Incredible footage reveals massive problem with China

Words: Alexis Carey Producer: Bianca Mastroianni

Chinese real estate group Evergrande is teetering on the brink of ruin, revealing a massive problem in China right now.

The company has debts of $408 billion, and faces a predicament that has experts fearing a worldwide financial crisis.

Real estate glut

China has enough empty property to house more than 90 million people right now.

The imbalance was made blatantly clear when 14 unfinished apartment blocks were demolished at Kunming in China's Yunnan province.

The scale of this problem China is facing may have an impact on Australia, given China’s previous reliance on us for iron ore supplies.

Beginning of the end

Evergrande’s downfall began when demand in cities such as Beijing and Shanghai sent prices skyrocketing.

The company took out several loans and expanded rapidly, but when the Chinese government implemented the ‘three red lines’ measures, it left Evergrande with mountains of debt.

If Evergrande is not saved, as many as 1.6 million home buyers will be waiting for unfinished apartments and banks will lose money.

Threat to Australia?

Experts say it's unlikely that the Evergrande fiasco will impact the Australian real estate market, as was initially feared.

While it's also unlikely to kickstart another global debt crisis, companies and governments have been urged to act to avoid a similar fiasco in future.