To: TobagoJack who wrote (101891 ) 7/30/2013 4:04:02 PM From: Snowshoe Read Replies (3) | Respond to Regarding China urbanization... >>If all works out over the next 25 years, the last would be seen as ... Warm-up<<Preparing for China bubbles to burst: Andy Xie marketwatch.com China’s land market reached a turning point last year. The reasons are, first, that the quantity expansion-based growth model reached its limits, and, second, that the U.S. economy began to recover and with it the dollar. The market recovered in the last quarter of 2012 and the first quarter of 2013, which was a bounce in a bear market. Now begins the second leg down. There could be another recovery in early 2013. Like in Japan and Taiwan, lower lows and lower highs in both prices and trading volumes will track every wave. China’s land price will reach bottom in 2017 at the earliest. The bottom in 2017 is contingent on the country successfully reforming its growth model. If reforms aren’t carried out and money is used to keep afloat bankrupt financial products, developers and local governments, the price of land will fall for many more years. The debts in China’s property bubble are mostly held by local governments and property developers. Total household debt is one-third of gross domestic product, compared to nearly 100% when the United States’ bubble burst in 2008 and Japan’s in 1992. On balance, the bursting of the property bubble will boost China’s household demand. The lower property prices will decrease the need for savings. China is experiencing widespread shortage of blue-collar labor. The shrinking of the working age population will worsen the shortage. This is a major source of inflation. As the cooling property market decreases labor demand somewhat, it won’t lead to serious unemployment and may decrease the inflationary pressure in the labor market.
