Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance, examining events occurring in markets right now and financial history to see what lessons can be taken away, including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit

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Welcome back everyone. Just a quick video today on the Chinese property market and the

fallout of the Evergrand collapse, where we'll look at what's going on at Chinese land

auctions over the last few months and how this is affecting local government revenues.

The Chinese government's push in the last year or so to reduce leverage across the property

sector in China and increase affordability is driven Evergrand and other private sector Chinese developers

to the brink of bankruptcy. And I've covered that story fairly extensively here on my channel.

Property development in China is estimated to make up about one-third of total economic output

in the country. Now, one of the many problems being caused by the rapid real estate

slowdown is that the biggest source of income for local governments in China is the money

that they raise when they auction off land for development and the right to develop this land

has typically been bought up by private property developers like Evergrand.

In China, the history of private home ownership is quite short.

When Mao took power in 1949, the state seized all private property,

and the state continued to own all property up until the 1980s,

when Deng Xiaoping began experimenting with private property

ownership in select cities. Since then, Chinese real estate prices have skyrocketed, such that China

today has some of the world's most expensive real estate relative to income. In some Chinese

cities, the average home costs over 25 years

of average household income. That compares to eight years of average household income in New York

City. The real estate boom has widened the country's wealth gap and is leaving many people,

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