Residential real estate construction now accounts for nearly ten percent of the country's total GDP -- four percentage points higher than it did at the peak of the U.S. housing bubble in 2005. Bullish analysts have long argued that large-scale urbanization and rapidly rising incomes warrant such an extraordinary boom.
10% of total GDP is significant, but when the economy is growing at 10% a year[1] it can afford to drop quite a lot without necessarily causing an economic meltdown.
To be clear - I'm not claiming that a drop in real estate prices won't cause problems for the entities involved in the Chinese real estate sector. What I am claiming is that it might not be as catastrophic as people expect based on the US experience.
Residential real estate construction now accounts for nearly ten percent of the country's total GDP -- four percentage points higher than it did at the peak of the U.S. housing bubble in 2005. Bullish analysts have long argued that large-scale urbanization and rapidly rising incomes warrant such an extraordinary boom.
10% of total GDP is significant, but when the economy is growing at 10% a year[1] it can afford to drop quite a lot without necessarily causing an economic meltdown.
To be clear - I'm not claiming that a drop in real estate prices won't cause problems for the entities involved in the Chinese real estate sector. What I am claiming is that it might not be as catastrophic as people expect based on the US experience.
[1] http://www.google.com.au/publicdata/explore?ds=d5bncppjof8f9...