Is China entering Japan's nightmare ? or already ?

[JerseyBoy]

In fact, one of the leaders, I forget who, knew that assets=liabilities+equity.

Liabilities are not part of an asset. Rather, liability is an opposite to an asset, as it drains the money from your assets.

 

[Astroboy]

Liabilities are not part of an asset. Rather, liability is an opposite to an asset, as it drains the money from your assets.

Dogen Z is right. He is telling B/S (Balance Sheet).

assets=liabilities+equity.

in terms of accounting.

Assuming you buy a house at a million dollar with your own cash (10%) + bank loan (90%), the house is your asset, but another face of your asset is your equity (10%) & liability from bank (90%).

You said Citi Bank's asset is valued at $2 trillion, but I don't know the composition of the asset. IF it is all Citi Bank's own equity, then that's fine. But usually they did a lot of leverage. And asset value is now shrinking, but amount of leverage remain unchanged. So the B/S may not be balanced.

 

[JerseyBoy]

I misunderstood Dogen Z's comment, then. I did not notice he was talking from the balance sheet perspective. As far as the leveraged amount, it is said the typical investment bank's leverage ration is 1 to 15 or 30. Putting down a dollar to borrow $15 or $30!.

 

[Astroboy]

Chinese exports drop in slowdown

China has reported a fall in exports for the first time in seven years.
BBC NEWS | Business | Chinese exports drop in slowdown

China's currency falls by record against U.S. dollar
Decline may signal official policy shift towards devaluation, analysts say
China's currency falls by record against U.S. dollar

In short, China tries to devalue its RMB against USD in order to boost exports because "export" is only hope for them to maintain their society.
However, this China's currency devaluation may be equivalent of beggar-thy-neighbor.

I personally believe that Japan's Deflation will never end as China is located as a "neighbour".

 

[JerseyBoy]

China is following the proven text book approach to be a wealthy country. Building the industrial base to sell goods to overseas. UK-->Continental Europe-->North America-->Japan all followed that (to the detriment to the 3rd world economies). China will dump about USD 600 billion to pump up its economy to weather through the current worldwide economic downturn.

 

[Pachipro]

The transnational corporations that have shut down factories in the US and outsourced them to China account for over 60% of China's exports to the USA. As a result the economy here is slowly collapsing and will continue to do so for a long time to come.

The Chinese are going to devalue their currency again to price undercut US and other foreign products. That means all other exporters will probably do the same in order to stay competitive.

That means US manufacturers can't compete and offshoring and outsourcing are going to boom again by the transnational corporations with what's left of our depleted manufacturing sector.

China and all exporters to the US (including US transnational corporations) are currency manipulators and cheats. Unless these cheats are stopped we won't have any economy left. The manufacturing sector in the US has seen the steepest decline since records began. The US does not produce textiles, furniture or toys anymore among other things. If allowed to, and I believe they will be allowed to in order to increase profits and the hell with the US worker and middle class, China and other exporters will take away what is left of what little we still produce here in the USA.

And now I read this from the International Forecaster:

China has devalued the yuan for the first time since the mid-nineties. This will undoubtedly ignite fear that 1930s-style ﾂ'beggar they neighbor' policies will be adopted by other countries. This would create a similar constraint on global trade that the Smoot-Hawley bill produced.

The central bank has shifted the central peg of its dollar band twice this week in a calculated move that suggests that Beijing aims to offset the precipitous slide in Chinese manufacturing by trying to gain further export share abroad. The futures markets are pricing in a 6 percent devaluation over the next year. "This is clearly a big shift in policy and we are now on alert," said Simon Derrick, currency chief at the Bank of New York Mellon. Hans Redeker, currency head at BNP Paribas, said China's policy switch could set off a dangerous chain of events. "If they play this beggar-thy-neighbour game, it will cause a deflationary shock for the whole world," he said.

However, this crisis is more serious [than 1998]. The manufacturing sector has seen the steepest decline since the records began, with devastation sweeping the textile, furniture, and toy sectors. Civil unrest has begun to rock the Guangdong and Longnan regions.
The deepening world economic crisis and a possible spat over currency levels hung in the air as the United States and China sat down Thursday to discuss the future of their economic relations.

