Six senior officials and policy advisers told the Financial Times that Chinese Vice Premier Liu He believes the government underestimated the economic impact of the crackdown on housing companies and the closure of some in Shanghai.

Some local governments have recently loosened their real estate policies, and the committee favors giving developers more flexibility in using advance payments from homebuyers.

The Financial Times cited a government adviser who shared Liu’s concerns that continued industry deterioration may result in an increase in bad debts and the failure of the entire financial sector. Meanwhile, the Central Bank governor, Yi Gang, is worried about a broad rate cut.

However, other senior authorities have opposed Liu’s efforts to relieve pressure on the real estate sector.

Vice Premiers Han Zheng and Hu Chunhua have argued for continuing pressure on developers and tightly supervising how project earnings are spent.

For Han and Hu’s supporters, predictions of an impact on China’s primarily state-owned banking sector were exaggerated. One said that not every bank would go under and that China would always have healthy banks to bail out troubled ones.

China’s internal policy conflicts reflect difficult decisions. The Chinese government strives to strengthen China’s economy and implements a strong “Zero-COVID” strategy, and controls heavily indebted property developers.

In addition to Chinese top leaders’ different perceptions, China’s economic recession is a noteworthy point.

Recently, Premier Li Keqiang has emphasized that the downward pressure on China’s economy is increasing. The Associated Press (AP) reported that China’s gross domestic product (GDP) increased by 4.8% year-on-year in the first quarter of this year, while retail sales fell by 3.5% in March.

CNN cited data from the Institute of International Finance (IIF) showing that foreign capital lost from China reached a record high of $17.5 billion.

Bloomberg cited official figures from the Chinese government; foreign investors sold a net 35 billion yuan ($5.5 billion) of Chinese government bonds in February, the greatest monthly drop in history.

The drop hit a high record of 52 billion yuan ($8.1 billion) in March.
According to Chinese language media, Li Yanming, a Chinese expert in the U.S., said that the internal conflict within the Chinese government is very serious.

Li said China’s economy is in a slump, and China is disintegrating. According to Li, this is a precursor to the collapse of China, which is struggling both internally and externally.

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