CHINA - HSBC chief executive Michael Geoghegan has dismissed predictions of a Chinese property bubble.

"There'll be some bubbles in some places, but China is a big country, and it won't have a bubble as we understand it in the West," he told an audience at Chatham House, the London think tank.

"There may be some asset value corrections, but look at London in 2009 and real estate price increases - talk about a bubble in China."

Geoghegan said currently oversupplied sectors - such as hotels - would "work through the cycle" in five or six years.

He also urged protectionist economies in the West to learn from China.
"It's not true all western economies are as welcoming to Eastern foreign direct investment as vice versa," he said.

"Chinese surpluses have to find a home, and the value of the euro is a concern.  
"China will invest where it's welcome - and not just China, but Middle East and Latin

American investors, too - where they know they'll find a level playing field, and where the currency is stable."

He dismissed an audience challenge over protectionism.

"China is not as easy as it was," he said. "That doesn't mean it's not a level playing field, just that there is more competition.

"There are no real structural barriers - just more competition."

He added: "In emerging markets generally, you will face political volatility.

"China has opened up his economy and society far more than people understand. In any case, each country should be allowed to manage its own internal fears by itself."

Meanwhile, Xinhua, the government-controlled Chinese news agency, reported land and resources minister Xu Shaoshi as claiming success for measures introduced in April to calm the property market, including higher down payments on mortgages.

Xu said the measures had already resulted in lower transaction volumes.

The property market will see a full correction after the next quarter, he said, though he declined to predict how far prices would fall.

However, Diana Choyleva, an analyst at Lombard Street Research, an economics consultancy, claimed this morning that China was heading for a sharp slowdown after "unstable" expansion.

She said government policy had been "behind the curve", with further tightening just as the economy was turning down.

"The growth in property transactions may have come off a cliff, but a forced housing sell-off causing house prices to collapse is less likely when households have to simply contemplate the opportunity cost of holding their real estate assets, as opposed to a major negative cash-flow carry," she said.
 

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