It is time to look East again as there is a lot of economic news from China. We can start with something that has become awfully familiar as we have observed the bursting of the property market bubble.
China Vanke Co. is preparing a debt restructuring plan at the request of authorities, people familiar with the matter said, potentially pushing one of China’s largest property developers closer to default, as such restructurings typically involve suspending debt payments. Authorities have asked Vanke to ускорate its overhaul and submit the plan as soon as possible. Citigroup analysts led by Griffin Chan wrote last month that falling prices and weak liquidity could drive national property sales down another 11% this year, warning the market may face a “harsh reality” in 2026. (mktnews.com)
So we see yet another property group in the debt restructuring game. These things are a bit like banking collapses where bad news is released in penny packets. So this means that a default is very likely. The latter part of the quote with the Citigroup analysis suggests that for all the attempts to halt the slide we are still singing along with Glenn Frey.
The heat is onThe heat is onThe heat is onOh, it’s on the streetThe heat is… on
That is more bad news for the likes of Vanke. If we stay with a the issue of Chinese developers then the tower by Vauxhall they built looks open as I pass by on a Boris bike.
Property Quality Problems
Usually the debate is around price but there is also the issue of what you get for your money or quality. Channel News Asia has been looking at this.
SHENZHEN: Preparing to move into his new family home in Shanghai’s Baoshan district last September, Liu Jun (not his real name) thought the hardest part of adulthood was behind him.
The apartment, which cost nearly 8 million yuan (US$1.1 million), was the biggest purchase of his life, one that his parents helped finance.
So the Chinese need their own version of the Bank of Mum and Dad or Bomad. But things are about go really rather wrong.
They paid around 300 yuan for a pre-handover inspection meant to offer reassurance.
Instead, the checks unearthed serious problems that brought those plans to an abrupt halt.
“We had already flagged water seepage issues and excessive moisture levels in the master bedroom wall,” Liu, who asked not to be identified as he is pursuing legal action, told CNA.
“But the more we tore things apart, the worse it got. We eventually discovered that the entire exterior wall was leaking. Once it was opened up, there was mould everywhere, and even insects growing inside the backing panels,” he said.
The insect infestation is especially gross. But the issue does seem to be widespread.
A nationwide review by Zhijian Cloud, a construction quality data platform, based on third-party inspections of more than 100,000 newly completed homes found that nearly two-thirds of units delivered in 2025 were rated “poor quality”, roughly six times the share in 2022.
The particular problems are shown below.
Assessments of the subpar units typically cited problems such as wall cracking and hollowing, water leakage, poorly installed doors and windows, flooring defects and failures in concealed systems such as wiring and drainage.
A housing inspector is quoted.
Earlier that day, he inspected an apartment measuring more than 100 sq m and flagged over 100 separate issues, ranging from hollow tiles to missing fittings.
“We’ve found apartments where sockets were cut open but never installed, with exposed wiring, and even lights coming loose.”
Rentals Too
Channel News Asia first gives us a handle on the size of the rental market.
A 2025 industry paper estimated China’s rental population at nearly 260 million, underscoring the scale of the market in a country of 1.4 billion people.
The boom led to this.
One flashpoint has been quick-flip rental flats, known as “chuan chuan fang” in Chinese, a term borrowed from Chongqing slang for intermediaries, now used to describe homes rapidly renovated and re-rented for short-term gain.
Which led to something rather unpleasant.
Media investigations and court cases have linked some of these units to excessive formaldehyde levels, which often only surface after tenants move in due to rapid, low-cost renovations with little time for ventilation.
Good Housing
One way of confirming the problem is an official response.
Tackling these issues now sits at the heart of a broader policy push towards “good housing”, or “hao fang zi” in Chinese, that aims to move the sector away from speed and scale towards safety, liveability and long-term use – while also shoring it up.
New national rules raise minimum floor heights, impose stricter limits on noise between units, and expand lift and accessibility requirements.
Of course many areas of building and renovation have problems.For example the official push in the UK for more insulation saw a 97% failure rate according to the National Audit Office. But for China we have seen first quantity issues with the “empty cities” saga, then price falls and now quality issues to add to the mix.
Speaking of the empty cities I looked at it on May 11th 2015.
He went to Tianti, in Zhejiang province, by accident getting off a bus at the wrong stop, and found a series of empty high-rises and office blocks so quiet he could hear only the wind and his own breathing. The buildings “all appeared to be crisp and new, inside they were dark cavities, devoid of inhabitants and interior fit-out”.
Export or Die
The paragraph heading is a phrase which has gone out of fashion in spite of the fact that in many ways it is Chinese economic policy. As the housing boom turned to dust then exports and in particular manufactured exports became economic policy. Or more accurately more exports as it was already a Chinese success,
A nuance arrived yesterday from the US trade figures.
The real goods deficit decreased $15.6 billion, or 19.8 percent, to $63.1 billion in October, compared to a 24.1 percent decrease in the nominal deficit.
A lower US deficit reflecting lower imports as well as higher exports.
Real imports of goods decreased $9.7 billion, or 4.2 percent, to $222.0 billion, compared to a 4.3 percent decrease in nominal imports.
Single month figures are erratic but there does seem to be a trend.
Year-over-year, the average goods and services deficit decreased $31.3 billion from the three months ending in October 2024……Average imports decreased $10.8 billion from October 2024.
If the US imports less then that poses a problem for the Chinese export drive. I expect it to ho elsewhere but how long before they change policy? Also can they afford them?
Comment
The Chinese property crisis has opened a new flank.Or rather we have been made aware of it. As it happens the news has dropped just as we also see that the going looks to be getting tougher for exports which are the economic replacement policy.
However that is the flow position whereas a stock one is going really rather well.Here is Money Metals from July last year.
According to an HSBC survey, Hong Kong residents with $100,000 to $2 million in investable assets have allocated an average of 11 percent of their portfolios to gold and other precious metals. That was up from a 4 percent allocation just one year ago.
This reflects rising interest in gold and silver by Chinese and Asians more generally.
Investors in mainland China have even more exposure to gold, with an average of 15 percent of their portfolios allocated to precious metals. That was up from 7 percent last year.
