Ekonomické zprávy
09.11.2021

China’s real estate troubles could spill over to the U.S. - Fed

CNBC reports that the U.S. Fed warned of potential spillover from China’s real estate troubles to the U.S. financial system.

“Stresses in China’s real estate sector could strain the Chinese financial system, with possible spillovers to the United States,” the Federal Reserve said in its latest financial stability report, released twice a year.

The report pointed to the size of China’s economy and financial system, and global trade links.

The bulk of the document discussed domestic U.S. financial conditions, from historically high stock market prices to risks from rapid growth in stablecoins — digital currency tied to a fixed value such as the U.S. dollar. 

“The nexus of the Fed’s concern is that China’s real estate activity is slowing, but the developers have large debts [and] some of them (like Evergrande) are diversified into other areas of the economy,” Paul Christopher, head of global market strategy at Wells Fargo Investment Institute, said.

These wide-reaching links mean a slowdown in China’s housing market could ultimately lead to unemployment, a drop in Chinese stocks and deflation — which could spread through global trade channels as China cuts its purchases of goods from other countries, Christopher said.

The Fed’s latest report also analyzed the role of retail investors and social media in stock market volatility earlier this year, as well as the role of foreign investors in a sell-off of Treasurys in March 2020.

Previous financial stability reports from the Fed have mentioned China, its high debt levels and “stretched real estate prices” as risks that could spill over to the U.S.

Podívejte se také