Ms. Chu told the seminar Wednesday that compared to banks' exposure to local government financing vehicles, the property market is "more intractable and much more complicated to deal with."
Real estate has been the foundation of China's supercharged growth over the past two decades, and its health is crucial to the construction, steel and cement sectors. Local municipalities and provinces receive funds from land sales and rely on higher land prices to fund infrastructure projects.
Not only is financing backed by overvalued real estate, it is also backed by overvalued base metals. There is no soft landing for this situation.
hat tip: Jesse