A weekend topic starting with Reuters. "As developer China Evergrande Group lurched from one crisis to another over the past two years, Beijing avoided directly intervening to rescue what was not too long ago considered one of the country's 'too big to fail' enterprises. Despite a growing number of Chinese property developers having defaulted on debt obligations since a liquidity crisis hit the sector in 2021, Beijing has not directly stepped in to bail out any firm so far. Because of the massive debt pile, worsening cash flow, and the scale of unfinished homes, some analysts wonder whether Evergrande has now morphed from too-big-to-fail to too-complicated-to-exist."

"'Evergrande is large enough that its collapse needs to be managed. Partly because of size, (and) partly because of managing expectations,' said Antonio Fatas, INSEAD professor of economics. In China, 'because of the political/economic system and because of the large interference of the government and state-owned enterprises…there will always be a political question on how to share the losses associated with events like this one.'"

From The Hill. "After German Foreign Minister Annalena Baerbock referred to Chinese President Xi Jinping as a 'dictator' in a September 15 interview, Beijin called in the German ambassador and emphatically and publicly complained. This tantrum was no mere semantic complaint, but a paradoxical revelation of both China’s fragility and its global authoritarian aspirations. One might imagine that the Chinese Communist Party would be less concerned about a foreigner’s description of its leader and more concerned with the many challenges facing China: a slowing economy, unsustainable debt, a housing glut, endemic corruption, a shrinking and unbalanced population, massive youth unemployment and lethal levels of pollution."

"One would be wrong. Those developments do not threaten the CCP’s legitimacy. Words do. Beijing reacted so harshly to Baerbock’s speech because, to the CCP, contradicting the party line anywhere challenges the legitimacy of its rule. China is hardly unique among dictatorships in its hypersensitivity to perceived criticism. But it differs in terms of scale, economic power and ambition. It wants to control speech everywhere."

"For the CCP, its institutionalized and prickly paranoia generates three significant harms to regime effectiveness: reality distortion, resource depletion, and negative reaction. Reality distortion skews decision-making. The CCP cannot solve problems that it denies exist. One might argue that Xi is well aware of the problems he faces, but this is unlikely. No one inside China risks telling the emperor that he is naked for fear of giving offense and suffering dire consequences. Furthermore, foreigners who ask the wrong questions, or simply do normal financial due diligence, are branded as spies."

"Finally, the party’s policy of aggressively responding to what the democratic world considers normal economic, social and political discourse provokes reactions that unify antagonists and start the cycle anew. The CCP’s paranoid lashing out may seem appropriate and effective inside China, but outside it is now proving counterproductive."

From Time. "Ignominy comes quickly in China. Just a few years ago, Evergrande Group was the pride of the nation. The real estate giant was for a time China’s biggest constructor with more than 1,300 projects in 280 cities to date. And through sport, specifically soccer, it became the poster child for a new era of Chinese dominance. Guangzhou Evergrande soccer club won eight Chinese Super League (CSL) titles, including seven back-to-back between 2011 and 2017, as well as two Asian Champions Leagues, thanks to a galaxy of handsomely remunerated European and Latin American stars. It also ran the world’s biggest soccer school, whose 'goal is to revitalize Chinese soccer and cultivate soccer stars, not only for the Evergrande group, but also for our country,' principal Liu Jiangnan told TIME in his office in 2016."

"Back then, investment in soccer was smart politically. In 2015, Chinese President Xi Jinping unveiled a 50-point reform plan to develop grassroots soccer with the aim of China hosting and ultimately winning the World Cup. Evergrande even paid the bulk of former Italy manager Marcello Lippi’s salary as China coach from 2016 to 2019. In April 2020, Evergrande broke ground in Guangzhou on a new $1.8 billion, state-of-the-art 100,000-capacity stadium, which would be 'a world-class new landmark comparable to the Sydney Opera House and Dubai Burj Khalifa,' Chairman Xu Jiayin told reporters."

"In August, Evergrande filed for bankruptcy protection in the U.S. and last week Xu was arrested in China on suspicion of 'illegal crimes' related to his firm’s precipitous collapse. Since a high in July 2020, the shares of Evergrande—the world’s most indebted developer—have plummeted 99%, wiping out almost $47 billion in market value, owing to a housing slump and regulator crackdown on excessive liabilities. Xu remains under investigation at an undisclosed location. That half-completed 'landmark' stadium, meanwhile, has been seized by the local government toward servicing the firm’s estimated $300 billion of debt."

"Meanwhile, the recent high-profile purge of top-ranking officials, bankers and generals has decimated the confidence of investors already reeling from the punitive investigations of consulting and accounting firms, bankers forced to do ideological study sessions rather than productive work, executives at foreign companies barred from leaving the country, and new draconian controls on exporting data. In the second quarter of the year, foreign direct investment into China was just $4.9 billion, down 94% compared with the same period in 2021, according to the Nomura financial services group."

