Sizing the Mortgage Defaults in China

Estimated USD 148 billion of risk exposure to the banks

Photo by C Dustin on Unsplash

This is part three of my take on the mortgage boycotts in China. You may also want to check out the part one and part two before proceeding.

So how big of a mortgage delinquency problem are we talking about?

“Political correctness” has prevented Chinese sources from properly assessing the risk here. The numbers are likely understated. Meanwhile, people outside China are more pessimistic and worried about a major financial crisis.

Below is my back-of-the-envelope calculation of the risk exposure (or shall I say “back-of-the-abacus”). These are ballpark figures of course. And so far the default risk seems controllable.