“Evergrande’s crisis is not unexpected, as its development has been influenced by hoarding capital and splashing into unrelated businesses, such as bottled water and new-energy vehicles,” said Cong Yi, a professor at the Tianjin University of Finance and Economics, according to Global Times today.
“The central government guided the direction of the domestic property market early in 2016: Houses are for people to live in, not for people to speculate on. Hence, the exposure of Evergrande’s crisis underscores the authorities’ firm determination to regulate a rapidly expanding sector, whose development relies on piles of debt,” he said.
Those who say Evergrande could be China’s “Lehman shock,” Global Times writes, “do not understand China’s development model.” Cong added, “China’s future economic development relies on innovation and the real economy, rather than the short-term booster of the property sector.”
