Essay on China’s Real-Estate Bubble

Words: 1052
Pages: 5

China’s Real-Estate Bubble

China is one of the major economical players in today’s international market. China’s economy is the “seconds largest in the world after the United States” (Joseph, 63). This is a striking achievement due to fact that China is a “developing country”. China has achieved a great amount of success through the collaboration of political and economical regimes. The economical growth in China led to “one of the biggest improvements in human welfare anywhere at anytime” (Kristof, 15). Currently, China is experiencing a real-estate bubble. This eventually will hit a climax, disrupting the real-estate market within China. This real estate bubble that China is undergoing is considered one of the "biggest housing
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The U.S. economy would greatly be affected by the outcome of Chinas real-estate bubble. If China is placed in a situation where the economy begins the run in a downward spiral "Growth may slow to 8.7 percent by the end of 2011" (Leung, China Must Pare Stimulus). If China's property sector goes through a downturn, “the demand for things like cement, steel, concrete, aluminum will all be affected" (Cambreleng, China property market dip).
The Chinese housing market is currently in a difficult period. Currently the Chinese "property markets exhibit significant risks of a bubble" (Huang, China Beyond the Miracle Part 3). This exposes the necessity to resolve the issue. Governmental policies have attempted to solve the issues. The current restrictions "on housing purchases are only a second-best policy option" that is controlling the real-estate economy. (Huang, China Beyond the Miracle Part 3). Ironically, the difficulties China is having with the real estate issue coincides with governmental polices. Such has the tightening of monetary policies and restrictions on housing purchase. There is a possibility that housing prices may decline by “10-30% during the current cycle” this depends on the policy restrictions and policy adjustment made by the government. (Huang, China Beyond the Miracle Part 3).
The main question is how the bubble has not popped yet for China. According to studies it is believed that the household