Update: we removed the embedded video that was posted above, since CBS kept replacing it with other clips. Here's a direct link to the video.
As our readers know, we follow with keen interest events in the People's Republic of China (does anyone call it that, anymore?), especially those issues related to property and a budding system of private rights. Here's the latest from CBS's venerable 60 Minutes, about the housing and real estate markets there. If true, it's scary stuff, especially when you consider we live in a global economy, with so much of our goods supplied by the PRC.
China has been nothing short of a financial miracle. In just 30 years, this state-controlled economy became the world's second largest, deftly managed by government policies and decrees.One sector the authorities concentrated on was real estate and construction. But that may have created the largest housing bubble in human history. If you go to China, it's easy to see why there's all the talk of a bubble. We discovered that the most populated nation on earth is building houses, districts and cities with no one in them.
Here's the full text of the story if you prefer not to sit through the video (but you really should, some of it is eye-opening). But we're not so sure China is bound for the same trouble that the U.S.and European housing markets are enduring. Unlike those economies, China's is primarily built on cash and savings, not credit and leverage. There are a few banks and their deposits are high. People there purchase property for different reasons than people here. China's massive population creates huge demand. Debt is internal, not external.
Will those factors make a difference? We'll see.
