The ailing Chinese real estate sector poses a risk to the US economy, the Federal Reserve has warned.
The Fed said that heavily indebted companies, such as Evergrande, were a source of potential global contagion.
In its semi-annual Financial Stability Report the Fed warned: “Financial stresses in China could strain global financial markets through a deterioration of risk sentiment, pose risks to global economic growth, and affect the United States.”
The US central bank said it was worried about China because the nation’s “business and local government debt remain large; the financial sector’s leverage is high, especially at small and medium-sized banks; and real estate valuations are stretched”.
The Fed’s warning comes roughly two months after Jay Powell, its chair, described the Evergrande situation as “very particular” to China.
