Economy
Official: Real estate bubble undisputable
By Zuo Likun (chinadaily.com.cn)
Updated: 2010-03-03 10:58
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China's real estate industry is in an "undisputable" bubble with its skyrocketing property price fermenting an imminent structural inflation that might hijack the country's booming economy into violent fluctuations, a high-ranking official said on Wednesday's Beijing News.
"The over-speedy price hike is evident of an undisputable bubble in the property market, which is a major propeller behind the current inflation," said Yin Zhongqin, deputy chairman of the Financial and Economic Affairs Committee of the National People's Congress.
The country's robust 8.7 percent GDP growth in 2009, against odds of a global stagnancy or even recession, was largely due to its $586 billion behemoth two-year stimulus package whose pulling effects on the economy might weaken in 2010 since local governments, over stretched last year, are running out of notes, Yin said.
Adding to the anguish is the country's inert household income which stifles a further improvement in the domestic consumption, while China's tottering exports, formerly a coveted powerhouse responsible for almost 35 percent GDP growth, downward spiraled into negative territory for the first time, dragging down three percent of the economy in 2009.
The official cautioned about the risk of structural inflation this year, as his committee has just finished a preliminary reading of the government work report, economic development plan as well as a budget report that are to be reviewed by the national congress beginning this week.
