NEWS//Will China's bubble burst?

China's formerly red-hot housing market is showing signs of imminent collapse.

• Real estate makes up nearly 30% of China's GDP, compared with 19% for the U.S. before its housing bubble burst and 6% today.

• Housing makes up 78% of Chinese assets, compared with 35% for the U.S.

• There are enough empty apartments in China to house an estimated 90 million people.

• In August, a social media video from China showed 15 unfinished high-rise apartment buildings getting demolished.

• China's largest real estate developer, Evergrande, has leveraged its borrowing power to accumulate $300+ billion in loans. China Evergrande is having problems servicing its huge debt load. Its shares have fallen 84% in the last year.

Evergrande

The once-powerful Evergrande is now unable to continue building new homes. Unable to build new homes, it has nothing to sell. Unable to sell new homes, it cannot receive much-needed cash to roll over its loans and service its coupon payments.

Thirteen years ago, when the U.S. housing market bubble burst, Lehman Brothers and other large real estate companies imploded. Global markets paid a severe price. It kicked off the Great Recession of 2007-08.

Worse than the Great Recession

Mark Gongloff writes in Bloomberg, "Popping this bubble would hammer China’s economy in a way that could make the Great Recession look like a spoiled gender-reveal party."

"Some observers have compared Evergrande’s woes to the epic collapse of the investment bank Lehman Brothers during the 2008 financial crisis,” writes Neal Freeman in Morning Brew. “But other experts say this isn’t a Lehman Brothers moment—it could be worse, if you view China’s gargantuan real estate sector as rotten to the core.”

Sources: Morning Brew, Kiplinger, Yahoo Finance, Forbes, Bloomberg