Crazy censorship fails to hide China’s big meltdown

Property crisis fallout has wiped out $6 trillion from the market value of Chinese and Hong Kong stocks 

China’s crazy censorship clampdown has failed to cover up the country’s economic turmoil.

Fallout from the property meltdown has wiped out more than US$6 trillion from the market value of Chinese and Hong Kong stocks in the past three years.

No amount of spin can hide the colossal challenges facing President Xi Jinping’s regime.

“China’s equity market has more than 200 million retail investors,” Bloomberg’s Next China newsletter reported earlier this week.

“Many have traditionally looked to stocks and the property market as ways to grow their money amid rock-bottom savings rates – only to find their wealth shrinking,” it said.

And the bad news keeps coming:

  • On Wednesday, manufacturing activity shrank for the fourth straight month in January.
  • The official purchasing managers’ index or PMI came in at 49.2.
  • It was below the 50-mark separating growth from contraction.
  • And yet another sign that China’s manufacturing juggernaut is stalling.

There are more vacant apartments than even its 1.4 billion people could fill.


Delve deeper: On Monday, Chinese real estate giant Evergrande went into liquidation after racking up at least $300 billion of debt. The crisis unfolded in 2021 and has since spread across the entire property sector.

Between the lines: Evergrande was once “a pillar of China’s economy.” Up to 90% of Chinese household wealth is tied up in real estate. It also makes up around 30% of gross domestic product or GDP.

Why this matters: China’s crumbling property market risks popping a debt bubble that has floated out of control for more than two decades.

Big picture: “As one former official put it last year, there are more vacant apartments in China than even its 1.4 billion people could fill,” Foreign Policy’s China Brief revealed.

What they are saying: “[Yet talking] about the problem could get people into trouble … [because of] the relationship between censorship and other forms of state control,” the newsletter reported.

China Factor comment: Matthew Henderson, an independent Asia expert, summed up the mood perfectly in the London-based Daily Telegraph when he warned that “public resentment and disaffection with the” ruling Communist Party “is on the rise.”