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China's massive housing bubble now imploding; economic collapse likely to spread globally


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(NaturalNews) Is China getting ready to experience the very same housing collapse that triggered the Great Recession in the United States beginning at the end of 2007? Actually, China's housing bust may be worse, according to recently released data.

As reported by Tyler Durden at Zero Hedge, Chinese home values are plunging at a faster rate than did American homes following the bursting of the subprime mortgage bubble at the outset of the Great Recession.

The web site noted that in early March the People's Bank of China, the country's central bank - which has the power to control monetary policy while regulating all other Chinese financial institutions - announced a surprise rate cut. At the same time, the site posted a chart "that should scare everyone who is hoping that China will avoid a hard landing" - one that shows "the annual collapse in Chinese home prices is now so sharp and so widespread, that it has surpassed the housing collapse in the aftermath of the Lehman [Bros.] collapse."

Income, value, commodities, trade, real estate - all down

It appeared as though things went from bad to worse nearly overnight; China's National Bureau of Statistics said that contrary to hopes that there would be a modest rebound, the average new home price in China fell at the fastest pace on record in February, from the previous year.

Reuters reported that average new home prices in China's 70 major cities fell 5.7 percent, year to year, in February - marking the sixth consecutive drop after January's decline of 5.1 percent. In all, the decline marks the largest annual drop in the nationwide survey since it was initiated in 2011.

As Reuters further noted:

The monthly fall in February from January was 0.4 percent, the same as in the previous month, and pointing to sustained risks to the government's new 7 percent economic growth target for the year. The property sector accounts for some 15 percent of China's gross domestic product (GDP).

The record fall coincided with news that Chinese banks have extended Evergrande Real Estate Group 100 billion yuan ($16 billion) in credit, as the real estate slump extends to one of the country's biggest and most indebted property developers.


Durden further cited a Shanghai Daily report noting that China's fiscal revenue was growing at a much slower pace than expected as well:

Fiscal revenue rose 3.2 percent to 2.57 trillion yuan (US$411 million) in the first two months, down from 11.1 percent in the same period a year ago and 2014's 8.6 percent rise, the Ministry of Finance said...

Personal income tax dropped 7.1 percent year on year to 164.6 billion yuan.


In addition, government revenue from tariffs fell 5.3 percent following the deline in prices for oil, iron ore and commodities, and that reduced the value of imports.

'Government will intervene'

But no worries - nothing to see here. In fact, that's essentially the position of top Chinese economic policymakers; they seem to be adopting the playbook of the U.S. Federal Reserve, as in quantitative easing (the dumping of cash into the economy - or, more specifically, the country's banks).

Chinese banking officials have said that the PBOC would "intervene" to "boost the Chinese economy" if it continues to "slide." In fact, observed Luo Wenbo, an analyst at Qilu Securities, the more the economy slides the sooner the intervention would come. He further noted that "investors would not" have been so keen to continue investing in Chinese mortgages if government economists had not assured government intervention.

"In other words," Durden notes, "if and when China finally reveals that it is currently not in hard, but crash landing mode, with GDP as Cornerstone estimated at under 3%, the SHCOMP will simply find itself offerless and stop for trading as everyone puts all their remaining cash in the Chinese stock market, that one final bubble now that the housing bubble is a distant memory."

Can you say "bursting bubble?" The world's No. 2 economy imploding will have global implications.

Sources:

http://www.zerohedge.com

http://www.bloomberg.com

http://uk.reuters.com

http://www.shanghaidaily.com
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