Conundrum with Distorted Urbanisation
This chapter reveals the negative impacts of distorted urbanisation, that is the excessive currency quantitative easing, the high-risk housing bubble and the recession in farming and manufacturing. All of our observations indicate that China has chosen an imbalanced growth model after material production lost its growth momentum. The rise of the real estate market has compensated to a great extent the decline in farming and manufacturing but with a heavy price to pay: firstly, there is a sack-in effect on liquidity that is channelled to the housing market; secondly, there is the heavy indebtedness among local governments and private households and, thirdly, there is an elbow-out effect on household consumption budgets due to a zero-sum game between food and shelter.
KeywordsUrbanisation Quantitative easing State-fuelled housing market State-owned leasable land Land-for-loans Local government debt Housing price
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