Real Estate News - China

China's real estate industry experienced an unprecedented boom in 2007. Increasing quantities of land were developed, causing land supplies to fall short of demands.

Beginning in August 2007, the growth rate of Chinese consumer price index (CPI) remained above 6 percent and hit a decade-high, reaching 6.9 percent in November. This was a definite warning sign that the Chinese economy would probably soon see the end of its golden period.

China, however, was not the only country to fall victim to high inflation. Most of the world experienced high CPIs in 2007. Statistics from US authorities indicated that the US' CPI rose by 0.8 percent in November 2007, raising it 4.3 percent higher than in 2006. This inflation rate caused the interest rate, which the US government had lowered to 4.25 percent earlier, to become technically negative. In the Euro region, the CPI increased by 2.6 percent in October, exceeding the maximum limit of 2 percent that the European central bank could bear. A report made by China's National Development and Reform Commission (NDRC) said that during September and October seven countries had CPIs higher than 5 percent: Russia (10.8 percent), South Africa (9.7 percent), Argentina, Vietnam, Indonesia, India and China. Therefore, the so-called BRICs, except Brazil, as indicated by the data have fallen victim to rampant inflation.

What caused such wide spread inflation around the globe? The NDRC has cited several factors, including excessive liquidity, depreciation of the US dollar, decreased crop production by some agricultural exporters, biofuel created agro-demand hikes and production curtailments on the part of oil-rich OPEC members, among many other factors. All these reasons drove up global commodity prices of petroleum, grain, edible oil and iron ores; inflation was the inevitable outcome.

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