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Economist: No housing bubbles
By Fu Yunwei |
June 3, 2010, Thursday
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Print Edition
Print Edition
CHINA has promising growth prospects and should not be blamed for world imbalances, says Danny Quah, a renowned British economist.
"Emergency financing that was placed in the Chinese economy to counter the downturn from the 2008 global financial crisis was the right thing ... The imbalance is a global problem, not a China problem," said Quah, a professor at the London School of Economics and Political Science.
China did the right thing in infusing its economy with fiscal stimulus, Quah said in a recent interview with Xinhua. He declined to describe the ballooning real estate prices as a bubble, pointing out "the strong fundamentals" of China's economy.
He said the expansion of China's housing construction will be proved useful eventually, given the fact that "China is still engaging in the task of moving hundreds of millions of people from rural areas to urban China to continue to power its manufacturing and industrial progress."
"So I would not describe it as a collapse of real estate bubble, we can look forward to a rationalization of housing and real estate prices," Quah said. "The improvement and expansion of housing stock will play an important role in continuing to move the Chinese economy forward."
On allegations that China deliberately keeps its currency, the RMB or yuan, weak to obtain unfair advantages in trade with countries like the United States, Quah said people who draw such a false conclusion are misguided.
"The United States is running a trade deficit not just against China. It is running a trade deficit against almost 100 other countries," he said. "China is not unique in exporting more to the United States than it's importing."
When asked what is behind the world imbalances, Quah said: "The direction of the causality I think is much more compelling from the behavior of the US economy to the rest of the world than it is from China to the US economy."
(The author is a writer at Xinhua news agency.)
"Emergency financing that was placed in the Chinese economy to counter the downturn from the 2008 global financial crisis was the right thing ... The imbalance is a global problem, not a China problem," said Quah, a professor at the London School of Economics and Political Science.
China did the right thing in infusing its economy with fiscal stimulus, Quah said in a recent interview with Xinhua. He declined to describe the ballooning real estate prices as a bubble, pointing out "the strong fundamentals" of China's economy.
He said the expansion of China's housing construction will be proved useful eventually, given the fact that "China is still engaging in the task of moving hundreds of millions of people from rural areas to urban China to continue to power its manufacturing and industrial progress."
"So I would not describe it as a collapse of real estate bubble, we can look forward to a rationalization of housing and real estate prices," Quah said. "The improvement and expansion of housing stock will play an important role in continuing to move the Chinese economy forward."
On allegations that China deliberately keeps its currency, the RMB or yuan, weak to obtain unfair advantages in trade with countries like the United States, Quah said people who draw such a false conclusion are misguided.
"The United States is running a trade deficit not just against China. It is running a trade deficit against almost 100 other countries," he said. "China is not unique in exporting more to the United States than it's importing."
When asked what is behind the world imbalances, Quah said: "The direction of the causality I think is much more compelling from the behavior of the US economy to the rest of the world than it is from China to the US economy."
(The author is a writer at Xinhua news agency.)
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