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Well, look no further than this latest Stratfor report on the Chinese real estate bubble.
Paradoxically, as the global financial crisis continues, China sees little choice but to loosen its monetary policy even further, fearing the opposite would curtail economic growth and result in massive unemployment, which could lead to social instability. Beijing knows that one of the country’s underlying economic problems continues to be an overheated real estate market, but it also knows that the real long-term solution - limiting the flow of cash and credit - could have dire socio-economic ramifications. Meanwhile, real estate developers, government officials and investors continue to speculate on real estate, raising land and housing prices.
Given the current global economy and the economic balancing act it must maintain domestically, Beijing has few good choices. It must keep enough cash flowing to maintain economic growth and social stability in the short term while tightening credit to avoid a tsunami of bad loans and a market collapse over the long term. Certainly, Beijing does not want to face the kind of collapse in the housing market that Japan experienced in the 1990s, which triggered a financial crisis and more than a decade of economic malaise.
Source:
http://ftalphaville.ft.com/blog/2009/10/16/78181/chinas-liquid-real-estate-bubble/?source=rss
After all, let's not get too concerned about exports - China's #1 growth driver.
http://www.nakedcapitalism.com/2009/10/imports-fall-sharply-at-la-and-long-beach-ports.html
Why not just give a loan to anybody with a pulse? Especially those recently graduated from college with poor job prospects?
They can put that cash to good use speculating in other things besides real estate.
Of course, Chinese officials may want to revise earlier statements about inflation in light of what is happening:
http://debtsofanation.blogspot.com/2009/08/debts-of-lenders-chinese-policymaker.html
For more news on China, please visit:
http://mpettis.com/
