The Evergrande Crisis And Mainland China's Property Sector Risks

Summary

• China's property sector is not a growth driver of the Chinese economy, but a growth passenger.
• China's fiscal system also created incentives for local governments to favor housing market development.
• If the Chinese government continues to put off economic reforms, China's true growth driver, productivity growth will continue to slow and economic growth will further grind down.

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A common assertion in the business and financial press analyzing the Chinese property developer Evergrande's liquidity crunch is that the real problem Evergrande has exposed is China's flawed and unsustainable economic development model that depends