The U.S. Federal Reserve has warned of potential spillover from China’s real estate troubles to the U.S. financial system.
China’s Evergrande shook global investors with its reported attempt to avoid official default. Other Chinese developers have also struggled to repay debt, adding to concerns of wider fallout in the world’s second-largest economy — roughly a quarter of which is driven by real estate.
Stresses in China’s real estate sector could strain the Chinese financial system, with possible spillovers to the United States,” the Federal Reserve said Monday in its financial stability report, released twice a year.
The bulk of the report discussed domestic U.S. financial conditions, and analysts downplayed the significance of the Fed’s comments on China real estate.