China

Buying a home in China using a bank mortgage is different than in the US. In China you take out the loan before the house is built and you pay the mortgage payments during the construction period. This up front money led to large investment firms who built homes and office buildings based on expected future growth. The growth was so rapid based on expected future demand and now there are 80 million homes and many more only partially completed sitting empty. The second biggest developer, Evergrand, recently declared bankruptcy and the largest developer, Country Garden, miss a payment is is in danger of failing. This means that many home owners will suffer loses. Henry put a down payment on a house three years ago and the house is still not completed. Henry has been making monthly payments and now finds the house many never be completed and that the builder has file for bankruptcy. Henry will not get his down payment back and he is liable for the rest of the payments coming due over the next 20 years. The building was the main thrust of the rapid growth in the Chinese economy and it was not limited to housing. The whole growth of government over the past 20 years was based on adding infrastructure and they overbuilt. In addition to empty and partially build homes there are empty office building, bridges to nowhere, high speed rail lines that don't run and ghost cities constructed for thousands and no one lives there. Adding to that the population of young people of working age has declined and they are also the consumers so consumption is down. As the Chinese people moved from the country to the city they had fewer children and the governments one child policy over the past 35 years has further aggravated the shortage. Wages rose and now Chinese industry cannot compete with countries like Vietnam and Thailand and manufacturing is moving to low wage countries. On top of that many western countries like the US are reshoring for safer and shorted supply chains and China is losing exports.