Over in Beijing, Bertel Schmitt has dinner with an American insurance company CFO and the Chinese head of a Chinese/American bank. He reports back:
When the discussion came to the Chinese real estate bubble, my Chinese banker friend emphatically acknowledged that China is in a huge one. Mostly in the tier one cities, but getting into the tier 2 cities also. He said that it is an absolute insanity. People buy homes and apartments, and keep them empty. Vacancy rates in tier one cities are sometimes higher than 30 percent. About 60 skyscrapers in Beijing are vacant. He congratulated me on my choice of renting, and suggested I should move, because rents are actually coming down. Caused by the oversupply of unsold properties, held for speculative purposes.
So what happens when a real estate bubble bursts in a country with a semi-state-controlled economy like China? Beats me. But it can’t be good no matter what kind of country China is, can it?