China real estate crisis endangers the wealth base of the middle class”

China real estate crisis endangers the wealth base of the middle class”

According to a report by finanzmarktwelt.de,

The crisis in the Chinese real estate market that has been going on for two years is increasingly destroying the prosperity of the politically important middle class in China. The effects of this crisis not only affect the real estate industry, but also have far-reaching consequences for the entire Chinese economy and society.

China's middle class, traditionally invested in real estate, is facing asset losses. According to a Bloomberg calculation, just a 5 percent drop in property prices could mean the loss of 19 trillion yuan ($2.47 trillion) in household wealth. This could further undermine confidence in the real estate market and lead to an uncertain economic future.

The crisis in the real estate market is also having an impact on the stock market, which is already recording losses. Nearly 90% of actively managed funds have lost money in 2023, and the Chinese stock market is set for a prolonged streak of annual losses.

In addition, wage growth in China is also at risk, further undermining the population's financial stability. University graduates and young workers are particularly affected as job prospects and starting salaries decline.

Demographic developments in China are increasing the financial burden, as fewer and fewer people of working age have to support more and more pensioners. This could pose an additional challenge to social stability in China.

Overall, the real estate crisis in China could become a social problem and endanger social stability. It is important to continue to monitor the dynamic developments in the Chinese real estate market and to closely analyze their impact on the economy and society.