The alternative ploy — that it doesn’t exist — doesn’t get same airing that it did in the US before the subprime crash. Instead, the “it’s a bubble, but it won’t burst” case is that the bubble is too important to China’s continued growth to be allowed to burst, and — unlike the US — China has the wherewithal to keep it going, at least for a while. (See There will be no Minsky moment for China, March 25; China Can’t Afford to Let Its Housing Bubble Pop, January 30;Templeton Braving China’s Housing Bubble, February 28; Chinese Property Sector Will Not Implode Like America’s Subprime Market, March 11.)
I have deliberately refrained from this discussion, mainly because I prefer to work from data, and I prefer data that — despite some warts — I trust. Until recently there was no publicly available data on China’s debt levels, which is a key metric for me; fortunately that has been remedied recently by the Bank of International Settlements, and I’ll analyse that in a future post. But whatever it reveals, I also concur with the alternative ploy to some extent — that though there is a bubble, China’s capacity and determination to contain problems is much more impressive than the US’s.
But I also wanted to see the phenomena first hand before I commented. Anecdotal and eyewitness evidence counts for something.