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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 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)
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
10.9%
75% in 1975
8% of world total
48.6%
40.5%
•
House Prices
China – Overview
• 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
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 .
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