It is interesting that a lot of the experts say that there is little chance of 'contagion' from a company like Evergrande going belly up, when we have just experienced the spread of a virus from China, to around the globe. In other words, even though they thought that Covid would be contained within China, it wasn't. Just like, if there was a financial meltdown in China, then some how, despite China being the world's second largest economy, then no other economies would be affected. They will be.
The saving grace is that no default has occurred and there are no other similar examples yet. However, it is definitely something to watch. The reason being, the China story is not the same it was 20 years ago. Firstly, urbanisation rate is now >60%, up from about 25% in 2000. Secondly, birthrate is now below replacement rate at about 1.4, hence the abolishment of one-child policy. Thirdly, they won't be able import wealthy Chinese and Indians to fill the gap/prop the bubble up, like we do. Fourthly, Chinese government doesn't kowtow to the US.
Conclusion. Based on the fact that China stocks are already down ~%25 from peak, there are problems there. The question being, just how big?
