The following is an excerpt from Jethro Mullen and Andrew Stevens | September 28, 2016 | CNN.com |
Chinese billionaire Wang Jianlin made his fortune in the country's real estate market -- and now he's warning that it's spiraling out of control.
It's the "biggest bubble in history," he told CNNMoney in an exclusive interview Wednesday.
Bubble is a sensitive word in China after the dramatic rise and spectacular crash in the country's stock market last year, which wiped out the savings of millions of small investors who thought Beijing wouldn't allow the market to drop.
After struggling to contain the fallout from the stock market debacle, China's leaders could face a similar headache in the real estate sector.
The big problem, according to Wang, is that prices keep rising in major Chinese metropolises like Shanghai but are falling in thousands of smaller cities where huge numbers of properties lie empty.
"I don't see a good solution to this problem," he said. "The government has come up with all sorts of measures -- limiting purchase or credit -- but none have worked."
It's a serious worry in China, where the economy is slowing at the same time as high debt levels continue to increase rapidly. There are massive sums at stake in the real estate market: direct loans to the sector stood at roughly 24 trillion yuan ($3.6 trillion) at the end of June, according to Capital Economics.
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