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Why A China Crash May Be Imminent
Aggregated Source: China Challenges

Forbes ays:

It’s obvious that the government is concerned with three things:

  1. Local governments are again turning to fixed asset investment, particularly property sales, to boost their revenue and GDP. The problem is that local governments own the land so they’re incentivised to sell that land to get revenues. These governments are already heavily in debt and this is exacerbating the issue.
  2. Property sales have led to increased bank lending, as January figures attest too. This is not what the government wants given total credit to GDP is already high, at 190% according to Fitch.
  3. More broadly, the property bubble has never really deflated. As economist Andy Xie points out, NBS data shows 10.6 billion square metres of property was under construction at the end of last year, half in residential and the other half in office/commercial. If you put market prices on this inventory, it equates to 1.5x Chinese GDP. Quite the bubble.

Read more: http://www.forbes.com/sites/jamesgruber/2013/02/23/a-china-crash-may-be-imminent/?goback=%2Egde_36656_member_217051151

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