The head of the Chinese government, Li Keqiang, faces a period of economic pressures to which he was not accustomed the world’s second largest economy.
A slowdown in production and mantle covering doubt the official figures, particularly the value of its sales abroad, the sharp increase in real estate, according to the latest report for the month of April, presented adds hikes most important since January 2011 for large cities like Guangzhou, Beijing and Shanghai.
A price bubble in the housing market last thing you want is an economy seeking recovery. This not only restricts access of the growing middle class and increasing inequality gap in the country, but the first step in establishing a mortgage crisis as recently observed in the United States or sight in Colombia in the nineties.
However, the solution is not easy and must be approached carefully. Aggressive attempts to directly intervene prices may discourage builders to continue their projects and their financial flows would be severely affected. This in turn directly hit Chinese growth and relegate much lower growth rates than seen historically.
Experts suggest a policy to avoid speculation and impose measures to prevent real estate developers maintain vacant lots waiting for prices to continue to rise and thus higher profits in the future. Ensure that there is land available for building and working hard from the side of the real estate seems to be the only plausible way to avoid an uncontrollable vicious cycle in the long run to the Asian country.