Some officials in South China's Hainan province admit there is bubble in the region's property-driven economic growth, but rule out the possibility of a bubble crash, the chinanews.com.cn reported yesterday.
The tropical island's GDP grew 25.1 percent year-on-year in the first quarter of this year, ranking No 1 across the country. The GDP of Qionghai city in Hainan province grew 58.7 percent year-on-year.
More than one-third of the island's economic growth came from the real estate sector.
The provincial statistics bureau said that investment in this sector surged 136.9 percent year-on-year in the first three months, topping the level of such investments in all other provinces. Housing prices in Haikou and Sanya dominated the first two places in the country for three months in a row.
The prosperity in the island's property market came after China announced plans in late December to turn Hainan into an international tourist destination. However, there are rising concerns that this could lead to a repeat of the early 1990s, when property collapsed in the province after policy shifts.
The province's GDP grew 22.4 percent year-on-year in 1992, thanks to the hot property market. The capital city of Haikou jumped 114 percent that year. But two years later, the country's macro-economic adjustment strategy deflated its property bubble, and the province's GDP growth dropped 4.3 percent in 1995.
Analysts say that Hainan's economic strength and China's macro-economy are better positioned than a decade ago, but the island province still lacks a new engine for its economic growth.