China’s Real-Estate Bubble Essay

1045 Words Apr 7th, 2013 5 Pages
China’s Real-Estate Bubble

China is one of the major economical players in today’s international market. China’s economy is the “seconds largest in the world after the United States” (Joseph, 63). This is a striking achievement due to fact that China is a “developing country”. China has achieved a great amount of success through the collaboration of political and economical regimes. The economical growth in China led to “one of the biggest improvements in human welfare anywhere at anytime” (Kristof, 15). Currently, China is experiencing a real-estate bubble. This eventually will hit a climax, disrupting the real-estate market within China. This real estate bubble that China is undergoing is considered one of the "biggest housing
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In an attempt to stimulate the economy Chinese authorities allowed a stimulus package dealing with the real-estate sector of the economy. Chinas massive monetary stimulus package seems to "risks triggering large asset-price increases, a housing bubble, and bad debts from the financing of local-government projects" (Leung, China Must Pare Stimulus). According to Barclays China has four factors supporting its property growth "strong income growth, urbanization, home upgrading and favorable demographic change, limited investment alternatives, households’ strong balance sheets". This provides a good base to withstand the real-estate bubble’s burst.
Today globalization has an impact on all nations. China is a nation that many rely heavily on. This shows an importance with the economical welfare of China. If China has a downturn in its economy other nations are impacted as well. China contributed “19% of the world's economic growth in 2010, and that's expected to increase to 24% this year” (Miller, What If the China Bubble Bursts?). This depicts the impact that china could have on the economical growth of the world. Due to the economical situations within the United States and Europe, China's growing strength is essential for the recovery of U.S. and Europe. A major issue is "if Chinese land prices plummet, there will be less demand for raw materials and a steep decline in world commodity markets and

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