Were the Chinese not paying attention to the global housing debacle which crushed the global economy over the last decade?
And if they were paying attention, why do they think their housing supply won't come crashing down like (cough, cough) some other countries?
Perhaps, it is...
"No nation has ever built so much so fast"
Excerpt from CBS News 60 Minutes:
Lesley Stahl: How important is real estate to the Chinese economy? Is it central?
Gillem Tulloch: Yes. It's the main driver of growth and has been for the last few years. Some estimates have it as high as 20 or 30 percent of the whole economy.
Lesley Stahl: But they're not just building housing. They're building cities.
Gillem Tulloch: Yes. That's right.
Lesley Stahl: Giant cities being built with people not coming to live here.
Gillem Tulloch: Yes. I think they're building somewhere between 12 and 24 new cities every single year.
Unlike our market driven economy, in China it's the government that has spent some $2 trillion to get these cities built - as a way of keeping the economy growing. The assumption is "if you build it, they'll come." But no one's coming.
If this massive bubble bursts in China, how may it impact you? Good question.
If you are in one of these nine U.S. cities selling the most goods and services to China, you may see the ripple effects. Even if you are not in one of these nine cities, the ripple impact could be global, as large multinationals - which have made huge bets on China and institutional investors get caught holding the bag on enormous investments.
It's wise to be aware.
Until Next Time,
Craig Turley
H/T: 24/7 Wall Street
You may not be planning to purchase a new home in Beijing, or refinancing a home in Shanghai - but if you live in Arizona or California - feel free to contact me for a professional mortgage consultation.
