I found this 60 Minutes segment very interesting, but also incredibly
disturbing. In the above video, 60 Minutes investigates the extraordinary
growth of the Chinese economy in the past decade which has been largely powered
by an enormous housing market bubble.
In an effort to grow
China’s GDP, the Chinese government has been building what are essentially “ghost
cities” that are uninhabited with almost no vacancies for miles. These
developments are owned by Chinese investors who depend on rising property
values driven by inflation within the Chinese economy, thus causing the largest
housing bubble in history. Real Estate roughly accounts for about 30 % of the
Chinese economy, and with real estate development increasing at an alarmingly
fast rate, this partly explains the unprecedented boom of China’s economy in
such a short amount of time.
It blows my mind that the Chinese government spends $2 trillion
dollars a year building these deserted cities in order to keep the Chinese
economy going, and are essentially running on borrowed time with non-existent supply
and demand. I can’t even imagine the worldwide implications of
this bubble bursting and assessing what I’ve heard and seen in the video above,
it doesn’t seem like a matter of IF the bubble will burst but WHEN.
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