China’s largest private property developer, Country Garden, has run out of cash and is likely to default on a US$15 million coupon payment at the end of a 30-day grace period.

In 2021, Evergrande, another huge Chinese real-estate titan, defaulted, representing the start of a real-estate meltdown that has rocked China’s economy.

The two companies alone have a combined debt of $500 billion – and there are serious doubts about whether Beijing is able to steady the implosion.

There is one important takeaway from this serious economic situation: Diversification is critical.

China’s decades-long reliance on real estate as a primary driver of economic growth is fundamentally flawed, for several reasons.