U.S. officials say Treasury Secretary Henry Paulson will press Beijing to let its yuan rise against the dollar to ease trade tensions at the two-day Strategic Economic Dialogue. American companies contend that China keeps the yuan undervalued, giving its exporters an unfair advantage and adding to its swollen trade surplus. But with China's exporters suffering, the yuan plunged Monday in government-controlled trading—a possible message to Washington to go easy on the issue.

"The signal China sent on Monday is: We also have our own political problems and issues in a slowing economic environment," Frank F.X. Gong, chief Asia economist for JPMorgan Securities Ltd., said in a report to clients.

What if China, the largest holder of US govies in the known universe, decides to sell them? Of course this will allow Bernanke to monetize even more debt so he can prove that the Fed can stop deflation.

In a sense we are screwed, but this could never happen without the aid and nod of US corporations and a wink by the US government, who have moved to China.

 

[Astroboy]

IMF Sees China Growth Halved
The International Monetary Fund said on Monday Chinese growth could be cut almost in half next year while eyes across the globe looked to Washington for signs on whether it would bail out the U.S. auto industry.
http://www.javno.com/en/economy/clanak.php?id=215058

It cannot be helped as China is "much dependent" on exports. China's trade dependency is about double than Japan.

As far as I know, China needs to grow by at least 8% per year. Otherwise, the country cannot absorb new school graduates every year - some 8 - 10 million workforce per year. So if China's GDP growth slow down to 5% or less, serious social unrest must be expected.

Good Luck China.

 

[JerseyBoy]

It cannot be helped as China is "much dependent" on exports. China's trade dependency is about double than Japan.
As far as I know, China needs to grow by at least 8% per year. Otherwise, the country cannot absorb new school graduates every year - some 8 - 10 million workforce per year. So if China's GDP growth slow down to 5% or less, serious social unrest must be expected.

Thank you for reporting the news. It may be easier for you if you just posted the web link for the articles.

Good Luck China.

I hope you are also wishing Japan for its luck. Japan's "wealth-building" economy depends on the world market.

 

[ahlee]

US has to do the right thing, which is to keep people employed through whatever way. China has to do the right thing, which is to stimulate more purchasing power in the domestic markets. Sadly I don't think either could do good job.

 

[JerseyBoy]

US has to do the right thing, which is to keep people employed through whatever way. China has to do the right thing, which is to stimulate more purchasing power in the domestic markets. Sadly I don't think either could do good job.

It would be counterproductive to spend whatever amount of money to keep people employed, as it is imperative to direct the limited resources and budgets to the areas where the results can be gained.

As far as China is concerned, it is in a unique position to have a prevailing control over its domestic economic activities by spending its public money (because it basically influences almost all of its domestics enterprises in China; I did not use the verb "control" because it would be difficult to have a full control over all of Chinese economic activities).

As China's economy counts on export businesses, the current global recession is not going to make it easy for China to cruise through. China can use its reserve of over USD 1 trillion to keep its economic expansion going for several quarters. But, without the noticeable economic recovery in the rest of G20 countries, China's economy may sputter to a grinding holt causing the internal unrest. If that happens, that would be very scary.

 

[ahlee]

It would be counterproductive to spend whatever amount of money to keep people employed, as it is imperative to direct the limited resources and budgets to the areas where the results can be gained.

As far as China is concerned, it is in a unique position to have a prevailing control over its domestic economic activities by spending its public money (because it basically influences almost all of its domestics enterprises in China; I did not use the verb "control" because it would be difficult to have a full control over all of Chinese economic activities).

As China's economy counts on export businesses, the current global recession is not going to make it easy for China to cruise through. China can use its reserve of over USD 1 trillion to keep its economic expansion going for several quarters. But, without the noticeable economic recovery in the rest of G20 countries, China's economy may sputter to a grinding holt causing the internal unrest. If that happens, that would be very scary.

At the time of extreme economic uncertainty in the sense that we may go into a really serious recession, economic efficiency is not the priority anymore. I would say confidence is much more crucial. If I were the US I would defend dollars by any political means possible while depreciating it to give the corportate America more liquidity, and more jobs, and transfer part of the crisis overseas. Sure, Asia is not gonna be happy about it but so be it. As for the tax policy, they should really go easy on corporations who are actually hiring people.

China's reserve is going to help, but the our country has been doing dumb things when setting up the structure of the economy and now it is time for a change. Pay attention to peasants and lower classes in the city by building a better social security. So, they dare to spend their limited income on other things. And I believe this is the basis for a new stronger middle class to grow.
China is going through a tough time, but I'm glad to see the CCP is doing some thinking now.

