Global Risk Insights

In the past few months, the debate surrounding China’s property bubble has become increasingly controversial. Many fear that the property bubble is about to burst, and some argue that this process has already begun. Further adding to the debate, house prices in China reached a record high this August, in a property market that was estimated at 115 trillion yuan (or $18.8 trillion) at the end of 2012.

The debate follows on from various comparisons to the American real estate bubble, as there are fears of a similar collapse in the Chinese real estate market. However, this western concept of a ‘bursting bubble’ cannot necessarily be applied to China due to inherent differences in the structure of society.

China’s real estate bubble may not burst like it did in the United States, as China’s sheer size poses issues of generalization between differently sized cities and differently structured regions. Li Tie, an…

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