China's real estate bubble

Getting commodities out of the ground, building empty shopping malls, ghost towns, and bridges to nowhere requires a lot of equipment. Industrial goods companies benefited tremendously from Chinese demand. In the past, those were very cyclical companies, and it seems like this time they almost didn’t have a normal cycle. They declined but then came back very fast because the demand came back very fast, and a lot of that demand came from China.

Now what are the consequences of this. Spending large amt of cash on building this assets which are not utilized effectively will lead to property bubble. now with the bubble burst the property rates fall and so the value of the initial investment starts diminishing weakening the economy.

Will this make China to pass the point of no return. Well I bet 50% on that (considering the historic collapse of other economic giants). But what if China manages to survive it will force to create new economic principles.

Kuldeep H. P
Making love with eco & fin