China's property problems may affect financial market across the world: US Central Bank

The United States Central Bank has expressed concern over the ongoing real estate market problems of China. The US Central Bank has warned that China's property market problems might increase the financial stress in the country and affect the global financial market, according to ANI. The US Central Bank further highlighted that the property problems of China would also 'negatively' impact the United States.

The Federal reserve in its biannual report on financial stability noted the crisis at Evergrande, ANI cited CNN report. China's most indebted real estate developer Evergrande has been fearing contagion since September after they received a warning that it could have defaulted on its debts of more than $300 billion. As per the report, several other real estate developers could also face debt issues. 

China property problems may affect the global market 

The US Central Bank highlighted that due to the size of China's economy and its ties with the international community, the financial system of the country could impact the global financial market. Furthermore, the Federal Reserve said that the troubles in the financial system of China could pose threat to the financial growth across the world and also impact the United States. 

The Federal reserve highlighted that there is a risk of financial stress in China to further increase. The US Central Bank further noted that the Chinese authorities have started implementing measures that are needed to subside the property markets. The "Chinese authorities have introduced measures to cool down property markets," ANI cited Federal reserve. The Federal Reserve further stressed the risk that "financial vulnerabilities will continue to rise", as per ANI. 

Real estate debt in China 

The Chinese economic slowdown in the third quarter of the current financial year revealed that the real estate of the country was facing the problem of increased debt. The real estate debt has reached $5 trillion in China, ANI cited The Hong Kong Post. The GDP of China has witnessed a growth rate of 4.9% in the third quarter. In comparison to the prior quarter, the economy of China witnessed a growth of 0.2% in the time between July to September. As per the report, the problems in real estate is due to the absence of property tax in China. 

Inputs from ANI

Image: AP