People view a model of a property development being sold at an investment show in Beijing on Sept. 20, 2012. (Mark Ralston/AFP/GettyImages)

Fall of Chinese Regime Predicted by Well Known Financial Expert

The housing and asset bubbles in China are big, and will lead to disaster

In “China’s Housing Bubble Born to Burst,” a well known Chinese financial commentator and columnist states that the communist regime’s totalitarian economic system will cause an impending economic crisis in China.

Niu Dao is an award-winning blogger who is a financial commentator on the state-run CCTV, a consultant to Essence Securities, and a teacher at Tsinghua University. His post on Sept. 26 warns that the coming crisis will bring disastrous consequences.

Plundering the Nation’s Wealth

In a subsequent Oct. 8 article, which was deleted from the website Sina shortly after it was published, Niu explained that the Chinese people’s human rights are not protected at all under the communist totalitarian regime. In a sense, the Chinese people are not citizens, but veritable “residents”—they are nothing without a dwelling.

That is the main reason why the Chinese Communist Party (CCP) dares to magnify the housing bubble indefinitely, and why the Bank of China dares to print money wantonly, Niu wrote. The housing bubble has become a tool for the ruling class to plunder national wealth.

Niu wrote that asset price bubbles are also bound to burst; and, as the rule goes, the larger the bubble, the greater the damage. Chinese people who think real estate investment could be their inheritance will eventually discover that under the CCP real estate is merely used as a tool to artificially increase the value of capital.

In the over 20 years since Japan’s asset bubble burst, it has had 13 different prime ministers. For China, Niu wrote, it won’t be an issue of a change of prime minister, but rather the fall of the regime. China’s bubble is even bigger than Japan’s bubble was back then, according to Niu.

Dire Economic Consequences

At the China Forum during the 2013 APEC Summit , CCP State Council counselor Xia Bin said the phenomena of financial crisis already exists in China. Some local governments became insolvent long ago, and are merely surviving by taking out more loans. The crisis has not yet exploded, and bad debt has not yet been exposed, because they have been covered up by issuing more currency, Niu wrote.

On Oct. 3, Credit Suisse published the “Asian Economic Outlook” report, referring to China’s unresolved economic problems. Credit Suisse’s chief Asia economist, Dong Tao, said China’s average local government debt payment will peak in late 2014 to 2015.

The problem, said Tao, is that local government infrastructure projects have no ability to repay their debt. Therefore, China’s local debt crisis may burst in the second half of next year.

Niu has previously written that a normal economic crisis under a free market economic system in western countries could be a disaster for countries with a totalitarian economy. Because totalitarian states take as their priority not letting an economic crisis become a social crisis, they cover up any economic problems and do anything to keep an economic crisis from breaking out.

As a result, eventually small bubbles become large bubbles, and minor issues grow into major contradictions that cannot be resolved, Niu wrote. Finally, the situation evolves into a comprehensive crisis causing the dictator to step down, the disintegration of the country, or both.

The most obvious example in history is the disintegration of the Soviet Union, starting with the complete self-destruction of the Soviet Communist Party. The collapse of regimes with totalitarian economies, including Romania, Albania, Cambodia’s Khmer Rouge, and the German Democratic Republic, were all because the regimes covered up financial problems in the beginning, eventually leading to conflicts breaking out.

China may face that type of crisis, Niu warned—a huge crisis that has never been seen before in mankind’s history. It will stun the world.

Read the original article in Chinese.

Translated by Yu Chen. Written in English by Christine Ford.