How does it compare the US collapse in 08? How do the causes& impacts compare?
In: Economics
Other commenters have covered most of it, but couple points to add about China specifically.
1. Chinese people are very financially cautious and don’t like to invest in perceived ‘higher risk’ asset classes like stocks. Obviously now the ‘safe’ investment of buying property has proved to be not very safe at all they might change
2. China is communist which means it’s companies operate under heavy government restrictions. This means the companies in it’s stock market are much more volatile, at any time there is a risk the government could interfere with a company and wipe out it’s value. Again, this means investing in the stock market isn’t as good an option for Chinese people
3. Chinese people have been discouraged from buying foreign stocks to ‘encourage’ domestic investment
So a lot of the property buying is actually reflective of a lack of better options. If Chinese people had more choice, they could invest their money in things that aren’t property, but really the perception is that property is the only option and this means all the money goes into property regardless of whether it is or isn’t actually a good investment
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