Chinese real estate developer Fantasia has missed a $315 million debt payment raising new fears that China, a country heavily dependent on real estate development for economic growth, has started a cascading crash. Another very large real estate developer, Evergrande, has also been under the spotlight with severe economic woes, raising new fears about other smaller developers as well. Most western economist believe the official economic figures that China releases annually are inaccurate, skewed towards showing growth above all else. Chinese banks are also allegedly to have loaned out more money than they are allowed to by government regulations and are in jeopardy of crashing as well.
Fantasia develops higher end condo’s and apartments, by far the most common type of real estate development in China.
Shenzhen based Fantasia Holdings also missed a $206 million bond payment on Monday and said it is “the potential impact on the financial condition and cash position of the group.” The ripple affect of failing Chinese real estate developers bringing down the Chinese economy is starting to be priced into global markets with short terms investment money starting to dry up.
While China does have GDP growth, it is largely inefficient and unproductive growth. Their manufacturing sector is heavily dependent on human workers and not machinery or technology such in North America and Europe. Despite a positive GPD growth rate and because of the country’s inefficiencies, the real economic growth of the people is actually falling behind. In terms of real money and real wealth, American wealth and money in all income levels grew at a rate of 6:1 compared to Chinese citizens.