China Property Bubble Deflates
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  • Luke Lea

    What else would you expect from a centrally planned economy? The laws of supply and demand (or in China’s case of demand and supply) are only allowed to operate in the export sector. Everywhere else it is the political authorities (party elites) who make the big capital budgeting decisions with no real market signals to guide them. A modern industrial economy is far, far too complex to do this rationally. Hence apartment towers with no tenants, high speed trains with no riders, and, apparently, whole cities without residents.

    According to Western observers of the Chinese banking system, this isn’t likely to end happily, or even peacefully, when you consider that much of the capital being wasted comes out of the private life-time savings accounts of Chinese workers who — because of China’s “one-child-per-family” planning policy — were relying on this money to take care of themselves in old age.

    For them, like the Irish of yesteryear, history truly is a nightmare from which they are trying to awake, as Stephen Daedelus famously defined it in James Joyce’s Ulysses

  • More data coming out suggesting China’s housing market might be hitting a wall:

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