China's property bubble poses dangers - and not only for China

THIS year began with a rout in China's bubbly stock markets, an event which reverberated around the world. Since then, those markets have been relatively subdued, but other bubbles have emerged and grown - some of them potentially more damaging to both China and the global economy than the stock market bubble.

China's bubbles span a wide variety of asset classes, ranging from art and antiques to soymeal and iron ore futures, and above all, real estate. They are partly the result of a dearth of investment opportunities in China's slowing real economy and the lack of deep, liquid financial markets.

But they have been fuelled, more than anything else, by runaway credit growth, a signature feature of China's economy since the global financial crisis of 2008, when Beijing launched its US$586 billion economic-stimulus package. The International Monetary Fund (IMF) has pointed out that between 2009 and 2015, credit growth averaged at around 20 per cent a year - far higher than nominal growth in gross domestic product, and thus unsustainable.