China has made its housing crisis worse

China has made its housing crisis worse. The country has enough new apartments to meet seven years’ worth of demand. This can cripple the country’s economy, as per the New York Times.

In China, the pension akin to Social Security in the United States pays about USD 410 a month to seniors who live in cities, and only USD 25 a month in the countryside.

Public health care covers less than half of people’s costs. Unemployment insurance provides around USD 220 a month; the U.S. average is nearly USD 1,700.

The country’s consumer safety net is full of holes, even when accounting for lower costs of living than in the United States. As growth has faltered in recent years, and now as a simmering real estate crisis ripples through the economy, China is seeing the consequences of its failure to establish robust social assistance programs.

Policymakers in Beijing who have a longstanding aversion to financial protections for households, have begun trimming social spending this year. That could further harm the country’s already sputtering levels of consumer spending, in turn dragging property prices even lower.

Real estate and consumer troubles are also exacerbating dangers posed by very high debt among businesses, households and local governments.

Prominent economists, around the world and inside the country have urged it to do more to support its consumer economy, and to stop relying on growth built on speculative construction of apartment towers and heavy public investment in infrastructure like roads and high-speed rail lines.

The World Bank and a Chinese government planning agency boldly made the point in 2012 with a report, “China 2030,” that called for China to support consumers better and embrace a “turning point in its development path”, as per The New York Times.

Since then, China has mostly doubled down on investments to generate growth. The biggest industry by far over the last several years has been building apartments — not consumer-oriented services like travel or restaurant dining.