中国是一个泡沫

Is China A Bubble?

Sachin Matpal
Jaya Roopwani 1st July 2010
Contents

China – Overview
Chinese Retail Market
How the bubble started
Real Estate Boom
Uncovering the realities
 3

In 2009, the GDP of China amounted to about $4.8 trillion

Factor Number and Standings

Population 1.3 Billion (2009; Largest)
Size 9,572,900 km2 (4th Largest)

GDP Nominal: : $4.814 Trillion (2009; 3rd Largest)

PPP: $8.789 Trillion (2009; 2nd Largest)
GDP per capita Nominal: $3,677 (2009; 98th)
PPP: $6,567 (2009; 99th)
Labour Force 812.7 Million (2009; Largest)
Exports $1.20 Trillion (2009; largest)
Imports $1.01 Trillion (2009; 2nd Largest)
GDP Growth (2000-09) 9.86 % (average)

Source: CIA World Factbook

 4

In the last decade the Chinese economy grew at about 10% per
year
6,000
GDP of China $4.81 trillion
5,000
($ billion, 1960 - 2009)

4,000 Average Growth Rate: 9.86%

3,000

2,000

1,000
Reforms:
3 step strategy
0

~ $60 billion
8
19
2
19
6
19
4

19
0
0

0
8

8
8
8

8
7

0
7
7
6
19

19

19
8
7
2

2
6
19
6
19

19
6
19
4

4
8
6
19

19
19
6
19

19
4
2
6
9

19
19
19
7

0
0
0
0
1

8
2

6
4
2
2
2
0
2

Source: World Bank

 5

Share of GDP in 2009

GDP of China
($ billion, 1960 - 2009)

10.9%
75% in 1975

8% of world total

48.6%

40.5%

Source: CIA World FactbookIndustry (48.6%) Services (40.5%) Agriculture (10.9%)

China – Overview

How the bubble started

Real Estate Boom
Uncovering the realities
China – Overview

How the bubble started

Real Estate Boom
Uncovering the realities
Facts
▫ Property and construction represent about 10% of China’s GDP


▫ Home prices in 70 Chinese cities rose by 12.8% in the year to April



▫ Total sales value of homes—384.6 billion Yuan ($56.3 billion) in April—and

the floor space sold (72.4m square meters)
▫
▫ The ratio of average home prices to average annual household incomes
(considered foremost indicator of a Bubble) is almost ten in China; in most
developed economies it is only four or five.


•
House Prices
China – Overview

How the bubble started

Real Estate Boom
Uncovering the realities
Why China is not a Bubble ?
Mortgages grew by 53% in the year to March. But the Housing loans/GDP is still only
15.3%

 The average mortgage is for less than 50% of the value of a home

 One-quarter of Chinese buyers pay by Cash .

 China’s property boom is being financed mainly by saving, not bank lending.

 Most of the speculative investments are especially concentrated in tier-1 cities like
Beijing, Shanghai, and Shenzhen whereas still tier 2 cities lack adequate infrastructure
investments





Why China is a Bubble ?
• Cheap money to support overvalued assets.
•
• Cheap money came from past exports and also from hot money inflows due to
the yuan’s peg to the dollar and weak Fed dollar policy. Neither money source is
sustainable.
•
• Extra goods and services produced by chinese workers’ higher productivity is not
consumed either by economic crisis stricken westeners or by domestic market.
•
• Property in China now costs roughly the same per square meter as in the US.
The only difference is that your average Chinese worker makes 1/7th as much
money as your average US worker.
•
• China’s “boom” has almost entirely been the result of financial speculation
because Chinese investors taking out loans and piling into the markets
Proactive China
• New curbs on housing speculation, raising down-payment requirements
and mortgage rates


• Buyers must make at least a 50% down payment on a second home,

even if it is their first mortgage


• Beijing they cannot buy a third home, even with their own money


• Prices of new homes fell by over 20% on average in the first week of
May in Beijing, Shanghai and Shenzhen


A bursting property bubble might do damage to China’s lenders, ruin local

exchequers and cast a pall over its economy—and the countries which sell to
it.
Conclusion
 Its not a Bubble to Burst but waiting a major Correction in Property Prices


 There is strong domestic demand which can be a market for excess goods
produced .


 Daniel Gross, author of the book “Pop! Why bubbles are great for the economy,”
argues that the US economy has thrived in part because of bubbles exaggerating
the potential for exciting new technology, then crashing and creating cheap
capacity. For example, Google was able to buy a network of servers big enough to
feed the US market, on the cheap Later that century business benefited when an
over supply of railroads led to cheap transport, and trade across the states then
boomed.


 The Pace of the Dragon may get slowed but only to come with extra zeal and
strength .
▫
▫