Is this the Schadenfreude moment for China sceptics?4 min read 04 Oct 2021, 08:14 PM IST
President Xi Jinping is rewriting the social compact and exerting party control over the economy. If the mood sours, it could tick-off the time bomb that is its property sector and have repercussions much beyond.
The woes of Chinese property development firm, Evergrande, heavily indebted to both domestic and foreign lenders and on the verge of collapse, has engendered a Schadenfreude moment amongst China sceptics: but is it premature? After the crisis broke out, some proclaimed that the imminent failure of Evergrande might just be China’s “Lehman moment", referring to the 2008 bankruptcy of the New York investment bank, Lehman Brothers, which was the opening salvo in the global financial crisis. Yet, global financial markets settled after a day or two of turmoil, as investors bet that that the Chinese state, which still heavily regulates the economy, will restructure the debt-laden firm in a manner that forestalls any potential international contagion. The critics might just have to wait before popping the Schadenfreude champagne corks.