China's Mortgage Crisis is Worse than the Pandemic: CCP Bankrupt, Banks Failing, Protests Everywhere

a prolonged housing crisis in China having a knock-on effect on the rest of the economy. I know that China is doing very poorly right now. I just saw some reports coming out and I don't want that to happen to China.

And one of their biggest challenges, the property market, young people in China are increasingly flocking to poorer regions in surge of rock bottom housing as the property slump continues. Things are not going to plan with China's economy. China's a ticking time bomb.

China's in trouble. The Economist magazine talks of President Xi's failing model. Oh, Jill.

Over the past decade, we've seen property in China go from economic growth engine to a risk factor. In 1989, the Chinese Communist Party showed the world exactly what it feared the most. Its own people.

Thousands of young Chinese students had gathered in Tienman Square asking for freedom and democracy. Something that threatened the CCP's rule. It made them scared.

so scared that the CCP decided to launch a brutal attack against its own citizens. Thousands were killed. Thousands more disappeared.

All because they dared to hope for something better. After Tenemen, the CCP didn't admit to anything. No apology, no accountability.

They blocked it online, banned anyone from even mentioning it, and erased it quietly from public memory. In its place, they offered a new promise. Stay silent and you'll be rewarded with endless jobs, affordable homes, and a future where everyone could get rich if they just keep their heads down.

That was the deal. And for a while, it worked. The economy exploded.

Cities got bigger. Millions moved out of poverty. But the good times didn't last.

Today, unemployment is at record highs. The housing market has crashed. Home buyers are refusing to pay mortgages on unfinished apartments.

Banks are freezing withdrawals. Factory workers are going months without salaries. Businesses big and small are shutting down across the country.

And that's why it's not just students protesting this time. It's everyone. I'm sure you guys remember Everrand back in 2022.

With that company's collapse, things got really bad in China. People lost everything. And when people have nothing left to lose, they are not afraid to fight their government.

That's why protests were happening all across China against the CCP. But when we covered it back then, our video was demonetized and restricted. It didn't make sense to us because when we cover other protests, our videos are fine.

But covering Chinese protests seems to be a problem. Luckily, YouTube admitted they made a mistake and reversed it. But it took them more than a year to admit their mistake.

Now, I have a feeling that since I'm talking about the same subject today, this video may also get demonetized and restricted. So, if you guys can help me out and hit that like and subscribe button down below, it truly does help me a lot. Thank you.

Now, let's look at how China's real estate crisis started. You see, for a Chinese citizen, owning a home means everything. It's how families plan for retirement, how parents secure their children's future, and how many young men prove they're ready for marriage.

In fact, in many parts of China, not having a house means you're not seen as settled enough to even start a family. That's why for decades, families have poured their entire life savings into property. Often, buying homes that they don't even plan to live in just to preserve wealth and show security.

It became the one thing everyone trusted because it always seemed to go up. Even the communist government encouraged developers to take massive loans to keep building. Local officials sold land to raise money.

And people kept buying because they believed the risk didn't exist. Soon enough, real estate became the foundation of the modern Chinese dream. And for a while, it worked.

Prices rose, wealth grew, people stayed quiet, and kept buying. But now, the one thing that held the country together, the so-called safe investment in China, has turned into a ticking bomb. Today, more than 60 million homes across China are sitting empty.

That's over 400 million square meters of completed but unsold housing, enough to cover six entire Manhattans. And that doesn't even include the half-finished ones, the construction sites that were abandoned midway when the money ran out. According to Goldman Sachs, the total value of stalled or unfinished housing projects is now around $93 trillion yuan.

That's nearly 13 trillion. To put that into perspective, that's eight times what all Chinese home buyers spent in total last year. And while these homes sit empty or unfinished, the value of the ones already sold is also collapsing.

In October of 2024 alone, new home prices dropped by 5. 9%, making it the 16th month in a row that prices have declined. You'd be surprised to know that for most Chinese families, their home is their life savings, their retirement plan, and their safety net in case everything else goes wrong.

