or even started) future home. Because of the bidding wars the dollar (Yuan) cost of the future properties shot for the sky. Smart borrowers were permitted to sell their mortgages on not yet built properties and after paying it off re-enter the market and receive on paper profits each time. The sudden lock down policy China implemented during the Covid crisis literally prevented many from even going to work much less make mortgage payments, while also halting all construction work. This assured their (not built yet) homes would go into foreclosure with the banks assuming Title and ownership of properties that did not exist. Meanwhile the banks continued to issue new speculative development loans until recently. Developers plowed forward, but after Covid ended the buying market had ended.

This video provides more information. It is possible China's belt and road initative may soon basically experience a major down scaling.