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What happens if China's 'bubble' pops?


Guest kumar
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http://money.cnn.com/2010/02/05/news/international/china_bubbles.fortune/index.htm

 

...."Because prices are so heavily managed, China could easily flood the U.S. and the world with extremely cheap stuff," says Morici. If nearly everything America buys is made in China now, just wait. The trade imbalance would spiral further out of control; and manufacturers in other nations fighting China for market share would be at a greater disadvantage.

 

"Remember, when we talk about bubbles, the stakes are the future of the Communist Party," says Morici. "They'll try to survive no matter what; and it could mean destroying other economies to do it."

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http://money.cnn.com/2010/02/05/news/international/china_bubbles.fortune/index.htm

"Remember, when we talk about bubbles, the stakes are the future of the Communist Party," says Morici. "They'll try to survive no matter what; and it could mean destroying other economies to do it."

 

He could be talking about Wall Street/Washington.....

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Jim Chanos has a nice talk about China in this video.I know you guys don't like him but still...

 

http://www.youtube.com/watch?v=99HNFCn5RP8&feature=PlayList&p=F034B25AE78645B8&playnext=1&playnext_from=PL&index=6

 

What worries me the most is the 5 Billion of commercial real estate beying built. Anybody can confirm this number with a reliable source?

 

 

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I cant speak on behalf of mainland China, specifically because all the government data that comes out is whatever you want it to be. But, if you use Hong Kong as a proxy, the building of office buildings and luxury suites is out of control. Yields on these properties are only returning around 3.2% where historically they have been in the 4-5% range. The squared value figures for floorspace are up to pre-recession levels already.

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