- Registration time
- Last login
- Online time
- 582 Hour
- Reading permission
Yes there is a bubble, but the bubble will not hurt the economy because half of the real estate is paid in savings so you won't see a USA or Japan style CRASH that brings down the banks
I agree on that; the banks belong to the government, so they won't be destroyed when their debitors can't pay back. But this means, the problem is just shifted, not solved:
1. the debitors will be in deep depts (and probably even without home, although I hope & assume that the government will show some mercy to them and don't kick them out their homes). That means, they don't consume - and therefore, not only the investments, but also the consumptions break down - which will be a very difficult situation for the economy and for the individuals.
2. the banks will be still in debts - debts which are not covered. So their private creditors won't give them money... so the government has to give them. Thus, the government will be in deeper debts.
3. if the central bank doesn't want interest rates to rise and keep the economy alive, they'll have to flush it with liquid money. Even more than the amount already given last and this year...
Anyway, the nearly 3 Trillion Dollars China saved will enable the country to find cheap credits abroad and keep up the stability. So I don't think China is going to collapse or something, but it won't be easy.
I could go on building this possible scenario, but the accuracy isn't given anymore as at this point, the development largely depends on the government.
What I'd suggest to Chinese investors: invest a substential part in gold (kinda risky, as the world is recovering from a crisis, which might lead to a decrease in gold prices) or, if you can, in a foreign currency. China came out as the first one of the crisis, while Europe is right about to come out of it's own crisis - that's why I see huge gain potential for the Euro towards the Yuan (and most other currencies). When investing in China, take risk - invest into export business to profit from the fact that world is lacking behind China in recovering and in order to put urself in a good situation if there are turmoils in chinese markets.
These tipps represent my own oppinion and I do not guarantee for them.