Despite the tight liquidity in Ordos, Inner Mongolia, local residents can still afford to buy homes and luxury cars, but they pay not with cash but in kind, the China Securities Journal reported Monday.
Before they used to exchange their bottles of baijiu from their stash of high-end liquor for luxury cars from heavily indebted companies, but after the local government banned the practice, people used gold and silver as “currencies” to continue the trade, according to the newspaper.
Ordos residents use gold to buy luxury cars, and trade silver for houses, a local merchant was quoted as saying.
This is so because luxury cars are considered more valuable than real estate in the city, where houses are aplenty because of a previous construction boom.
The bursting of the housing bubble has led to the liquidation of many of the residents’ assets, but there is no one interested in buying houses and apartments, local sources were quoted as saying.
The size of non-performing debts outside the banking system in Ordos is estimated to be around 200 billion yuan (US$32 billion), as up to 80 percent of local residents have participated in shadow banking, the report said.
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