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After years of rapid expansion, the Chinese authorities have decided to put a stop to excessive leveraging in the real estate sector. Beginning in the summer of 2020 new limits on access to credit for property developers were imposed and the sector entered a prolonged phase of adjustment in which it still remains today.

In mid-2020 the Chinese government announced a series of strict rules on access to credit in the real estate sector, which had historically followed a growth model based on high leverage. However, these measures not only managed to limit debt in the sector, but also exposed its vulnerabilities. In this article, we look at the biggest risks of this strategy.