Post by jeffolie on Jun 27, 2011 10:14:55 GMT -6
When will China collapse financially just like Japan did in 1990?
My guess is 2014 and/or beyond ... when buyers of their stuff can not buy
Europe buys more than America from China.
50% of China's GDP is linked to the fate of its real-estate
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China Risks Being Next Property-Bubble Blow Up
"....Between 2006 and 2010, investment in residential property jumped by half to about 9% of China's gross domestic product, according to Mr. Lardy. During that time, real-estate prices in major cities in China roughly doubled...because of the paucity of alternative investments for Chinese savers and the reliance of local governments on land sales for revenue. At some point, she figures, the boom could give way to a bust....Mr. Lardy expects the cycle to play out more quickly. Kynikos Associates short-seller James Chanos has been predicting for two years that a crash is imminent. No one knows for sure, of course. A number of events could trigger a big selloff, including a sharp rise in interest rates, the emergence of other investment options and higher taxes on property....Estimates of how badly the economy could be damaged by a real-estate slump reflect different views of the structure of the Chinese economy....The strength of the real-estate market directly affects the construction, steel, concrete, power and appliance industries. In all, about 50% of China's GDP is linked to the fate of its real-estate market, says Standard Chartered economist Stephen Green...."
"...Prices at auctions for residential land in eight major cities doubled in 2009 largely because of highly leveraged purchases by state-owned companies, he and three co-authors calculate. In March 2010, state-owned companies bid up the price of one piece of Beijing land to 10 times the asking price, according to one analyst...The magnitude of the leveraged purchases is hard to gauge....One indication: Shortly after the Beijing land sale, the Chinese agency that oversees state-owned companies ordered 78 firms—whose charters had nothing to do with real estate—to cease buying and selling property. Nearly a year later, in February 2011, state-owned Xinhua news agency reported that just 14 firms had left the business and another 20 were expected to get out later in the year...."
"....few expect the anti-bubble measures to last, given concern by the government and Communist Party about sustaining growth, which they see as a key to social stability..."
"... a Fitch Ratings Service analyst in Beijing, who has documented how China's official statistics understate total lending, said state-owned firms have taken on heavy real-estate debt. Thus a sharp fall in prices would produce a raft of nonperforming loans and "would have an outsized impact on Chinese banks." ... In other words, a real-estate collapse could lead to a banking crisis—the kind of woes that have undermined the U.S. and Japan...."
online.wsj.com/article/SB10001424052702304569504576403793565756986.html
My guess is 2014 and/or beyond ... when buyers of their stuff can not buy
Europe buys more than America from China.
50% of China's GDP is linked to the fate of its real-estate
====================================================
China Risks Being Next Property-Bubble Blow Up
"....Between 2006 and 2010, investment in residential property jumped by half to about 9% of China's gross domestic product, according to Mr. Lardy. During that time, real-estate prices in major cities in China roughly doubled...because of the paucity of alternative investments for Chinese savers and the reliance of local governments on land sales for revenue. At some point, she figures, the boom could give way to a bust....Mr. Lardy expects the cycle to play out more quickly. Kynikos Associates short-seller James Chanos has been predicting for two years that a crash is imminent. No one knows for sure, of course. A number of events could trigger a big selloff, including a sharp rise in interest rates, the emergence of other investment options and higher taxes on property....Estimates of how badly the economy could be damaged by a real-estate slump reflect different views of the structure of the Chinese economy....The strength of the real-estate market directly affects the construction, steel, concrete, power and appliance industries. In all, about 50% of China's GDP is linked to the fate of its real-estate market, says Standard Chartered economist Stephen Green...."
"...Prices at auctions for residential land in eight major cities doubled in 2009 largely because of highly leveraged purchases by state-owned companies, he and three co-authors calculate. In March 2010, state-owned companies bid up the price of one piece of Beijing land to 10 times the asking price, according to one analyst...The magnitude of the leveraged purchases is hard to gauge....One indication: Shortly after the Beijing land sale, the Chinese agency that oversees state-owned companies ordered 78 firms—whose charters had nothing to do with real estate—to cease buying and selling property. Nearly a year later, in February 2011, state-owned Xinhua news agency reported that just 14 firms had left the business and another 20 were expected to get out later in the year...."
"....few expect the anti-bubble measures to last, given concern by the government and Communist Party about sustaining growth, which they see as a key to social stability..."
"... a Fitch Ratings Service analyst in Beijing, who has documented how China's official statistics understate total lending, said state-owned firms have taken on heavy real-estate debt. Thus a sharp fall in prices would produce a raft of nonperforming loans and "would have an outsized impact on Chinese banks." ... In other words, a real-estate collapse could lead to a banking crisis—the kind of woes that have undermined the U.S. and Japan...."
online.wsj.com/article/SB10001424052702304569504576403793565756986.html