Chinese crisis

Can China save the world economy, as it was in 2009? In conditions of weakness of the US and European economies, eyes again turn towards the Middle Kingdom. During the crisis of 2008–2009, it was China with its impressive growth supported the global economy. But now China is not up to the west, it seems that a mortgage crisis is flared up in the very Middle Kingdom. The explosive growth of the economy’s lending, organized by the Chinese government in the response to the crisis at the end of 2008 (the total volume of stimulating measures is estimated by the Hong Kong Consulting Company Gavekal at the monstrous 20% of GDP in 2009 and 10% in 2010 - more than in any other country of the world!), Led to a substantial overheating of the housing market - cheap liquidity from state banks flowed into state bank Mortgage loans and development. Frightened by the uncontrolled increase in real estate prices, the authorities in 2010 tried to release excess air from the inflated bubble: 10% increased the volume of the initial mortgage contribution for the purchase of a second house (from 40% to 50%), mortgage rates were raised, and in large cities, like Beijing, restrictions on the purchase of a second housing within city borders were introduced. In addition, the authorities tried to limit the orgy of the “shadow”, which goes outside the banking balances, lending and secreitization of mortgage loans. The results seemed to occur in the fall of 2011 - in October, the number of real estate transactions in the 15 largest cities in China fell by 39% compared to the same period last year. Throughout the country, the number of transactions decreased by 11.6%, accelerating the fall from 7% in September. The cost of real estate in 34 of the 70 largest cities in the Middle Kingdom in October showed an estate decrease. So far, these numbers are not particularly scared. But the decline in the sector can adversely affect the banking system, because more than 20% of all loans are somehow related to real estate. The China Banking Commission (CBRC) ordered Chinese banks to find out the impact of reduction in real estate transactions and conduct appropriate stress tests. According to Gavekal, in the coming months, overshooting may occur in the real estate market - the supply still continues to steadily increase, despite bad sales. Although some developers are already experiencing financing difficulties and stop laying new houses. Hence the fall of demand for steel and cement, the collapse of the sales of excavators. The Chinese mortgage crisis can significantly slow down the growth rate of the economy, while high inflation connects the hands of the China Central Bank: it cannot soften his monetary policy and thereby support real estate prices. It is not necessary to count on the fact that in 2011–2012, China will be able to support the world economy and demand for raw materials (which is very important for Russia), as it was in 2008-2009, there is no need for Beijing.