Editor’s note for Thursday, September 23, 2021

My thoughts today:

The Evergrande saga is becoming a Rorschach test for views on China: The “coming collapse” crowd see it as evidence that they will soon be proved correct, the usual Poylannas remain blithely optimistic, and people like me think that China will muddle through this, as it has done through various potential economic and political crises over the past few years.

Think tank MacroPolo is in my camp, even using the same vocabulary: China’s property sector will muddle through rest of year, despite Evergrande.

But that does not mean things are not changing: “Chinese authorities are asking local governments to prepare for the potential downfall of China Evergrande Group…The officials characterized the actions being ordered as ‘getting ready for the possible storm,’” reports the Wall Street Journal.

And it’s not just Evergrande. Before that company started attracting global headlines this week, The Pekingnology newsletter, written by an editor at a state news organization, translated a “recent Chinese government document that…is underreported and of significance to people interested or with a stake in China’s breathtaking urbanization — now shifting gears.” The takeaway from the document:

The real estate development model that powered much of China’s economic growth over the last three decades is over.

Upcoming event: On September 30, live over Zoom, I’ll interview technologist, investor, and co-author of AI 2041 Kai-fu Lee. Please join and ask questions.

Our word of the day is Ethiopia (埃塞俄比亚 āi sài é bǐ yà).

—Jeremy Goldkorn, Editor-in-Chief