A growing crisis is threatening China’s economy. The Chinese Communist Party’s (CCP) draconian “zero COVID-19” policy has caused the country’s economy to atrophy: This year’s second-quarter GDP increased by only 0.4 percent, data released by Beijing showed, making it inevitable that the CCP would miss its target of 5.5 percent growth this year.
Outside of the macroeconomic situation, the country’s banking system has been shaken by multiple serious cases of fraud involving rural banks in Henan Province. Forty billion yuan (US$5.94 billion) of client deposits have disappeared and withdrawals from their accounts have been frozen, revealing regulatory failures and a dark side to banking in rural China involving collusion between banks and criminal gangs.
An even more serious problem is a real-estate crisis emerging across the country and engulfing 25 provinces. Scores of home buyers are refusing to pay mortgages on unfinished residential projects, abandoned by heavily indebted developers that have run out of credit. The situation has exposed the extent to which China’s economy is reliant on real estate to maintain growth, a market which has become a gigantic Ponzi scheme.
If China’s real-estate bubble pops, it would send the country’s economy into a severe slump, dragging down with it the livelihoods of tens of millions of people, with far-reaching implications for societal…
