In May, officials unveiled the biggest rescue package yet. It contains a 300 billion-yuan ($42 billion) central bank fund that attempts to help local governments buy finished but unsold homes and turn them into subsidized housing.

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Separately, the IMF warned of “significant downside risks” to China’s inflation outlook, saying “a negative domestic demand shock amid high debt levels could trigger a period of sustained deflation.”

Does it tough? Why would aggregate demand collapse because of real estate developers going bankrupt? They make up a small part of the population and hoard more of their wealth. Also, very funny that IMF only cares about private debt buildup when it affects the porky-happy .

Where is the concern for a demand shock when you pressure Kenya and Nigeria into raising sales taxes, which has much greater impact on aggregate demand?

[–] HobbitFoot@thelemmy.club 16 points 4 months ago

Infrastructure building, including housing, was a major part of the Chinese economy. That part of the economy collapsed, which is causing China to try to transition to other industries to drive economic growth.

It is possible that the IMF is worried about the collapse of a Chinese industry, but it seems like China is trying to focus more on the effects of a collapse on the asset class given that said asset class is the main retirement savings in the country and the main driver of local government spending. China has also taken internal steps try to limit infrastructure spending in the last few years, so they may not be worried about development companies collapsing as long as their collapse doesn't spread to the overall economy.