China Has A Housing Bubble In "Some Cities", PBOC Admits

Tyler Durden's picture

While US central bankers shudder at the idea of admitting their could be a bubble in real estate or stocks (unless its obvious in hindsight); and England's Bank of England explains 'if there is a bubble, it's not their fault, but there isn't so there'; it appears the Chinese are more comfortable with the truth. As Bloomberg BusinessWeek reports, China's central bank Governor Zhou Xiaochuan said, China may have a housing bubble only in “some cities,” - an issue that’s difficult to resolve with a single nationwide policy. As concerns mount of dramatic over-supply on the back of extrapolated urbanization dreams, Zhou notes, “The economy has slowed down a bit, but not very much," adding that "we should keep vigilance on whether it continues to slow down." Which is odd because US talking heads have made up their minds that China is fixed...


As Bloomberg reports,

China may have a housing bubble only in “some cities,” a issue that’s difficult to resolve with a single nationwide policy, the nation’s central bank Governor Zhou Xiaochuan said.


China is a big country with multiple housing markets, many of which are still drawing new inhabitants from the countryside, Zhou said yesterday in an interview in Kigali, Rwanda, where he was attending the African Development Bank’s annual meeting.


“China is still in the process of urbanization, so there may be some kind of volatility in the supply-demand relationship,” Zhou said. “But if you look at the medium-term of urbanization, I think we still have a very good market for home sectors.”




“The economy has slowed down a bit, but not very much,” Zhou said. “We should keep vigilance on whether it continues to slow down.”

Which is exactly what PMI showed - a nation still in contraction on  Flash PMI basis - but of course, that doesn't matter to the machines and the meme...

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disabledvet's picture


"Damn the torpedoes full steam ahead" time?

Boris Alatovkrap's picture

Yuan hau sing? Wi meiku haus sing, yu bai hau sing! Sam dei pu lai su go a pu, so yu no bai wan hau sing, yu kan bai tu hau sing, fo hau sing, ei tau sing!

i_call_you_my_base's picture

"We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though."

LetThemEatRand's picture

I'll take Bearded Clam quotes for $200, Alex.

q99x2's picture

Pull a pig from the river. I'm heading back to Pittsburgh.

Offthebeach's picture

Ben Bernanke is unemployed, maybe he can go over and give insight.

fxrxexexdxoxmx's picture

If a Central Banker ever told the truth, he would be killed. It is like when your neighbor tells you he had sex with your wife. Sneaky, lying, scumbags have to lie or else they die.

besnook's picture

the critical factor no one considers in any analysis of the economy is china's ability to absorb all sorts of mal investment because there are still hundreds of millions of people to bring on board the industrial dreamworld. i witnessed how, during the initial build out, southeast asian countries and japan would hyper develope an area and the 18th century was literally next door. eventually all the land was developed sometimes years before growth came to the area. none of it was not on the scale of the chinese build out but the asians are well known for thinking on a much longer investment timeframe and they will pay today for some future value if it suits their needs.  the growth in other areas of the economy will cushion the real estate mal investment correction. that is the big difference between a real estate bust in china and the western real estate bust. the usa and most of europe had nothing to lean on when the bubble burst except another bubble.

random999's picture

Chinese are not more comfortable with the truth.  Their bubbles are just too insane to ignore.

AdvancingTime's picture

 Much of the recent growth in China after 2008 came from a massive 6.6 trillion dollar stimulus program that expanded credit and poured massive amounts of money into the system. This money encouraged expansion and construction with little regard as to real demand or need. Like a plane on autopilot China continued in the direction it had been on.

Now China finds itself in a credit trap. For years the people of China have had the habit of saving much of what they earn but the low interest rates paid at banks has not rewarded savers. With few investment options much of this money has drifted towards housing and driven housing prices sky high. The economic efficiency of credit is beginning to collapse in China and the unwinding of China’s giant credit spree could be very painful. More in the article below.

China will not be that easy to fix!

starman's picture

If they build it they will come. If they got the $$$$$$!