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A China Bubble?

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There is no end of commentary about China’s real estate bubble, with an even split between those who believe it may pop at any moment, and others who argue it never will.

The alternative ploy — that it doesn’t exist — doesn’t get same airing that it did in the US before the subprime crash. Instead, the “it’s a bubble, but it won’t burst” case is that the bubble is too important to China’s continued growth to be allowed to burst, and — unlike the US — China has the wherewithal to keep it going, at least for a while. (See There will be no Minsky moment for China, March 25; China Can’t Afford to Let Its Housing Bubble Pop, January 30;Templeton Braving China’s Housing Bubble, February 28; Chinese Property Sector Will Not Implode Like America’s Subprime Market, March 11.)

I have deliberately refrained from this discussion, mainly because I prefer to work from data, and I prefer data that — despite some warts — I trust. Until recently there was no publicly available data on China’s debt levels, which is a key metric for me; fortunately that has been remedied recently by the Bank of International Settlements, and I’ll analyse that in a future post. But whatever it reveals, I also concur with the alternative ploy to some extent — that though there is a bubble, China’s capacity and determination to contain problems is much more impressive than the US’s.

But I also wanted to see the phenomena first hand before I commented. Anecdotal and eyewitness evidence counts for something.

Click here to read the rest of this post.


Source: http://www.debtdeflation.com/blogs/2014/04/21/a-china-bubble/#utm_source=feed&utm_medium=feed&utm_campaign=feed


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