If the Chinese real estate “bubble” bursts…

The above warning was given by the Japan Center for Economic Research (JCER) in a new report published on December 19. JCER’s report outlines GDP growth forecasts for 18 Asia-Pacific economies through 2035, with annual updates reflecting the latest policy situation and economic conditions.

China’s economy has been affected by the above difficulties real estate market over the past 2 years. JCER warns that giving unreasonable reactions may cause ominous consequences for the economy.

The Government’s plan to increase support for real estate companies may also place an excessive burden on the financial system Stagnant home sales and plunging prices could cause defaults on bank loans to spike and cause a widespread financial crisis at small and medium-sized banks.

Background China’s economy has been affected by difficulties in the real estate market over the past 2 years (Photo: Getty Images).

According to JCER forecasts The bursting of China’s real estate “bubble” could occur in 2027. Investments in infrastructure and other sectors are likely to slow significantly as the Government prioritizes debt repayment.

According to the real estate “bubble” scenario, China’s real growth rate will be zero by 2027. This is in stark contrast to the 32% in the scenario without an economic crisis. What a big deal. After 2029, China’s growth rate will fluctuate below the 15% threshold.

China aims to double its GDP by 2035 to be on par with mid-range developed countries and reach 20,000. -30,000 USD.

However, even in the base case, China’s real growth rate will continue to slow and fall to below 3% in 2029 and then below 2% in 2035.

JCER also calculated a scenario in which China pushes forward with reforms to reverse cooling economic growth. In this scenario, the Government’s priority in handling bad debts will help reduce financial risks. In this scenario, China could achieve real growth of 25% by 2035.