A laborer carries materials at the construction site of a new housing project in Hefei, in eastern China's Anhui province on Feb. 18, 2012. The real estate market, which had been booming prior to the global recession, has markedly worsened. (STR/AFP/Getty Images)
There may be too many vacant homes in China for even a population of 1.4 billion people to fill, a former Chinese official admitted recently.
He Keng, the former deputy head of the communist regime’s statistics bureau, spoke of his concern for China’s real estate market, given what he sees as the obvious oversupply of residential properties. Mr. He was speaking at an open forum on Sept. 23 in Dongguan, an industrial city in the south of China.
“There is currently an oversupply of real estate. How many vacant homes are there exactly? Each expert gives a very different number, but 1.4 billion people probably can’t fill them,” said Mr. He, according to a video made available by Chinese media.
Almost concomitantly, Chinese media reported that real estate—long a critical economic sector for China—has become a ‘gray rhino’ that threatens to sink China’s financial system. ‘Gray rhino’ is a term coined to symbolize an obvious and substantial known risk that is deliberately or unsuspectingly ignored.
Massive Numbers of Vacant Homes
August data from China’s National Bureau of Statistics showed a combined floor area of 648 million square meters (7 billion square feet) in unsold homes—a figure equal to around 7.2 million homes, Reuters estimated, based on an average home size of 90 square meters.
“That does not count the numerous residential projects that have already been sold but not yet completed due to cash-flow problems, or the multiple homes purchased by speculators in the last market upturn in 2016 that remain vacant, which together make up the bulk of unused space,” the Reuters report stated.
Last month, the Chinese media outlet Caixin reported that the real estate sector and local financing platforms have become “two conjugated and approaching gray rhinos that are seriously threatening the stability of China’s financial system”—referring, in addition, to China’s local governmental debts, which have ballooned to tens of trillions of yuan.
To save this critical pillar of China’s economy, the Chinese authorities have issued a number of policies to try to stop the market collapsing.
Earlier in July, the Chinese Ministry of Housing and Urban-Rural Development announced relaxed housing loan requirements, in addition to lowered down-payment ratios on people’s first and second home purchases. These were followed by lower first-home mortgage rates in August—all in the hope of boosting home sales.
However, the communist regime also issued its routine propaganda plays to refute observations from the West regarding its collapsing economy.
A residential complex built by flailing Chinese property developer Country Garden in Nanjing in China's eastern Jiangsu province, on August 31, 2023. (STR/AFP via Getty Images)
Mao Ning, the spokesperson, made the remarks at a daily press briefing on Sept. 12 “in response to recent comments in the United States and Australia, which talked down China’s economy,” according to the Chinese State Council release.
“All sorts of comments predicting the collapse of China’s economy keep resurfacing every now and then, but China’s economy has outlived them all,” said Ms. Mao. “What has collapsed is such rhetoric, not China’s economy.”
She insisted that the “Chinese economy has strong resilience, great potential and vitality, and its long-term fundamentals remain unchanged.”
Chinese state mouthpiece Xinhua News also claimed on Sept. 17 that the collapse of China’s economy is a “pure delusion” of the West, and that the Chinese system is healthy and strong.
Foreign investors, however, are retreating from the Chinese market. China’s central bank records show that holdings of the nation’s equities and debt have fallen by about 1.37 trillion yuan ($188 billion), or 17 percent, from a December 2021 peak through the end of June this year, according to Bloomberg’s calculation.
After it was revealed that there may simply be too many vacant homes in China, a Chinese netizen responded, “I really want to cry. The vacant homes are more than 1.4 billion people can fill, but I can’t even afford one.”
Li Chengpeng, a famous Chinese football reporter and commentator, wrote on the X social media platform, “This is the situation: The high-ranking officials don’t know if they can keep their jobs tomorrow; the middle class don’t know if they can keep their homes tomorrow; and the lower class don’t know how they will live tomorrow ... All the panic is following a certain law, and [the collapse is] only a matter of time.”
