China may not be mirroring every mistake made by the U.S. but they seem to be making their own, unique mistakes leading up to their crash:
"There’s a monumental property bubble and fixed-asset investment bubble that China has underway right now,” Chanos, founder of New York-based Kynikos Associates Ltd., said in a Jan. 25 Bloomberg Television interview. “And deflating that gently will be difficult at best.” Chanos predicted that China could be “Dubai times 100 or 1,000.”
A burst property bubble could slash bank lending and drag growth down for years. The risks are so great that a decade of little or no growth, as Japan experienced in the 1990s, can’t be dismissed, Patrick Chovanec, associate professor in the School of Economics and Management at Beijing’s Tsinghua University, told Bloomberg.
“You have state-owned enterprises using borrowed funds from the stimulus bidding up the price of land -- not even desirable plots of land -- in Beijing to astronomical rates,” Chovanec said. “At the same time you have 30 percent-plus vacancy rates and slumping rents in commercial property so it’s just a case of when you recognize the losses -- or don’t.”
China’s lending surged to 1.39 trillion yuan in January, more than in the previous three months combined. Property prices in 70 cities climbed 9.5 percent from a year earlier, the most in 21 months.
How much of the asset price growth in Beijing is due to the Chinese investor liquidating their savings accounts vs. E-Z FAST MONEY LOANS?
Half of the 5.8 trillion yuan (£522bn) of stimulus loans issued by Chinese banks have flowed into the country's stock and property markets, inflating new bubbles, according to senior Communist officials.
“When funds are circulating and swelling inside the financial system, instead of servicing the real economy, we see this as a sign of bubble formation,” said Wei. “Now the rapidly circulating funds can easily boost the stock market and produce new financial bubbles, and lift real estate prices as well.”
Another official, Cheng Siwei, the vice-chairman of the standing committee of the National People's Congress, said around 2.4 trillion yuan of the 4.58 trillion lent in the first three months of the year had been used for "real" investment, while the remainder was used for speculation.
China will grow but can it grow naturally without Central Party Headquarters manipulation?