Real Estate Bubble in China

Question: Is China experiencing a Real Estate Bubble? and what are the long term implications for China?

Answer: In all likely hood China is experiencing a real estate bubble, that will burst at some point in the future. However, throughout history all powerful emerging economies have had set backs and bubbles. So, while it is necessary to be cautious when things move too fast in one direction, it is wise to keep this all in perspective.

Take for example the US in the 19th century; the US had both the Civil war, and the railroad bubble.

I can only imagine that investors in Europe must have looked around the US and said "their just laying too much railroad track-no way their economy can support that, eventually when the money dries up the whole things gonna tank." Well the RR bubble did burst, but that obviously was not the end of the story for US which still went on to be a HUGE growth market.

Point is investors need to see the forest through the trees.

China Housing Bubble?

The Telegraph recently ran the story "Hedge Fund Manager Mark Hart bets on China as the next 'enourmous credit bubble' to burst"; Below are three of Mark's more important points on China's housing situation:
1. "China has consumed just 65pc of the cement it has produced in the past five years, after exports. The country is currently outputting more steel than the next seven largest producers combined – it now has 200m tons of excess capacity, more that the EU and Japan's total production so far this year."
2. "An excess of 3.3bn square meters of floor space in the country – yet 200m square metres of new space is being constructed each year."
3. "The average price-to-rent ratio of China's eight key cities is 39.4 times – this figure was 22.8 times in America just before its housing crisis."
...
It seems excess liquidity is wreaking havoc on the Chinese economy and it is in danger of overheating.