So, when housing prices fall, it's not just the property market that takes a hit. It's people's entire sense of security. Their trust in the system starts to crack.

And even now, the CCP can't ignore it. Officials are admitting publicly that real estate, which once made up nearly 30% of China's entire GDP, is no longer helping the economy grow. It's become dead weight.

It's crushed consumer spending, wrecked business confidence, and triggered a slow erosion of public trust. And that last part is what really scares the CCP because it's almost the same as what happened to the United States back in 2008. Back then, real estate felt like a guaranteed way to get rich.

Prices kept rising and everyone from banks to buyers started believing they'd never go down. The rush to own property was so extreme that developers sold out entire complexes before even pouring the foundation. People weren't buying homes to live in.

They were buying their second, third, and sometimes fourth property just to ride the boom. But once the construction was done, many of these homes just sat there. They had owners, but no one lived in them.

And when the crash finally came, it was brutal. Prices tanked, banks failed, millions lost their homes, entire financial institutions collapsed. It triggered a global recession that took years to recover from.

But here's the difference. America had a diversified economy. People had stocks.

They had retirement accounts and small businesses. In China, it's different. Chinese families don't invest the way Americans do.

Many people don't trust the stock market. One data set shows that nearly 70% of household wealth in China is tied directly to real estate. Not stocks, not businesses, not savings accounts, just property.

That means they're not just exposed to the crash. They're trapped in it. No safety net, no plan B.

This is why millions of families are finally realizing that the one thing they trusted the most, their home, is bleeding value every month. That it won't cover their retirement. It won't help their kids get married.

It won't protect them if everything else falls apart. According to a wellrespected expert, this housing crisis could be a hundred times worse than the 2008 crisis. And no single company shows how dangerous that gamble became better than Ever Grand.

In the 1990s, China was transforming. Millions of people were leaving rural villages for fast growing cities. Urbanization was happening at a scale never seen before, and with it came the need for housing.

In 1998, China began reforming its housing system. For decades, urban homes were distributed by the state. Now people could buy their homes outright.

that kicked off a massive home buying wave. Developers like Everrand took full advantage of this and soon became one of the largest developers in the country. At one point in 2018, they were actually the biggest real estate company in all of Asia.

The numbers alone made people believe it was too big to fail. But deep down, Everrand was never built to last. It was a house of cards.

And once the winds changed, everything started to collapse. Just like what we saw in the 2008 crisis, if anyone had looked under the hood, they would have realized that some of the practices happening at Everrand were far from appropriate. Now, due to the sheer scale of the company, a lot of those practices were quite complicated.

But here's my attempt at trying to simplify it. Remember earlier how I mentioned that like FOMO into real estate was so bad, people were buying houses before construction even began. Well, usually a company like Everrand would lease a piece of land from the local government.

Then they would turn around and sell the houses that were supposed to be built there and receive full payment for the houses before ever breaking ground. Companies would never have any issues selling out as the demand for real estate was so high. Many people were more than happy to take out mortgages and buy houses just in hopes of owning real estate someday in the future.

Now, the big problem that starts here is that companies like Everrand wouldn't usually use the money from the sale to start construction. No, no, no. Instead, they would use the money as a down payment to buy even more land so they can sell even more apartments for the future.

Now, this is already a huge problem. This should not have been allowed in the first place. Any unbiased person can look at this system and figure out that it is not going to last.

This is exactly the job of the CCP. But they passed on this responsibility to the local governments. And this is where another problem lies.

Local governments were directly benefiting from these real estate pyramid schemes that companies like Everrand had going on. You see, in China, one of the big ways local governments make money is by leasing land to developers like Everrand. This meant that the more risk these property developers took on, the higher the bids on this land that the government was leasing out.

Around 50% of local government revenue came from leasing out land. The same government that should be protecting its citizens from these risky practices is benefiting heavily from these so-called risky practices. This is a prime example of perverse incentives.

We don't even need to get into the corruption that goes on around these land leases. By the time anyone noticed the risks, it was too late. The Chinese government introduced the three red lines policy in 2020, a set of rules meant to stop property developers from taking on too much debt.

