(Natural News) There is a massive debt bomb that is about to explode in China that is increasingly likely to devastate the country’s economy in a way that would rival the Great Depression in 1930s America.
According to reports, Chinese homebuyers are boycotting their mortgage payments, which led the ChiCom government to scramble in order to avoid an economy-destroying collapse in what is the world’s largest asset.
Additional reports claimed that some suppliers to Chinese real estate developers have also stopped paying on their bank loans because they are not being paid for bills and other debts owed to them, “a sign that the loan boycott that started with homebuyers is starting to spread,” Zero Hedge reports.
The site adds:
In a jarring case study of what happens when a ponzi scheme goes into reverse, hundreds of contractors to the property industry complained that they can no longer afford to pay their own bills because developers including China Evergrande Group still owe them money, Caixin reported, citing a statement it received from a supplier Tuesday.
Similar to homebuyers who have taken a stand and refuse to pay for properties that remain uncompleted, one group of small businesses and suppliers circulated a letter online saying they will stop repaying debts after Evergrande’s cash crisis left them out of pocket.
“We decided to stop paying all loans and arrears, and advise our peers to decline any requests to be paid on credit or commercial bill,” said the group in the letter dated July 15, which was addressed to the developer’s Hubei office.
“Evergrande should be held responsible for any consequence that follows because of the chain reaction of the supply-chain crisis,” the letter continued, according to Zero Hedge.
The outlet went on to cite Bloomberg News which stated: “[T]he payments protest is the latest sign of how a movement by homebuyers to boycott mortgages on unfinished homes in China is spreading to affect other sectors in the economy.”
Zero Hedge further explains:
Yes it is, and it’s also why Beijing should be freaking out (if it isn’t), because what is taking place in China is far worse than what took place in March 2020 when the global credit machinery ground to a halt, only back then it’s because there was no other option, now it’s a voluntary development and not even fears of reprisals from China’s ruthless, authoritarian, Lebron-beloved dictatorship is stopping millions of people from calling for a systemic boycott, one which can topple China’s entire $60 trillion financial system in moments.
“The development underscores a dilemma for Xi Jinping’s government as it grapples with who to bail out as the country’s property crisis deepens: Relief for some borrowers could prompt threats of non-payment by a whole host of others,” Bloomberg News added. “While bending to demands for support could put a strain on state finances, ignoring them might lead to a spiral of defaults as more and more borrowers refuse to meet their obligations.”
China remains the world’s second-largest economy at roughly $17 trillion annually, behind the nearly $23 trillion U.S. economy (which would be trillions higher if we weren’t being led by a left-wing Democrat mob that hates fossil fuels) and well ahead of Japan’s No. 3 economy at around $5 trillion. So, if the Chinese economy were to collapse, you can see how easily that collapse would spread around the globe, especially since the Chinese make so much of what consumers all over the world use on a daily basis.
The Zero Hedge report noted further that the homebuyer mortgage boycott began in earnest in June, but it has spread to building suppliers as well — around 301 companies located in 91 cities. And it’s only going to get worse, so plan accordingly.