‘China’s asset markets are a ponzi scheme…

China Bubble Watch:

December 18 – Bloomberg (Shiyin Chen): “China’s property and stock markets are a ‘bubble’ that will burst when inflation accelerates in 2011, former Morgan Stanley chief Asian economist Andy Xie said. ‘China’s asset markets are a ponzi scheme… Property is heading for one huge bust that will take a year and a half to unfold.’”

December 18 – Bloomberg: “China has ‘dangerous’ bubbles in the real estate market, Huang Yiping, an economics professor at Beijing University and former Citigroup Inc. economist, wrote in the China Daily… He cited the level of vacancies and the ratio of home prices to incomes. Huang said that the Dubai crisis indicated that ‘once bubbles emerge, they are sure to burst.’”

December 18 – Bloomberg: “China property stocks fell the most in four months… on concern the government will step up measures to curb property speculation. Poly Real Estate, China’s second-largest developer by market value, plunged 7.5%..., a ninth day of losses, after the government increased down payment requirements on land purchases.”

December 18 – Bloomberg: “Chinese banks’ capital strength is probably more ‘strained’ than it appears as lenders use more off-balance sheet transactions to make room for loan growth, Fitch Ratings said. The increasing amount of unreported transactions, including repackaging loans into wealth management products to sell to investors, and the outright sale of loans to other financial institutions, represent a ‘growing pool of hidden credit risk,’ Fitch said in an annual review of Chinese banks.”

December 14 – Bloomberg (Stanley James): “China’s government departments are expected to speed up spending in the following weeks to try to use up as much as 2 trillion yuan ($293bn) that remains of the budget, the South China Morning Post reported, citing a state researcher. Central and provincial government officials will try to use the remaining money on concern that their budgets may be cut next year if they fail to spend the 2009 allocation…”

December 18 – Bloomberg: “Gloria Gu paid $483,000 for an apartment near Shanghai’s financial district so her 3-year-old son could attend one of the city’s best kindergartens. Six months later, a similar place in her building sold for $615,000. ‘Prices are way past reasonable,’ said Gu, 31, a food company manager who bought her three-bedroom, 140-square-meter (1,507-square-foot) apartment in the Pudong area in May. ‘The market is too good to be true.’”

December 17 – Bloomberg (Sophie Leung): “Hong Kong’s central bank said the city may face ‘sharp corrections’ in asset prices should fund flows reverse, adding to concerns voiced by Japan, China and South Korea on the dangers of speculative capital.”

[link to prudentbear.com]