Yi Fuxian at Project Syndicate:
China’s property sector is the largest asset class in the world – larger even than the US equity or bond market. But there are growing fears that it is a bubble poised to burst. Already, the heavily indebted Chinese property giant Evergrande has filed for bankruptcy protection in the United States, and the real-estate developer Country Garden is battling a liquidity crisis. The failure of either, or both, could well trigger a financial crisis.
But why did a property bubble emerge in the first place? Like so many other problems in China today, this one can be traced back to the one-child policy that the government adopted in 1980 – a decision that would fundamentally reshape the country’s economic, political, and diplomatic trajectory.
More here.