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I hope this site is not sponsored by the U.S. government.
It is very laudable to be bringing free speech to every corner of the world.
But, I presume the author and his institution have objections to the political leadership of China.
His knowledge of economics and financial markets is limited.
He gives you many facts. The problem is that none..none of them have anything to do with whether China has a housing bubble.
First, China does not have a housing bubble.
The author is bringing his experiences in Western and U.S. real estate markets and applying them to an economy where that model is not appropriate.
China's leaders are following the developmental state model and not a western neo classical model of economic development.
In simple terms, that means that when a developer sells a condominium in China 40% to 50% of the selling price goes to the state.
Real estate development in China, like autos, is subject to enormous consumption taxes which fall on the top 20% of the population.
Since the State is selling the land to the developer and determining the price the quantity and pricing of new housing is determined roughly by the State.
Since China has a growth rate goal of roughly 7% to 8% for 2016 and wages and benefits are rising by almost 10% yearly the State has to create infrastructure in advance of its need. This is similar to what Amazon does in the U.S.
Ninety percent of the empty projects of two years ago are now filled and since large downpayments are required, as the author states, it would take a drop of 30% for 11% to be under water.
I presume he pulled this stat without thinking. Good luck betting against China and their economy.
May 07, 2015 11:29 AM
Reply to this commentManOhMan! And the PRC (Pigs Reign China) wants to surpass the US in 2020. LOL. Well, they probably could do that because the Chinese
a) became extinct, or
b) immigrated en masse to the US, Australia and Canada.
Jun 30, 2014 12:07 PM
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Well, that makes sense because it's also a country filling up with empty people.
Mar 04, 2016 12:33 PM
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