China may well be about to take a tumble, as its economy reaches a boiling point that could see the country’s economy rival the Great Depression.
Chinese homebuyers are refusing to pay their mortgages, according to reports and this has sent the ruling Communist Chinese Party (CCP) into a tailspin as they attempt to divert a complete collapse.
According to other reports, Chinese real estate developers are also not paying back their debt, due to not being paid for debts that they own and according to a Zero Hedge report, this is “a sign that the loan boycott that started with homebuyers is starting to spread.”
Zero Hedge adds:
In a jarring case study of what happens when a ponzi scheme goes into reverse, hundreds of contractors to the property industry complained that they can no longer afford to pay their own bills because developers including China Evergrande Group still owe them money, Caixin reported, citing a statement it received from a supplier Tuesday.
Similar to homebuyers who have taken a stand and refuse to pay for properties that remain uncompleted, one group of small businesses and suppliers circulated a letter online saying they will stop repaying debts after Evergrande’s cash crisis left them out of pocket.
In a letter dated July 15, which was addressed to the developer’s Hubei office, the group said:
“We decided to stop paying all loans and arrears and advise our peers to decline any requests to be paid on credit or commercial bill,” said the group in the letter dated July 15, which was addressed to the developer’s Hubei office.
“Evergrande should be held responsible for any consequence that follows because of the chain reaction of the supply-chain crisis,” the letter continued, according to Zero Hedge.
The outlet went on to cite Bloomberg News which stated: “[T]he payments protest is the latest sign of how a movement by homebuyers to boycott mortgages on unfinished homes in China is spreading to affect other sectors in the economy.”
Zero Hedge further explains:
Yes it is, and it’s also why Beijing should be freaking out (if it isn’t), because what is taking place in China is far worse than what took place in March 2020 when the global credit machinery ground to a halt, only back then it’s because there was no other option, now it’s a voluntary development and not even fears of reprisals from China’s ruthless, authoritarian, Lebron-beloved dictatorship is stopping millions of people from calling for a systemic boycott, one which can topple China’s entire $60 trillion financial system in moments.
“The development underscores a dilemma for Xi Jinping’s government as it grapples with who to bail out as the country’s property crisis deepens: Relief for some borrowers could prompt threats of non-payment by a whole host of others,” Bloomberg News added. “While bending to demands for support could put a strain on state finances, ignoring them might lead to a spiral of defaults as more and more borrowers refuse to meet their obligations.”
China is the number two economy in the world, second under the United States and ahead of the number three economy, Japan. The collapse of China will likely have a devastating effect on the globe, we have come to rely far too heavily on the products produced by China.
Zero Hedge also added that the mortgage boycott has now spread to building suppliers – around 301 companies that are dotted in over 91 cities across China.