Billionaire George Soros has called China’s property market “unsustainable”, saying its current crisis could bring down the country’s leader. The Chinese real estate market has been in decline since the end of its long real estate boom. The country’s real estate market is valued at around $55 trillion – twice the size of the US market – with annual real estate activity accounting for 29% of Chinese GDP, well above the 10-20% seen by most developed countries. .

But Mr Soros said the sector had become too reliant on using “unsustainable” property development to drive growth since Xi Jinping came to power in 2013.

It comes as the country’s biggest developer, Evergrande, was forced to shut down operations earlier in January after authorities ordered it to demolish 39 buildings under construction as its debt crisis spiraled out of control.

The company is now in the grip of a massive state-led restructuring operation.

Mr Soros added that the failure of Evergrande and other similar problems spreading across the industry have shaken “people’s confidence” and the struggling economy.

The turmoil, he said, “will turn many of those who have invested most of their savings in real estate against Xi.”

In a speech in the United States, the billionaire said: “The model on which the housing boom is based is not sustainable.

“People who buy apartments have to start paying for them before they’re even built.

“So the system is built on credit.

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Since 2017, the Chinese government has tried to limit the overbuilding that characterized the early years of Xi’s presidency.

According to Mr. Magnus, in 2020, about a fifth of housing in China was unoccupied because it was too expensive for the general population.

But he said new regulations introduced last year ‘designed to reduce debt, preserve cash and limit overbuilding’ have ‘exposed the financial fragility of developers and moved the precarious housing bubble to center stage’. .

He said: “Even if, as seems likely, the Chinese authorities can prevent the fallout from Evergrande becoming a Lehman-like shock, a slowdown in the real estate and construction sector could well worsen the impending economic slowdown. from China.

“Some expect China’s growth rate to fall to 1-2%, at least for a while.”