"Chong Ja Ian, a China specialist at the National University of Singapore, says that a problem is the Chinese leadership’s impulse to address every problem by increasing control. 'That might work in terms of a Leninist system and the individuals within an organization,' he says, 'but it doesn’t quite apply to the market.'"

"Evergrande’s woes leave an estimated 1.5 million customers with unfinished homes, but the problem goes much deeper. As real estate accounts for some 30% of national GDP, as well as up to 80% of household wealth, the crisis is cascading through the wider economy. China’s property developers collectively owe more than $390 billion to various suppliers, according to Gavekal Research. 'We’re really only at the very beginning of the fallout of what’s happening in the property sector,' says Dinny McMahon, head of China markets research at Trivium China policy research group. 'Real pain and real stress will be caused to ordinary people and firms.' Ultimately, China’s soccer ambitions were built on the same real estate bubble as four-fifths of its people’s wealth. It’s a big problem if the latter goes the same way."

From Barron's. "China’s property crisis is a mixed picture with overwhelmingly dark shading, yielding benefits in a few areas but threatening far broader damage. Liu Jianguo, a 46-year-old teacher in the second-tier city of Guiyang, just bought a new apartment with help from his parents. He says that in his province, Guizhou, prices are low and that the time had come to buy. But Liu is a rarity. Over recent months, numerous homeowners have expressed frustration to Barron’s over declines in the value of property, the main investment vehicle for most families. Only in second-tier cities, such as Guiyang, are sales actually growing, according to data from Wind, a provider of financial information."

"That is critical because real estate plays a central role in the Chinese economy. It is where most citizens choose to invest their savings—70% of household wealth lies in the sector—and property accounts for close to 30% of the country’s gross domestic product, according to independent estimates. Car salesman Zhong Weiyi, 58, pins diminished housing sales—and weak consumption across the economy—on low confidence about financial security. 'If housing prices and pensions keep shrinking, I wonder what kind of security I will have in my 70s,' he told Barron’s from the first-tier city of Chengdu."

"That China’s property market is experiencing one of its worst periods in modern times is quite a feat considering how turbulent the enormous sector has been. The distress has dragged on for years at varying levels of intensity. Defaults have plagued developers, most notably in 2021, when China Evergrande, the world’s most indebted developer, lost 476 billion yuan ($65 billion) and failed to make interest payments to international investors. The next year, two other big players defaulted—Sunac China Holdings and CIFI Holdings. All eyes are now on developer Country Garden, which missed a $15 million interest payment on an offshore bond two weeks ago and has a grace period of another few weeks to avoid default. The consensus among observers is that it won’t come up with the funds."

From Newsweek. "China's current economic crisis is the one it refused to have in 2008. Now, the problems are far larger than they were two decades ago, and they cannot be solved without a crisis of historic proportions. The country avoided a downturn in 2008 only by embarking on one of history's largest and longest spending campaigns. First, there was a $586 billion, two-year stimulus plan. Second, Beijing ordered state banks to go on a lending spree. In the five years starting in 2009, Chinese banks extended an amount of credit that was roughly equal to that in the entire U.S. banking system, even though at the end of 2008, the Chinese economy was less than a third the size of America's. And the lend-a-thon continued long afterwards."

"Beijing technocrats had long dictated outcomes, so that was the approach they adopted in 2008. As they overpowered market forces in China, they prevented the corrections that swept market economies beginning that year. Yet because Chinese officials were determined to avoid a downturn at home, the underlying imbalances in China's economy became larger."

"'Going back to the stimulus in 2009, it was clear that the reliance on property, land sales, and debt for growth was unsustainable,' Andrew Collier, now managing director of Hong Kong-based Orient Capital Research, told me. 'I witnessed this on numerous trips to various provinces starting in 2006 for Bank of China where the overbuild in property in rural areas was quite obvious along with the ignorance of local officials about basic economics. Beijing ignored these problems until around 2016 because it was too hard to control and too convenient to use.'"

"The result is that China now has far too much debt—almost certainly in excess of the generally accepted 280 percent of gross domestic product—and is far too overbuilt. Last month, He Keng, a former deputy chief of the statistics bureau, said China had enough vacant apartments to house its entire population of 1.4 billion people. Some think the vacant apartments can accommodate 3 billion people."

"Chinese ruler Xi Jinping believes he can determine economic outcomes. As powerful as he is, however, he cannot overcome the law of supply and demand. Yes, that iron law works differently in China than elsewhere, but try as he might, he has not been able to change human nature—meaning the law still applies in the People's Republic of China. 'I think the problem is just too big to resolve,' J Capital Research's Anne Stevenson-Yang, also author of Wild Ride: A Clear and Sharp History of the Opening and Closing of the Chinese Economy, told Radio Free Asia. 'I have no idea what their plan is other than to hide head in sand. I actually think they are bureaucratically stuck.' China has too much property, and there is no solution short of either short-term crisis or long-term catastrophe, or perhaps both."