Hengda crisis and China's real estate economy

Choi PilSoo 

(ccppss@sejong.ac.kr) 

Professor, 

Sejong University 

Abstract

Hengda's financial liabilities only account for 0.3% of the total and therefore are controllable. Also, the People's Bank of China said that it will manage and supervise Hengda's assets so that they can be used first in housing construction rather than debt repayment. As China's real estate development system is a structure that benefits land-rewarded people, local governments, and real estate developers, there is a possibility of overdevelopment. However, it is unlikely that real estate prices will fall. This is because there are more than 10 million new urbanites every year. Now is the time for the real estate system to change as real estate is the biggest reason for the gap between the rich and the poor and urbanization is decreasing while housing demand is difficult to maintain. Recently, China announced its plan to trial property taxes in certain parts of the country.