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  Published in Science and Technology on Wednesday, October 8th 2025 at 1:55 GMT by The Financial Times
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China’s Housing‑Market Crisis: How the Government’s Plan is Reshaping a Global Risk

In the months since the headline‑making collapse of China’s once‑crown‑in‑the‑chin, the country’s property market has become the flashpoint of a much larger economic debate. The Financial Times’ in‑depth coverage (see FT.com/d4eb987a‑a3df‑4c81‑8675‑d4005bd6c1b7) charts how Beijing is attempting to tame a debt‑laden sector that threatens to spill over into banks, foreign investors, and global commodity markets.

1. The Debt Avalanche

The article opens with a stark tableau: roughly $3.5 trillion of unsecured and secured loans linked to property developers across China, with Evergrande alone accounting for $300 billion. By contrast, the U.S. housing market is still buoyant, with mortgage debt hovering at $11 trillion, but China’s debt‑to‑GDP ratio for real‑estate is approaching 30 %—double the U.S. level.

Evergrande’s fall—first a failed bid for a $5 billion bond sale, then a series of asset seizures—was a warning sign. The FT’s analysis notes that the company’s $200 billion in short‑term liabilities, coupled with its sprawling network of subsidiaries, set off a chain reaction in the global bond market. The article links to a companion piece, “Evergrande’s collapse shakes global markets”, that explains how the bond market volatility spilled into Europe’s sovereign debt spread.

2. Beijing’s “Stabilisation” Blueprint

Beijing’s response has been multi‑pronged, as the article explains:

1. Debt‑restructuring window – State‑owned banks, led by the China Development Bank, are granted a 12‑month window to restructure developer debt. The window includes the possibility of “de‑leveraging packages” that allow firms to replace high‑cost debt with equity or longer‑term instruments.

2. New real‑estate regulations – The Ministry of Housing and Urban‑Rural Development has rolled out a “property market stabilization plan” that caps the price‑to‑income ratio at 4:1 in the next two years. The FT cites the plan’s draft, available on the ministry’s website, that aims to “promote a shift from speculative investment to genuine housing needs.”

3. Credit policy tightening – The People’s Bank of China (PBOC) has tightened its loan‑to‑value (LTV) limits for residential mortgages, dropping the ceiling from 70 % to 60 % in many provinces. This policy tweak is intended to curb the over‑extension of credit to developers.

4. Property‑market “de‑leveraging” campaign – The article links to the “de‑leveraging campaign” page on the National Development and Reform Commission’s portal, detailing how developers can trade off their land‑banking assets for cash, thereby lowering debt ratios.

3. Impact on China’s Banking System

The article’s data section shows that state‑bank exposure to the property sector has climbed from 20 % in 2018 to 37 % in 2023. In addition, the non‑performing loan (NPL) ratio has surged to 4.8 %, up from 2.7 % a year earlier. The PBOC has warned that a “broad‑based default” could trigger a liquidity crunch that would require further monetary stimulus.

The FT notes that foreign banks—particularly HSBC and Standard Chartered—have already begun reducing their real‑estate exposure in China. The “Foreign banks pivoting out of Chinese real estate” article, linked in the original piece, provides a case study of HSBC’s plan to cut its residential loan portfolio by 30 % over the next 18 months.

4. Global Repercussions

Because China is a dominant player in the global commodity chain, the property market downturn has a ripple effect:

• Steel and cement: Demand for construction materials has fallen by 15 % year‑on‑year. The article links to “China’s steel production dips as housing slows”, which shows steel prices dropping from $650/ton in early 2023 to $520/ton in late 2024.

• Housing‑finance ETFs: U.S. ETFs that track Chinese property developers have seen a 25 % decline in net asset value (NAV) since the crisis began. The article explains that this loss reflects both debt defaults and falling share prices.

• Foreign investment flows: Chinese outbound investment, which had been a significant driver of capital into emerging‑market equities, has contracted by $30 billion in the past year. The FT’s “China’s capital outflows: a new trend?” article, linked within the main piece, analyses how policy shifts are prompting investors to look elsewhere.

5. The Path Forward

The article concludes with a discussion of the potential outcomes:

• Gradual “soft landing”: Beijing’s plan could succeed if developers manage to restructure debt without defaulting. This would preserve the banking system’s integrity while slowly cooling the housing bubble.

• Hard landing: If a cascade of defaults continues, banks could face significant losses, potentially prompting a broader credit freeze and a downturn in GDP growth. The “China’s GDP slowdown: What’s next?” article offers projections that a 2.5 % growth rate is the new baseline for 2025.

• Policy recalibration: The government may have to revisit its “real‑estate reform” to ensure that price controls do not spur a black‑market housing boom or excessive speculation in low‑income areas.

Bottom Line

The FT’s analysis provides a comprehensive snapshot of a crisis that is still evolving. China’s property sector is not only a domestic issue; it is a bellwether for global markets. The government’s 12‑month debt‑restructuring window and new regulatory measures will be closely watched by investors, policymakers, and economists worldwide.

For those looking to stay ahead, the article recommends keeping an eye on:

1. Banking indicators – NPL ratios and capital adequacy ratios of state‑owned banks.
2. Commodity price trends – Steel, cement, and other construction materials.
3. Regulatory updates – New drafts from the Ministry of Housing and the PBOC.

In a world where capital flows move faster than governments can legislate, understanding China’s real‑estate crisis—and its containment strategy—is essential for anyone engaged in global finance or risk management.