Is China the new Ireland?

There’s a good New York Times story on a US hedge fund investor – Jim Chanos – in the New York Times. He’s been short-selling (i.e. basically betting on falling prices) Chinese real estate.  I’ve rarely come across discussion of Irish-Chinese similarities although, in an attempt to avoid accusations of racism, Father Ted famously said “The Chinese, a great bunch of lads”.  The parallels between the experiences of the Irish and Chinese real estate markets/economies seem fairly striking, er, to me. A shift from export-driven growth to construction/real estate sector driven growth? Huge increases in borrowing to fund this growth? Rapid real estate price inflation? High levels of transaction activity? Banking sector crisis? Real estate market price crash? Recession etc. History probably doesn’t repeat itself and markets seem to falter and crash in their own particular ways. However, the parallel between Ireland and China are notable but far from perfect. You can see in the chart below that the value the Irish office stock was growing relatively faster than China until 2007. It’s the period since 2010 that’s been worryingly some analysts of the Chinese market.

Ireland China

However, China is starting from a much smaller base and has been urbanising rapidly. The stock market seems to be a much more important element in speculative activity in China.

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