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Thursday, March 1, 2012

An update on the Chinese housing market

I promised to update you periodically on the Chinese "ghost cities", as we struggle to understand how they have impacted our wood industry in the last few years and how they might impact it in the near future.

It doesn't look too good right now. I may have said this before, but their impending housing bubble implosion may make ours look like a hiccup. Here's a video with the latest news, given from a Chinese perspective. The audio is in Chinese, but you can follow the English sub-titles pretty easily.



The end of the video revealed a slightly different twist on their situation. Some seem to be predicting that the implosion will be good for the economy, in the sense that a "real" market will develop for housing as the prices fall closer to what more people can afford. This in effect, they seem to think, will help transfer much of the country's wealth from the rich people and the government (which in China, is pretty much the same thing) to more of the poor, in effect creating a middle class.

So it could be a short-term economic shock, followed by a longer-term slowly rebuilding economy.

Let's hope it works itself out peacefully, without a ripple effect into the rest of the world's economies.

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