| This (real estate) slow down is only the start. I know most people in Shanghail still think this is only a temporary correction and property prices will head back up after this "healthy" correction. On the contrary I think things will get even worse in 2006 when the Chinese economy really starts to slow.
Behind the robust trade surplus figures of China, you see the reported losses of Chinese companies shooting up dramatically this year. This tells you excess capacity and eroding profit margins are starting to take its toll. So in order to survive, the Chinese companies push for the export markets to get cash flow thus leading to strong export figures. But look at how imports from China have slowed substantially, signaling a slowing economy. When the economy finally rolls over in 2006, China's overall trade surplus will shrink dramatically and may even turn into a deficit. And all those property owners/speculators who have bought at the top with leverage and are still holding on now will be forced to sell. |
When the House Prices Goes Down