David McWilliams: A property crash in China would rock global system

There are 90 million empty apartments in China after years of a construction boom

‘The  debts of Evergrande, the Chinese real-estate developer, may signal the beginning of a slow property crash in China.’ Photograph: Alex Plavevski/EPA

‘The debts of Evergrande, the Chinese real-estate developer, may signal the beginning of a slow property crash in China.’ Photograph: Alex Plavevski/EPA

Is China the new Japan? The monumental debts of Evergrande, the Chinese real-estate developer, may signal the beginning of a slow property crash in China, which could engulf its ageing population much in the same way as the great Japanese property bubble of the 1980s torpedoed the Japanese economy over the past 20 years.

There are remarkable similarities between the performances of both economies. Japan’s economic miracle occurred from 1950 to 1990. After the second world war, Japan was a country which had been internationally humiliated, industrially destroyed and traumatised by two nuclear strikes – the only society that has ever suffered such a fate. By 1968, Japan had become the second largest economy in the world. While the story of modern China’s economic miracle is well known, Japan’s story is not so universally appreciated, or possibly the details have been blurred by time.

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