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Will China’s Real Estate Bubble Burst?

"Two years after the US subprime crisis, China is seeing its own real estate bubble as a result of massive state stimulus programs. Many economists are warning it could burst soon."

“Two years after the US subprime crisis, China is seeing its own real estate bubble as a result of massive state stimulus programs. Many economists are warning it could burst soon.” Spiegel says the consequences for the world economy are difficult to predict: “The bubble could burst in two years, says Cao Jianhai of the Chinese Academy of Social Sciences in Beijing, and then it will be up to Hu’s and Wen’s successors to correct the situation. In the worst case, Cao predicts, there could be a large-scale run on the banks. ‘Of the 4 trillion yuan in the Chinese economic stimulus package, 3 trillion are in fact coming from local governments—and they borrowed the money from the banks.'”


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