China's real-estate sector is not on track for a crash, as demand is high and leverage is low,...

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Herr Hansa Comments (2899)
 
When we look at private debt to GDP and fixed investments as a percentage of GDP, then the balance in China is above the same point at which other countries economies have collapsed, like Japan in 1989, South Korea in 1997, the United States in 2007, and Spain in 2008. There is almost no way to engineer a soft landing from the current levels.

http://bit.ly/13I6pDs

I suspect the previous leadership wanted the historical perspective of a booming economy, and that may be part of the reasoning behind doing little to correct imbalances. Unfortunately that makes the tasks of the new government that much more difficult. A massive revaluation, or float, or the Yuan might change this, but not without high inflation and some domestic economic consequences.
7 Mar, 02:52 PM Reply Like

Sam Liu Comments (2735)
 
Who is fueling the real estate demand?
7 Mar, 09:41 PM Reply Like

Herr Hansa Comments (2899)
 
Hedge funds in the US, but a different situation in China. Mainly banks and more wealthy investors, largely to move into some sort of hard asset prior to the eventual revaluation of the Yuan. The problem is that borrowing is too high, and leverage is being used to excessive levels. Some news sources provide background information for this, like FT Alphaville, as well as some boutique investment analysts.
8 Mar, 12:43 AM Reply Like

Sam Liu Comments (2735)
 
Hedge Funds

Well, that sounds like a financial engineering risk. Just another bubble, cn bubble.

But who does it hurt since there does not seem to be any equity financing in cn.
8 Mar, 12:47 AM Reply Like

Herr Hansa Comments (2899)
 
The pain comes later when the bubble pops, and the Chinese central bank tries to move to engineer a soft landing.
8 Mar, 12:48 AM Reply Like