Evergrande's collapse could be worse than expected and spark a slowdown in China unseen since the end of the Cultural Revolution 45 years ago with huge ramifications for Australia.
China's second-biggest apartment developer has debts of more than $400 billion and Oxford Economics fears the crisis could spark a sharp slowdown.
This would cause China, Australia's biggest trading partner, to significantly cut back on its need for iron ore, the commodity used to make steel, as tens of millions of apartments remain empty.
Economists Louis Kuijs and Tommy Wu modelled several scenarios, including one where China's annual growth rate plunged to just one per cent.
This would be the weakest gross domestic product expansion since 1976, the year China's Cultural Revolution ended with the death of Communist dictator Mao Zedong.
Evergrande's collapse could be worse than expected and spark a slowdown in China unseen since the end of the Cultural Revolution 45 years ago with huge ramifications for Australia. China's second biggest apartment developer has debts of more than $400 billion and Oxford Economics fears the crisis could spark a sharp slowdown
'According to our modelling, a more severe housing market downturn in China than we currently expect would slow China's growth markedly and have a major impact on global growth,' it said.
China in 2020 was the only major world economy to avoid sinking into recession, managing growth of 2.3 per cent despite harsh lockdowns.
Evergrande missed another annual interest payment deadline to bondholders on November 6, triggering another 30-day grace period.
The building giant, founded by billionaire Xu Jiayin in 1996, previously missed three other deadlines in September and October and the Reserve Bank of Australia fears it could miss more deadlines in 2022, leading to a potential collapse.
While the world's second-biggest economy weathered Covid, Oxford Economics is concerned China would be in trouble if it experienced a property downturn similar to what the US and Spain had during the Global Financial Crisis of 2008.
'Our baseline
