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Economic lessons for India from the Evergrande crisis in China -Vivek Kaul

-Livemint.com

Real estate must contribute more to our economy and that calls for sectoral reforms and cheap homes

Over the past few weeks, the financial and economic world has been worried about the likely collapse of Evergrande, the world’s most-indebted real estate company. At the same time, the bigger issue of China’s dependence for growth on its real-estate sector remains.

In a working paper titled, Peak China Housing, Kenneth S. Rogoff and Yuanchen Yang estimate that real estate makes up for around 29% of the Chinese economy. This dependence on real estate has led to a huge increase in the debt of real-estate companies and also in the debt of consumers who have taken housing loans.

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