China faces vast real estate bubble

The wages of state intervention, in China or anywhere:

The nightmare scenario, though, is a bubble that bursts. A major drop in prices would ripple through the Chinese economy and potentially the rest of the world. Real estate investment constituted 13 percent of the country’s gross domestic product last year. The sector feeds steel, concrete and dozens of other industries.

A downturn would also be devastating to the wealth of Chinese households.

Urban housing stock made up 41 percent of Chinese household wealth in 2011, compared with 26 percent in the United States, according to Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics.

See, As China’s economy slows, real estate bubble looms.

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