 

[ahlee]

It cannot be helped as China is "much dependent" on exports. China's trade dependency is about double than Japan.
As far as I know, China needs to grow by at least 8% per year. Otherwise, the country cannot absorb new school graduates every year - some 8 - 10 million workforce per year. So if China's GDP growth slow down to 5% or less, serious social unrest must be expected.
Good Luck China.

I don't really understand the education system in China as well. We do not need that many college boys and girls, since a greater part of the jobs do not demand a college education. Either we learn that college is just college, and getting a degree is not really helping much, or we get more realistic and learn to respect blue-collar jobs again.

 

[Dogen Z]

I'm glad we have someone here who knows China well. I think the China-Japan relationship will be increasingly important in the coming years. I look forward to more input from you and any others from China.

And I'm happy to see you're well versed in economics, too.

 

[Astroboy]

Data Raise Fears of China Property Bubble
China's urban property prices grew at their fastest pace in 16 months in November, increasing concerns a market bubble may be forming and underscoring the challenge Beijing faces in sustaining the country's economic recovery while avoiding excess.
Data Raise Fears of China Property Bubble

U.S. household wealth rises in Q3, may spur spending
U.S. households' net worth rose $2.7 trillion to $53.4 trillion in the third quarter for a second straight quarterly advance, Federal Reserve data showed on Thursday, which may boost consumers' confidence to spend.
http://news.yahoo.com/s/nm/20091210/bs_nm/us_usa_economy_wealth_2

Because Chinese economy heavily relies on exports especially to US market, US recession damaged Chinese economy vey much. Thus Chinese government put emphasis on domestic market by .... government expenditure and forcing Banks to increase loans ..... until recovery of US economy.

However, those Chinese government economic stimulous measures are making property bubles.

In the meanwhile, US household net worth -- "the difference between the value of assets and liabilities" -- rose 5 percent from the second quarter..... This means that US households are repaying their mortgages to banks, not gaining assets. It also means that US households are decreasing spending.
In fact, the article says "In the third quarter, household debt contracted at a 2.5 percent annual rate from the prior three months, the largest fall on record, the Fed said. It was the fifth consecutive quarterly decline, reflecting steep declines in mortgage and consumer debt, such as credit cards."

Mortage reduction is not only seen in households, but also corporations. The article also points out "Business debt excluding financial institutions also fell at a 2.5 percent annual rate and the decline was widespread across credit market instruments, according to the report."

In short, US economy is likely to enter "Balance Sheet Recession" (All - households & businesses - is repaying their mortages and trying to balance their Balance Sheet. But if all makes repayment at the same time, economy goes to recession). This will result in a long term recession - the same lost decade as Japan ....

Unfortunately China's economic stimulous package will lose it breath soon as it is aimed until US economic recovery. This means China's property bubble is likely to burst soon, which is the same as Tower of Buble in Dubai.

 

[Tokugawa Ieyasu]

The economies of China and Japan are highly symbiotic; China and Japan excels at opposite spectrums of the value chain and there are very few overlaps. In fact, China's rise affect the industries of South Korea much more than Japan.

and some anecdotal observations: Japanese brands (cars, electronics, cosmetics, fashion..etc) are very popular here; the elevators at the skyscraper I work in are made by Mitsubishi.

 

[Astroboy]

I think China and Japan are very complementary economies; China is very good (right now) at low-end manufacturing, Japan with the high-end stuff (like cars and machinery).

and one completely anecdotal observation: the elevator I ride at work everyday is made by Mitsubishi.

This is very rare voice from "mainland China". Though I don't know what happens in Beijing right now, I would personally like to tell you that ....

"Japan is much tired in complying with Western economies/powers for more than a century, as China has grown sufficiently, we are glad to pass the torch to China. GO China, and of course Buy More from Japan !"

 

[Tokugawa Ieyasu]

This is very rare voice from "mainland China". Though I don't know what happens in Beijing right now, I would personally like to tell you that ....
"Japan is much tired in complying with Western economies/powers for more than a century, as China has grown sufficiently, we are glad to pass the torch to China. GO China, and of course Buy More from Japan !"

