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Thread: Can Chinese Real Estate Bubble Bring World Economy Down?
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[quote=JIMMYB,491005]On March 1, China issued new regulations on China Real Estate Market. No.1 Impose 20 percent tax on capital gains from home sale No.2 higher down payments and interest rates on second home No.3 new property taxi coming soon Like the previous regulations issued before, the new regulations has the same goal, controlling the housing price and curbing the bubble in case the real estate collapses. Many people believe that there is a huge bubble in the Chinese real estate market. Once the bubble breaks, Chinese real estate will collapse. As a result, Chinese economy will step into recession. Why? The real estate contributes 10 percent to China’s GDP. Yesterday, I watched a short video from CNBC. Two American professors share their opinions on Chinese real estate market. According to Peter Navarro, ‘Death by China’ author, the China real estate bubble will break if China’s economic growth is below 5%. And the direct result is that China will dump cars, steel and other Chinese products into the USA. This will lead into high unemployment rate in the USA and the US economy will be heavily affected. On the other hand, if Chinese economy collapse, Australia, Brazil, Chili, Peru, Canada and other countries that rely too much on the export of commodities will suffer a lot too. However, Ann Lee, a professor from the New York University has different opinion. According to her, China real estate bubbles doesn’t really exist. China has been trying many ways to cool down the real estate market for years including increasing the lending rate and deposit reserve rate. However, the government regulations don’t work well. Why? The demand in the real estate market is too huge. Ann suggests all speculators and investors should sell out their houses before the Chinese real estate market cools down. During the debate, Peter interrupts Ann many times and says some dirty words ‘Shame on you’ to her. Ann even doesn’t have a chance to state her opinion clearly. The hostess at last cuts off the debate. Do you think there is a huge bubble in Chinese real estate market? If so, will the bubble derail the global economy? [/quote]
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