China’s looming disaster bad news for Aus - NEWS.com.au

In the years since the Global Financial Crisis (GFC), the issues within China’s financial system and property market have become increasingly apparent.

Without Beijing’s ongoing intervention, the already gaping cracks in the Chinese financial system and property sector have become clear for the world to see.

In recent days Chinese mega developer Evergrande has been making headlines, as it heads for a corporate restructuring that could see investors lose tens of billions of dollars.

Evergrande is not the only Chinese property developer in major distress.

In a scenario where a protracted crisis unfolds within the Chinese property sector, the Australian property market and economy could end up feeling the heat.

If Chinese investors who own Australian property are forced to liquidate their assets in order to cover bad debts, some suburbs with a high proportion of Chinese ownership could see a significant increase in the number of properties on the market.

There are also Chinese property developers who have large holdings of Australian real estate, who could be forced to liquidate their foreign asset holdings as they attempt to keep their businesses afloat.

But perhaps the most immediate blow to result from a crisis in the Chinese property sector would be the reduction in demand for Australian iron ore.

But if Xi is willing to roll the dice on truly reigning in excess in the property sector and Chinese financial markets, Evergrande’s woes could be just the beginning of a more protracted crisis with consequences that could echo throughout the world