That user is one of the more prominent chronic “doomers” over on Hexbear. They are knowledgeable but prone to exaggerating.

My take: If anything this makes it even better news, as those local governments will now have additional incentive to rethink their relationship with real estate and find alternative ways of structuring local financing. Necessity is the mother of invention. Economists don’t make the political decisions, and material reality will assert itself over ideology anyway.

If local governments made bad bets that contradict the policy of the central government, which has repeatedly declared that housing is not for speculating on, has made it clear they wish to make housing affordable for everyone, and has deliberately but safely deflated the real estate bubble, then that is their problem and their responsibility to solve. If they don’t they will be replaced by others who will.

The bottom line is this: where would you prefer to live? A country where housing prices are skyrocketing or a country where they are becoming more affordable? Everything else is just concern trolling. Especially when we see that this has not led to an economic downturn but the opposite, an expansion of manufacturing as investment is redirected from a non-productive (real estate) to a productive sector.

And if China critics’ only response to pointing this out is to start throwing around the buzzword “overcapacity”, then you know they’ve lost the argument, because that’s just cope. No, China does not need to transition to a western style consumption driven model, why in the world would they adopt a system that is clearly seen by the entire world to be failing before our eyes? They would have to be incredibly stupid to do so.