This isn't about state order vs liberty. There is an old Chinese proverb that said. "Care about nothing as long horse keep racing and people keep dancing". When the economy is good, people don't really care about anything, it's only start being an issue when you can't keep the horsie racing and can't keep people dancing.
The problem for the Chinese is they hedged a lot of money in real estate due to their cultural belief. And when the real estate market is good, nobody cares because it brings them money, but then real estate and basically every non-volatile asset have the same issue, it's what people called "elastic-economy" imagining trading in Real Estate market. You can only trade up, because otherwise you can't sell them, or more likely you wouldn't and unlike gold or blue-chip investment, they don't have a stable price so when the supply of real estate overwhelms the market because people keep invest in it. Then it would be like the last person who buy GameStop share after that reddit "heist".
The different of investing environment between China and the West (US specifically) are very different, in the west, that liberty give us the resilience, say if we or the government or the market had made a mistake, that liberty of investment is going to allow a buffer zone for people to move around, so it bounce back quicker. In China, the market environment is basically good when it was bull and extremely worrisome when it was red. Because you don't have the liberty to invest however you want. You basically invest in what the Chinese government want you to invest in, again, if this is a good market, there ain't no problem, but if the market performance was bad, your investment is basically there to fill a pit.
The issue for Chinese economy is that they can't get out of the cultural constraint, Chinese invest in housing, their home, because growing up in Hong Kong, that's what you were told. Problem is that is the least expansive debt there can be. Because other than the land your house/apartment/condo sitting on, that piece of investment have no actual value. As I said above, it's A-OK when the land value is high, but when the valuation is low, and you are holding a loan that overvalued, well, you're fu.ked
Another thing is the government does not act as a guarantee in this investment. The problem is, when you are talking about repayment and loan health, that's a very risky factor to have to re-mortgage your home. Which if I am a principal lender, I probably wouldn't accept real estate as a security. Because it is a home, it doesn't generate income like machinery and commercial real estate. It's like those dudes in Pawn Stars always say "It might have value to you, but I need to find a buyer".
People don't understand who US currency and fiscal policy work, the issue here is USD is not just being used by the United States as tender currency. China have around 300 billion USD in their central bank. Australia Reserve Bank is holding 40 billion, each reserve/central bank in the world hold some USD (probably except Russia now) in some respect which mean those USD (even it was just a line of credit, not printed currency) are not going to be in regular circulation. Which mean as long as the world is doing this, US is always going to be in debt, in fact, the more US develop, the more debt they are going to be issuing, because on one side, you need money to developed, and on the other, a better US economy mean the world hold more USD as securities, which mean less USD in circulation. Also worth notice that most US debt are held within the United States, we are talking about around 23 trillion of the 30.4 trillion US debt were held WITHIN the US. That in itself are basically stuck in the Federal Loop, (generate debt -> raise tax -> pay off interest -> loan more) rinse and repeat, yes, the debt goes bigger, but so did the security pool.
China on the other hand, as I mentioned before, have majority of their debt stuck in real estate market, which basically depends on the market value, they don't generate fixed/liquid. In fact, in most western world, real estate investment is not really counted as investment. It's very much different for someone to invest a home and charge rent in return, than a person invest in a company that produce income thru commercial activities......Which mean the Chinese debt would have been a lot harder to clear and if the market collapsed, that is going to send shockwave to their economy in general. That's why we see 2 out of the 5 big real estate investment company goes bust and there are pretty much nothing anyone, including the government can do about that.
