In May 2024, the New York Times launched A report that undressed the situation of the real estate crisis in China. There was no doubt. It was one of the most serious in their recent history and the numbers were devastating: there were four million finished apartments without buyer, and another ten million sold, but still without building. The oversight was a direct consequence of something that had already happened in Japan.
A year later, the situation is a bit worse.
The Japanese precedent. The comparison between the current Chinese economy and the Japanese of The nineties It was inevitable: both face the consequences of inflated real estate bubbles for erratic fiscal and monetary policies, excessive expectations and an adverse demographic background. Japan lived a boom in housing prices that multiplied by more than two the relationship between cost and rent, sustained by a wave of first -time buyers, tax policies favorable to land and financial deregulation.
He mirage of wealth It promoted consumption and employment, but when the population began to age and the number of new buyers was reduced, the real estate values collapsed, dragging the bag and plunging the country into a deflation trap marked by unemployment and falling birth.
The Japanese solution. Japan Times remembered That Tokyo’s political response, based on aggressive monetary and fiscal stimuli, misunderstood the root of the problem: it was a Chronic demographicnot of a conjunctural episode. The consequence was to aggravate imbalances, further increase housing, delay marriages and reduce births.
With the passage of time, Japan managed to escape from deflation, but was caught in a Long -term inflation circlewith salaries pressured up for work shortage, industrial weakening and loss of competitiveness, all aggravating population contraction and profiling what some call not only “lost decades”, but “lost centuries.”
The Chinese challenge. China today faces a panorama even more severe. The accelerated urbanization, the shortage of land imposed by public policies, the fiscal dependence of local governments of land sales and unlimited growth expectations inflated prices until unprecedented levels.
At its peak, the real estate sector came to contribute a Fourth part of GDP national and more than a third of public income, while representing near the 70% of family assetsin front of the 50% in Japan In 1990. With price-unworthy ratios more than double than the Japanese and a residential investment that became 1.5 times higher than the Japanese in proportion to GDP, the prick of the bubble has left millions of homes without demand, collapse of construction, chronic overcapacity and a destruction of family wealth equivalent to a whole year of national production.
Residential Zone in Shanghai
The demographic trap. If Japan suffered the contraction of first -time buyers to from 40 yearsin China the situation is more serious: due to the Single Son Policythe average acquisition of the first home is earlier, towards 28-32 years. That cohort reached its maximum in 2019, just before the burst of the bubble, which means that there will be no second demand such as the one that the Japanese situation in the 2000s partially relieved.
In addition, the population over 65 grows at a dizzying pace: what Japan took 28 years, China will reach it in just two decadesuntil 2040. To this is added a very low internal consumption, just one 38% of GDP In 2020, compared to 50% Japanese in 1990, which limits the capacity of domestic demand to cushion the crisis.
The Evergrande case. Today, the Chinese real estate market, which for more than two decades was the great engine of economic growth, crosses a descending spiral that has been five years and threatens to chronify. The magnitude of the collapse was revealed with the record losses of Vanke in 2024 and with the Evergrande decision (The most notorious symbol of the boom and subsequent collapse) to retire from the Hong Kong bag after accumulating liabilities by 360,000 million dollars.
Evergrande, that at its peak became the largest promoter of the country and the emblem of an expansion based in debt and speculation, He collapsed When Beijing imposed limits on financing in 2020. Its liquidation reflects not only the failure of restructuring attempts, but also the depth of the crisis that drags the rest of the sector.
Urbanization, debt and speculation. Bloomberg remembered That Beijing’s problem has its roots in 1998, when the housing market was liberalized in an even mostly rural country. In just two decades, almost 500 million people They moved to the cities, which generated an unprecedented boom in the construction and turned the house into the main asset of Chinese families, until reaching the 80% of its wealth.
Between 2000 and 2015 prices are multiplied by sixfed by speculation and a model that allowed promoters to seem homes not yet built to finance their growth. At the same time, local governments became dependent on the sale of land to sustain their budgets, feedback the bubble. At the end of the 2010, the total value of the real estate sector exceeded The 50 billion dollarstwice the United States market.
The “three red lines.” In 2020, fearful of a bubble that could destabilize the financial system, the government imposed Hard restrictions: Limits to indebtedness, liquidity demands and brake on the concession of mortgages. These rules, known as The “three red lines”They suffocated promoters who already operated on the limit of their financial capacity. The coup coincided with the Covid-19 pandemic, which paralyzed works and He stopped the demand.
In 2021, Evergrande stopped paying his debt, which marked the official start of the crisis. Other giants such as Country Garden and Sunac followed the same path. Since then, Hong Kong courts have ordered the liquidation of several promoters Chinese, included China South City Holdings In August 2024, confirming the structural fragility of a sector built on debt and unreal expectations.
Price drop and excess supply. The demand collapsed from 2022, when the economic uncertainty and the loss of jobs eroded the confidence of the buyers. Prices fell strongly, registering in August 2024 the largest annual decrease in nine years. They now accumulate near 400 million square meters of non -selling housing, to which millions of floors are added half building that were never delivered.
Family over -indebtedness aggravates the situation: the mortgage debt already reaches the 145% of income Available per person, and delinquency is at four years. More and more families are forced to sell with losses, which accelerates the fall in prices and further erodes confidence.
Beijing’s dilemma. The government faces A crossroads. On the one hand, you must sustain a sector that uses more than 50 million workersholds the income of local governments and represents a decisive part of the banking system. On the other, he wants to avoid returning to the model Based in debt and speculation that led to the crisis.
Although leaders like Li Qiang They have promised New measures, including purchasing flexibility in suburban areas of Beijing and the possibility of replicating these initiatives in Shanghai or Shenzhen, the magnitude of the problem (With billions of dollars and an oversized housing park) it makes any intervention resemble an attempt to contain damages than to a definitive solution.
A stagnant future. The warning seems clear: while Japan took decades In discovering that his problem was essentially demographic and non -financial, China runs the risk of committing The same mistake with even more serious consequences. With a more inflated real estate bubble, a weaker internal consumption and accelerated aging, the country enters a land of Chronic vulnerability.
If the response remains to inject short -term stimuli instead of facing deep reforms in birth, well -being and productive model, the result may not be only a replica of the Japanese “lost decades”, but the entry into a It was prolonged of stagnation that irreversibly compromises its global economic projection.
As they summed up In Bloombergit is very possible that the question is no longer if China will recover the real estate dynamism of the past, but if it can reinvent its economy without the Implosion of the bald brick for years the growth, social stability and credibility of the government in its management capacity.
Image | Pexels, Kallerna, Cephoto, Uwe Arana
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