For years, China’s communist government has bombarded the western world with images of China’s incredible economic wealth. Thanks to the supposed good governance of the communist party, there was so much abundant wealth that most citizens could own their own homes, even two or three homes. Everyone, particularly the Chinese people, were led to believe that China’s booming real estate industry would go on for many more years.
Unfortunately, China’s real estate bubble has now burst, and not even the authoritarian communist party can hide this economic disaster: the China Evergrande Group, China’s second largest property development company has defaulted on its loan payments. It has a debt that has now hit $300 billion USD, which is sending shock waves throughout China’s real estate market. Hard to believe that this company’s stock values used to be the world’s most valuable, and now it is in default. It has ignited a chain reaction pushing other companies, including banks, to the verge of collapse.
For decades China’s communist party has ignored the rampant speculation that engulfed the real estate industry and now this sector that accounts for 29% of China’s GDP threatens the entire economy. So far, the government has offered no solution to solve the problem. You may want to follow Warren Buffet’s example, and start selling off your Chinese investments. China’s economic problems are only going to get worse. Get out of the country while you still can!