Those 600 million cannot afford to buy real estate even at the crashed price.

The going rate for a 2bhk in a tier 2/3 is still $100-300k, which is still unaffordable given that median urban household income is $6k and median rural household income is $3k.

And this is the crux of the problem in China - all this "overproduction" isn't necessarily due to some grand strategy, it's due to a lack of consumers because salaries are too low.