But for Ever Grand, this was a death sentence. Cut off from new loans, unable to finish its projects, and with millions of angry buyers demanding answers, the system began to fall apart. At this point, one more shady practice came into light.

Everrand would list the unfinished and empty houses as assets under their balance sheet to get even more loans from banks so they could finish construction. But these houses were already sold to other people. So no matter how you use accounting magic, there is no way you can consider these assets of Everrand.

The worst part is that Everrand wasn't the only one doing these shady tricks. Almost every real estate company in China was operating this way. The whole sector was overleveraged to the teeth.

Just like a Ponzi scheme, the only way to continue forever is if you continue growing forever. But you can't keep growing if people lose trust in Everran's ability to stay solvent. And I'm sure you guessed it by now.

That's exactly what happened. The company missed a payment. Then another by 2021, it defaulted on its offshore debt.

When the news got out that Everrand could default on $300 billion worth of loans, panic spread throughout the economy. People also realize that this problem isn't limited to Everrand. The whole real estate sector is overleveraged and it's starting to crumble.

Chinese developers owed around $5. 3 trillion in debt. Construction sites across China went silent.

Everything stopped and with no real choice left, thousands of buyers who had paid in full were left with half-built shells. These stalled units were nicknamed rotting apartments and the name stuck. In some cases, families moved into these unfinished buildings, living without water, electricity, or windows just to prove a point.

They had nowhere else to go. One of the owners is a 55-year-old woman. She told reporters that she spent her entire life savings on a home that still had bare walls.

There was no running water or gas, and every day she hauled heavy bottles of water up the stairs by hand. Her building had a makeshift outdoor toilet shared by over 20 people. And she isn't alone.

Whenever owners of these houses would ask about construction delays, they were just met with excuse after excuse. Slowly, things got to be too much. Some of these citizens had their whole life savings invested in these unfinished projects, and they just couldn't take it anymore.

So, on July 1st, all of the home buyers from a project in central China published a letter saying that they would stop paying their mortgage payments to the bank unless construction restarted. Now, a project usually includes thousands of houses and are worth upwards of hundreds of millions of dollars. But at the end of the day, it was just one project and a nation of 1.

6 billion people. So, it wasn't even that big of a deal. But it didn't stop at just that one project.

By the same evening, home buyers from another project had announced the same mortgage boycott, and the movement started to spread across the nation. By July 12th, 100 projects had joined the boycott. And as of the writing of this script, over 300 projects across China are boycotting mortgage payments until construction resumes.

Tens of thousands of people have willingly defaulted on their mortgages in hopes of getting the government's attention. People have also started taking to the streets to protest these construction delays. After the Tianman Square massacre, organized defiance like this is it's pretty rare and it's getting worse every single year.

The CCP keeps deleting videos from social media. Protesters are dragged away, never to be seen again. And yet, people keep coming out, stronger than last time.

What's even more concerning is that once the real estate got in trouble, people turn to banks to take out cash just to be safe. But even that was impossible because the bank started freezing accounts and somehow the money vanished and with no one to answer to the public. One of the big differences between 2008 and the current situation in China is that the majority of these loans are collateralized by houses that are not yet built.

So banks can't just repossess the house when someone defaults and cuts their losses. Banks are being forced to eat these losses. And if the defaults keep growing, there's a chance that big banks might fold.

One of the big four banks in China has already limited people's withdrawals. I'm sure most of you know how the modern banking system works, but here's a quick overview for everyone else. Banks usually loan the money the depositors deposit and hope to earn interest on it to make a profit.

Usually the reserve requirement is set by the central banks. Let's say that's I don't know 10%. That means whenever a bank gets $100 in deposits, they are only required to keep $10 in the vault and they can loan out $90 and charge interest on it.

So this is just a very simplified example, but these types of transactions happen millions of times over and over again in an economy. And that's basically how the modern banking system works. For every $100 in deposits, banks are able to create about $1,000 of money in circulation.

