The Impact of the Continuous Spread of Real Estate Risk on the Financial System in China

The recent real estate industry continues to experience credit crises, with the scope of these crises expanding. Current public data indicates that the proportion of major financial products involving real estate is limited. Moreover, banks, as the primary holders of real estate-related financial products, have passed the stress tests conducted by the central bank. Therefore, the direct impact of the real estate crisis on the financial system is limited and is not expected to trigger systemic financial risks at present. However, given the large scale of the real estate industry, its long industrial chain, and its close relationship with the macroeconomy and local finances, as well as its significant impact on the capital market and consumer confidence, the continuous spread of real estate risks will have extensive indirect effects on the economy and finance.