China's real estate market is the second largest asset class in the world, and it's coming severe pressure with prices falling and developers failing.
China's second largest real estate developer has crashed into filing for Chapter 15 insolvency in New York under the weight of the group's $468 billion of liabilities.
The developer has been under severe pressure, its delayed results having reported mind-boggling losses of more than $80 billion over two years.
What does this mean for Australia?
China is by far the largest trading partner of Australia, and as construction activity flails commodity prices - such as iron ore - are likely to come under pressure, reducing our export earnings.
Of course, the Chinese government has a long history of pumping enormous stimulus into the local economy, and a repeat of this shouldn't be ruled out.
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We can also pretty much forget any Chinese developers being active in Australia over the coming year.
The retreat of Country Garden means that only one Chinese developer remains active in Australia, at Barangaroo.
Bond yields have pulled back over the past day or two, as concerns of contagion increase.
The collapse of such as vast group must surely have dramatic knock-on implications, even in the event of a government intervention.
Indeed, Country Garden may be the next domino to fall, with the risk of default on its bond highly elevated, the group having failed to raise the funds to meet repayments over the past week.