Now, the system is actually pretty great. In the past century, a lot of economic growth is in part thanks to this fractional reserve banking. But the only way the system works is if depositors have trust in the bank's ability to keep their money safe.

Now, if too many of these loans that banks are giving out become worthless, then that trust starts to erode. This is why the US enacted strict lending regulations after the 2008 crisis. So, banks are careful with who they try to lend to.

Now, as more and more home buyers are defaulting on their loans, Chinese banks are also at risk of losing the trust of their depositors. Putting limits on the withdrawals definitely does not help with building that trust. If too many people start pulling out their deposits from the banks, then a bank run happens and banks collapse because of that.

For example, in Jungo, over a thousand people gathered outside a branch of the People's Bank of China after a rural bank froze deposits worth billions. It turns out even the banks had been making shady bets, illegally and quietly, funneling money into real estate projects and local government financing arms. When those investments went bad, small lenders started collapsing.

To contain the damage, regulators merged or bailed out hundreds of rural banks. In 2024 alone, over 290 small lenders were absorbed into larger state-run institutions. That's a record level cleanup.

China's rural banking sector has about 3,700 institutions with 57 trillion yuan, that's about 7. 8 trillion US in assets, roughly onethird the size of the entire US banking system. But here's the problem.

No one really knows how much of that money has already been gambled away on risky real estate deals. Even state banks are sitting on trillions in loans, and the smallest sign of widespread defaults could set off a chain reaction of panic and collapse. This is where the headache lies for the CCP.

The Chinese economy is heavily reliant on its financial and real estate sectors. Real estate represents about 30% of China's GDP, while seven out of the 10 companies in China are financial institutions. Initially, the CCP was strictly against bailing out failing companies as they didn't want to promote risky business behavior in China.

But now that they're realizing that this has the potential to tank the government, CCP officials are changing their tone when it comes to these bailouts. Other industries really aren't doing much better. Business profits are plunging and millions of jobs are vanishing.

In 2024, Chinese industrial profits fell 3. 3%, the third straight year in decline. Automakers saw profits drop by 8%.

Tech and green energy companies tried to stay afloat, but they couldn't make up for the overall losses. Household borrowing for cars and homes has actually turned negative with cashstrapped families putting big purchases on hold. Even the youth unemployment rate is at an all-time high.

In 2024 alone, 11. 79 million college graduates enter the job market only to find that a degree doesn't guarantee a career anymore. Campus job fairs are full of desperate seniors willing to work for far less than their parents had ever made.

Online, they call themselves rotten tale kids. A sad pun on China's ghost city rotten tale buildings that are begging any company to hire them. State media is now urging young people to move to poorer provinces or settle for vocational jobs.

And things aren't much better for older folks either. China has around 94 million people over the age of 60 still working. That's about 12.

8% of the labor force. And that number is only going to rise as the baby boomer generation retires. So yeah, this is what it's come to.

Families are forced to live in undeveloped flats, students graduating into a dead job market, and elderly parents forced back into exhausting work just to put food on their tables. For decades, the Chinese economy ran on borrowed money, borrowed demand, and borrowed time. Now that debt is due, baby.

Last year, Fitch ratings downgraded China's debt outlook and warned that the country's massive borrowing could cause serious problems. Now, the government debt, both central and local, is expected to rise from about 61% of GDP in 2024 to 68. 3% in 2025 and then to 74.

2% by 2026. That would push China's debt levels higher than what they were after the 2009 global financial crisis. But this time, the economy isn't growing fast enough to handle it.

Clearly, China is facing the worst economic and social crisis in years. Even after China allowed a record 10 trillion yuan in new bonds to cover up hidden debt, Fitch warned it won't solve the root of the problem. The truth is Beijing is running out of easy fixes.

They've already cut taxes, spent heavily on infrastructure and launched a huge stimulus plan to try to meet a 5% growth goal. But when public confidence is gone, all that spending barely moves the needle. And with more people protesting, more mortgages unpaid, and more savings frozen, the pressure is only building.

The protests are only going to get worse. And if history is anything to go by, we can only hope it doesn't end with tanks in the streets. Once again, thanks for watching.

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