Rampant inflation; shaky, low interest no-deposit loans; 400 per cent stock market growth in 2 years; property values rising nearly 18 per cent over last year’s values.
Sound familiar? Followed by a tightening of lending restrictions, interest rate increases, 30-40 percent vacancy rates in new developments. Sound even more familiar? This is not the US market, this is China, which seems hell bent on following in the footsteps of the recent US sub prime crash.
The Chinese government is pulling out all the stops to prevent the same thing happening there. Interest rates have been increased five times in the last year and reserve requirements for commercial lenders increased eight-fold. The central planning agency imposed a price freeze on household essentials like cooking oil, electricity and water, in an effort to reduce inflation below 6 per cent. Securities regulators in more than one province have issued new rules banning high school and college students from buying shares to rein in speculative stock market investments.