Beijing is a very dynamic city, but it's a developing city and there are definitely drawbacks-like pollution, dust, noise, and crazy drivers… but overall, It's a great city, especially if you have money.

As for purchases, I was talking to a co-worker the other day about cars; she and her fiancé wants to buy their first car-she wants a Mini Cooper, but he has his eyes set on a Subaru.

It's also a very interesting socio-economic story, as they are both from rural China and are now working hard in Beijing to achieve their career goals and personal dreams-the classic "北漂" story.

 

[Tokugawa Ieyasu]

Unfortunately China's economic stimulous package will lose it breath soon as it is aimed until US economic recovery. This means China's property bubble is likely to burst soon, which is the same as Tower of Buble in Dubai.

Almost every person in Beijing I've talked to, the view from the "street" I guess, agrees that there's a huge property bubble in the capital.

For example, I work in the technology district and there are at least three skyscrapers under construction right now (all within walking distance of each-other) by state-owned construction companies (and probably with loans from giant state-owned banks) and armies of migrant workers working day and night, with sparks flying....I'm not sure if there's that much demand for commercial property, but it sure is an awesome sight to behold watching the construction army doing their work.

 

[Dogen Z]

Almost every person in Beijing I've talked to, the view from the "street" I guess, agrees that there's a huge property bubble in the capital.

For example, I work in the technology district and there are at least three skyscrapers under construction right now (all within walking distance of each-other) by state-owned construction companies (and probably with loans from giant state-owned banks) and armies of migrant workers working day and night, with sparks flying....I'm not sure if there's that much demand for commercial property, but it sure is an awesome sight to behold watching the construction army doing their work.

We've been hearing about this bubble since last summer, so I'm sure your government is paying close attention to it. Since the government can apply direct pressure to key areas of the economy, it has a greater chance of controlling the bubble than economies that depend wholly on market fundamentalism. I don't think anyone reasonable wants to see that bubble burst. That would cripple Asia including Japan. Anyway, thanks for giving us a local view of events in China.

 

[Adulado]

qina a bubble waiting to burst according to James Chanos:

James S. Chanos built one of the largest fortunes on Wall Street by foreseeing the collapse of Enron and other highflying companies whose stories were too good to be true. Now Mr. Chanos, a wealthy hedge fund investor, is working to bust the myth of the biggest conglomerate of all: China Inc.

As most of the world bets on China to help lift the global economy out of recession, Mr. Chanos is warning that China's hyperstimulated economy is headed for a crash, rather than the sustained boom that most economists predict, David Barboza of The New York Times reports from Shanghai.

China's surging real estate sector, buoyed by a flood of speculative capital, looks like "Dubai times 1,000 — or worse," Mr. Chanos frets. He even suspects that Beijing is cooking its books, faking, among other things, its eye-popping growth rates of more than 8 percent.

"Bubbles are best identified by credit excesses, not valuation excesses," he said in a recent appearance on CNBC. "And there's no bigger credit excess than in China." He is planning a speech this month at the University of Oxford to drive home his point.

As America's pre-eminent short-seller — he bets big money that companies' strategies will fail — Mr. Chanos's narrative runs counter to the prevailing wisdom on China. Most economists and governments expect Chinese growth momentum to continue this year, buoyed by what remains of a $586 billion government stimulus program that began last year, meant to lift exports and consumption among Chinese consumers.

Still, betting against China will not be easy. Because foreigners are restricted from investing in stocks listed inside China, Mr. Chanos has said he is searching for other ways to make his bets, including focusing on construction- and infrastructure-related companies that sell concrete, coal, steel and iron ore.

Mr. Chanos, 51, whose hedge fund, Kynikos Associates, based in New York, has $6 billion under management, is hardly the only skeptic on China. But he is certainly the most prominent and vocal.

For all his record of prescience — in addition to predicting Enron's demise, he also spotted the looming problems of Tyco International, the Boston Market restaurant chain and, more recently, home builders and some of the world's biggest banks — his detractors say that he knows little or nothing about China or its economy and that his bearish calls should be ignored.

"I find it interesting that people who couldn't spell China 10 years ago are now experts on China," said Jim Rogers, who co-founded the Quantum Fund with George Soros and now lives in Singapore. "China is not in a bubble."

Colleagues acknowledge that Mr. Chanos began studying China's economy in earnest only last summer and sent out e-mail messages seeking expert opinions.

