The Collapse Of The Domino Chinese Real Estate

1450 words - 6 pages

With the outbreak of the U.S. financial crisis in 2008, the whole world's financial situation is not good, but except one, which is China. However, many people find out that China is walking on the old U.S. economic way, which means China will have economic crisis either. So right now, all the eyes from all the countries are watching at China’s economy, because if Chinese economic collapse, there are no more people buy Japanese animations and European luxuries. And after the economic crisis, China will recovery U.S. Treasury bonds, but American unable to pay, then the whole world economy is facing collapse; we can call that butterfly effect. So right now, in this context, the same ...view middle of the document...

More importantly, a huge real estate bubble led China's economy has two serious problems. First, real estate takes the entire Chinese economy; it takes all the resources from the companies, government, and small business, also it makes more and more the low-end developments, and more and more irrational industrial structure adjustment of China's economic structure. Just as Fan mentions “the need and desire for housing consumption does not fully explain the home-buying frenzy in Chinese cities.” (Fan) When all assets flow to housing market, there will be no capital and power to developers of other sectors, which will directly lead to the collapse of the Chinese market. Therefore, there is no way to adjust the industrial structure, if the Chinese government does not change the pattern of the current real estate Chinese economy system.
Secondly, the profits of real estate drives force the Chinese real estate economy system. We can say that the erroneous policies of real estate in the nearly 10 years guide China's real estate market into a speculative investment market, Every Chinese wants to use real estate become millionaire. In this case, not only the rapid surge in prices of the housing market, inflate the real estate bubble. Just as Fan points out “It is the fear of being left behind by skyrocketing housing prices and unpredictable policy changes that explains the high rates of homeownership and second- and multiple-home ownership,” (Fan) But the more important thing is the whole social wealth gathers to a few people in a short time. While all people try to get more money through the real estate, in fact, people are helping these real estate businessmen become rich and let financial collapse virtually. For example, there are more than 60% regales from Hurun Global Rich List have the relationships with real estate, and 70,000 billionaire stares with real estate to acquire wealth. (Hurun) This shows even though the violence of real estate lets some people get rich, but most people still cannot afford the expensive prices, which directly affects the main economic collapse.
We can say that in the history of mankind, there is none of dynasty or any country’s economic policy can make a few people accumulate wealth that quickly, while the vast majority of people cannot share the fruits of economic growth. When the numbers of government officials corrupt more and more, the risk of the financial system is rapid increasing. In this case, Chinese economy system has formed the core of a real estate interests, and that impossible to make the policy to adjust the relationship between real estate and interests. Just as the author of “Will Chinese Has Financial Crises” Youhuan Li mentions,” due to the current real estate has been kidnap the fiscal revenue of local governments, banks, and dozens of other related industries, once prices fall by a big margin, housing prices funding strand breaks, will trigger a chain reaction, eventually leading to the crisis...

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