While the rest of the global economy suffers from liquidity shortages, the mainland has been suffering a cash glut, leading to spiraling property values. Emerging property bubble is probably the most pressing threat that it is facing with no end to dire warnings.

China is a story of remarkable contrasts always. It boasts currency reserves of $2.3 bn, making it the richest country in the world. Yet, it is a country where 200 million people live with less than $5 a day. It played a key role in 2009 in leading the global economy out of the worst crisis. While worldwide stock market indices rallied 60-80% from March 2009 lows and witnessed a 10-20% gain for the year, Chinese stock market gained strongly amid swift policies from the central government. Chinese market pundits predict that it can overtake the US in terms of market capitalization within three years. Despite global slowdown, China's economy managed to grow around 8.9% in the third quarter of 2009; property market was a prime driver supported by Beijing's massive half-trillion-dollar government stimulus.

However, mainland's rise will not happen without some serious bumps along the road of miracle. These include stock market and property bubble, currency and trade protectionism concerns, social instability and carbon reduction, etc. With soaring property prices in key cities, investors and bankers in China are losing their sleep about the next great real estate bubble waiting to be popped. Even the Chinese government is worried about the excessive increase in house prices in some cities and now wants to monitor capital flows to check overseas speculative funds. According to new regulations, any Chinese who wants to buy a second house must make a down payment of at least 50%. Besides, developers who failed to start building on their land within two years of purchase would forfeit their plots. Despite these measures, economists and bankers fear that history could repeat itself. They express concerns that China's property market has got similar features like Japan in 1980 and the US in 2008 where residential real estate bubble ended in big crashes, battered banking system and slow recoveries. Analysts now say that money, along with huge foreign inflows of speculative capital has been funneled into the Chinese stock and real estate markets.

The Analyst Magazine, Chinese Economy, Chinese Stock Market, Real Estate Markets, Banking System, Carbon Reduction, Capital Markets, Chinese Banking System, Global Debt Crisis, Financial Markets, Economic Recovery, Economic Growth, Global Economy.