The financial woes of the giant real estate developer Evergrande, which carries an estimated debt of $300 billion, have rekindled global fears that China’s property bubble is about to burst. Such predictions have occurred repeatedly in the past, in particular since 2010, and have been fueled by the rapid rise of property prices, construction volumes, and real estate debt. Today, many analysts fear that if the property bubble collapses, the impact on the real economy will be devastating. Some expect China’s growth potential to decrease dramatically, to 4 percent per year from about 8 percent during 2010–19, or even lower. Yet the current property market turmoil originates in regulatory action to reduce financial leverage, and it may not lead to a full-fledged financial meltdown if
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