The housing crisis in China is quite severe…

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China’s property crisis is seen as one of the biggest stumbling blocks to a sustainable economic recovery, with rising risks of default among private developers threatening to imperil the country’s financial and economic stability.

Moody’s on Thursday cut China’s property sector outlook to negative from stable, citing economic growth challenges, which the rating’s agency said will dampen sales despite government support.

Shadow banking: Unpacking the risks for China

  • Shadow banking — a term coined in the U.S. in 2007 — refers to financial services offered outside the formal banking system, which is highly regulated.
  • China’s property sector, an estimated one-fourth of the economy, lies at the intersection of shadow banking, local government finances and household assets.
  • Today, Beijing’s problem is it needs to offset a crackdown on shadow banking and real estate developer debt with other kinds of economic support.
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