But he is tagging along with the bears, who see mounting evidence that China's stimulus package and aggressive bank lending are creating artificial demand, raising the risk of a wave of nonperforming loans.

"In China, he seems to see the excesses, to the third and fourth power, that he's been tilting against all these decades," said Jim Grant, a longtime friend who is also bearish on China and is the editor of Grant's Interest Rate Observer. "He homes in on the excesses of the markets and profits from them. That's been his stock and trade."

Mr. Chanos declined to be interviewed, citing his continuing research on China. But he has already been spreading the view that the China miracle is blinding investors to the risk that the country is producing far too much.

"The Chinese," he warned in an interview in November with Politico.com, "are in danger of producing huge quantities of goods and products that they will be unable to sell."

In December, he appeared on CNBC to discuss how he had already begun taking short positions, hoping to profit from a China collapse.

In recent months, a growing number of analysts, and some Chinese officials, have also warned of the threat of asset bubbles emerging in China.

The nation's huge stimulus program and record bank lending, estimated to have doubled last year from 2008, pumped billions of dollars into the economy, reigniting growth.

But many analysts now say that money, along with huge foreign inflows of "speculative capital," has been funneled into the stock and real estate markets.

A result, they say, has been soaring prices and a resumption of the building boom that was under way in early 2008 — one that Mr. Chanos and others have called wasteful and overdone.

"It's going to be a bust," said Gordon G. Chang, whose book "The Coming Collapse of China" (Random House) warned in 2001 of such a crash.

Friends and colleagues say Mr. Chanos is comfortable betting against the crowd — even if that crowd includes the likes of Warren E. Buffett and Wilbur L. Ross Jr., two other towering figures of the investment world.

A contrarian by nature, Mr. Chanos researches companies, pores over public filings to sift out clues to fraud and deceptive accounting, and then decides whether a stock is overvalued and ready for a fall. He has a staff of 26 in the firm's offices in New York and London, searching for other China-related information.

"His record is impressive," said Byron R. Wien, vice chairman of Blackstone Advisory Services. "He's no fly-by-night charlatan. And I'm bullish on China."

Mr. Chanos grew up in Milwaukee, one of three sons born to the owners of a chain of dry cleaners. At Yale University, he majored in medicine before switching to economics because of what he described as a passionate interest in the way markets operate.

His guiding philosophy was discovered in a book called "The Contrarian Investor," according to an account of his life in "The Smartest Guys in the Room," a book that chronicled Enron's rise and downfall.

After college, he went to Wall Street, where he worked at a series of brokerage houses before starting his own firm in 1985, out of what he later said was frustration with the way Wall Street brokers promoted stocks At Kynikos Associates, he created a firm focused on betting on falling stock prices. His theories are summed up in testimony he gave to the House Committee on Energy and Commerce in 2002, after the Enron debacle. His firm, he said, looks for companies that appear to have overstated earnings, like Enron; were victims of a flawed business plan, like many Internet firms; or have been engaged in "outright fraud."

That short-sellers are held in low regard by some on Wall Street, as well as Main Street, has long troubled him.

Short-sellers were blamed for intensifying market sell-offs in the autumn of 2008, before the practice was temporarily banned. Regulators are now trying to decide whether to restrict the practice.

Mr. Chanos often responds to critics of short-selling by pointing to the critical role they played in identifying problems at Enron, Boston Market and other "financial disasters" over the years.

"They are often the ones wearing the white hats when it comes to looking for and identifying the bad guys," he has said.

DealBook

HALFTIME REPORT - Jim Chanos: China is a Bubble Waiting to Burst

 

[Dogen Z]

Adulado, that was one the stories I was referring to in my previous post. However, China still has a somewhat controlled economy, the government can pull off a gradual correction. At least, that's what other fund managers believe, including Mark Mobius of the Templeton Fund - and he knows a thing or two about Asian markets.

Anyway, this is the Japan Forum, I think we should keep things focused on Japan in this and other threads.

 

[gaijinalways]

Dogen Z posted

Anyway, this is the Japan Forum, I think we should keep things focused on Japan in this and other threads.

Yes, but China's influence on Japan (and other countries who are major trading partners like the US) is immense. Add to that being geographic neighbors who share history and many things going on in China will affect what happens in Japan.

