As real estate accounted for 6.1% of all of China's GDP growth last year. This is the same level as the U.S. during 2005 and Japan during the 1980's. Commenting about what was taking place Citigroup analysts observed, "It's evident that property prices are no longer sustainable once the residential investments achieve above 8% of nominal GDP, and China may not be an exception." ("China Housing Market Nears U.S. And Japan") This is significant, because this information supports the hypothesis that a real estate bubble is developing in China. As prices could be in the process of rolling over, this will have an adverse effect on the economy.
The article that was written by Silverstein (2011), talks about the possible negative impact of the real estate bubble bursting. As he believes, that this could plunge the world into another deep recession. Once this occurs, it means that consumer spending will decline and the standard of living in the country will fall. as, China will experience similar challenges that: the U.S. And other countries around the globe were going through in 2008. This will make it difficult for the Communist government to maintain power. The information from this source is useful, because it helps to provide specific insights about the lingering effects of the real estate bubble bursting in China. As this is discussing various scenarios and how this could have an adverse impact on the economy. (Silverstein)
Research Approach
The basic approach that we will take is to use qualitative research. This is when you are looking at a variety of sources, to examine the overall impact that it will have on the subject. In this case, this style will help to identify possible trends and it will allow us to understand other outcomes. Once this occurs, it means that the overall quality of research and analysis will be as objective as possible. ("What is Qualitative Research")
Limitations and Key Assumptions
The limitations of the research are that we could be taking is of a more pessimistic view. As this kind of growth rate could be indicative of strong underlying demand, which could...
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