A China crash will cause major collapses in Canada and Australia because both countries greatly benefited from the last decade of Chinese economic expansion.
A China Real Estate bubble crash would play out worse than the 1989 Real Estate bubble crash in Japan. Before their bubble was started, Japan was already industrialized and developed. When their bubble started growing, a significant percentage of their population were able to buy into the early stages of their bubble and benefit from increasing Real Estate values. In China, the connected and early adopters to Chinese economic reforms quickly blew up the China Real Estate bubble. Only a very small percentage of China’s overall population were able to benefit from the Chinese Real Estate bubble. Even though the Chinese Real Estate bubble was not driven by a credit bubble, the rate of speculation quickly drove up prices way beyond what the majority of the growing middle class could afford. Combined with the insane amount of commercial development and corruption of local government officials, a property bubble / economic crash in China could be socially explosive. Additionally, a significant percentage of China’s economy is export based. China’s major export markets are in all decline.It may be that Beijing has lost control of their economy and is implementing measures to delay and deal with the coming crash and social unrest.
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