Back to conspiracy theories, I was surprised to read about Pachipro's financial fears. Seems like maybe you should read noted ecnomic/political commentator Thomas Friedman's somewhat dated (2000) 'The Lexus and the Olive Tree'. Globalization doesn't mean a world government nor should you lay all the blame on financial institutions and the Fed. Certainly more of the right kinds of financial legislation would avoid some of the excesses of banker's risk that have been employed with the certainty of taxpayer bailouts. The 'too big to fail' theories floated are rubbish and hedge funds that were way overleveraged (in some cases close to a hundrd to one) should have been allowed to go bankrupt.

Adddressing going off the gold standard, even prior to doing that we hardly had a one to one standard (amount of gold backing each dollar issued), so it was a bit of a myth that going off the gold standard caused any real economic decline. Economics is a lot more complex than many people realize, and capitalism has successfully replaced any and all economic systems that have proceeded it. Whether you agree with all of Friedman's conclusions, I don't see any better economic system being offered or displayed by the conspiracy guys. What the author goes at length to point out is that what he terms legal systems, financial, and supply and distribution systems have to be updated to fully integrate with a global capitalist system. Where many countries fail is assuming that a global system will help them without the preceding systems, which it won't (well it will, but with a lot of chaos and even more uneven wealth distrubution) . When you witnessed the chaos introduced in Russia after its markets were opened and to some extent Malaysia and even recently Dubai you begin to undertsand what he was reffering to. Free market money goes and is invested where people see value; simply building a wireless complex or high buildings alone won't bring investor confidence unless a real need is shown for these things and a supportive market wants them.

I see both Japan and China going over some financial bumps in the road together for different reasons; Japan grappling with an ageing and possibly shrinking # of workers due a fear of expanding their permanent foreign population, and China having problems effectively interlocking their system into a global economy as they slowly ease controls off of their rusting government industries and attempt to privatise the ones worth saving without setting off rural population riots. These two strange bedfellows are very interdependent; Japanese companies are still using Chinese factories to sell to the Chinese market (outside production is starting to be curtailed as China becomes a more expensive country to manufacture in) and China is trying to woo foreign investment and technology from Japan (and other places) to increase its competiveness in the world.

As to any nightmares, no I have been sleeping just fine recently.

 

[Astroboy]

I see both Japan and China going over some financial bumps in the road together for different reasons; Japan grappling with an ageing and possibly shrinking # of workers due a fear of expanding their permanent foreign population, and China having problems effectively interlocking their system into a global economy as they slowly ease controls off of their rusting government industries and attempt to privatise the ones worth saving without setting off rural population riots. These two strange bedfellows are very interdependent; Japanese companies are still using Chinese factories to sell to the Chinese market (outside production is starting to be curtailed as China becomes a more expensive country to manufacture in) and China is trying to woo foreign investment and technology from Japan (and other places) to increase its competiveness in the world.

This is true.

But from Japanese point of view, Vietnam has increasingly been attractive as mfg base for exports to China and others as China's cost is gradually becoming more expensive. In fact, Chinese mfgs are also going out of China for survival.

Plus, India is growing as another big market. China is now one of the markets, I think.

 

[Dogen Z]

Dogen Z posted
Yes, but China's influence on Japan (and other countries who are major trading partners like the US) is immense. Add to that being geographic neighbors who share history and many things going on in China will affect what happens in Japan.

Economics, like the environment, is a global issue, but unless you can specify what role Japan has in it, there are better places to discuss it. I'd suggest the China Forum associated with this Japan Forum. It would be a more informative place to discuss primarily Chinese issues. If we don't pay attention to this convention, we run into the problem of everything depends on everything else, then this forum becomes a free-for-all and loses its value.

 

[gaijinalways]

Dogen z posted

Economics, like the environment, is a global issue, but unless you can specify what role Japan has in it, there are better places to discuss it.

But since the OP's question related to Japan's bubble years, it's highly relevent to Japan, whether China is included or not. I see property bubbles in some of the hot zones in China (Beijing, Shanghai, and Guandong Province), just like ones in Japan centered especially in urban areas of Osaka and Tokyo from 1992 until 2001. I'm just not sure if the bubbles in China will fall as sharply as Tokyo's did and certainly the peak pricesin China probably won't be as high. Tokyo prime real estate at its peak had Ginza being worth more than California, and prices in Ginza for an average napkin sized piece of real estate were astronomical.