Fears of a Chinese property crash are overblown

Concern over the Chinese property sector has spread around the globe, though few analysts are seeing the whole picture.

At the IMF and World Bank meetings in Washington last week, the chief economist of the People’s Bank of China identified the country’s property sector, which accounts for 20 per cent of total investment, as the main downside risk for the Chinese economy.

Ma Jun, a former Deutsche Bank economist, told a panel that the real estate sector, state-owned enterprises and local governments were all over-leveraged and that exposure had been increasing at a rapid pace over the past few years.  This rising level of leverage is the key reason for Beijing’s reluctance to open its wallet to prop up a rapidly-slowing economy.

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