I always have a sneaking suspicion that the Vancouver real estate market is a proxy for Chinese real estate, given the heavily ethnic Chinese population concentrations (especially in Richmond, east Vancouver, and around the Metrotown area in Burnaby).
The government of China released an economic report, assuming it is to be believed, that states the following:
3. Investment in fixed assets increased rapidly and that in real estate continued to accelerate. In the first quarter of this year, the investment in fixed assets of the country was 3,532.0 billion yuan, a year-on-year growth of 25.6 percent, or a drop of 3.2 percentage points as compared with the growth in the same period last year. Of this total, the investment in urban areas reached 2,979.3 billion yuan, up by 26.4 percent, or a drop of 2.2 percentage points; that in rural areas was 552.8 billion yuan, up by 21.0 percent, or a drop of 8.4 percentage points. Of the total investment in fixed assets in urban areas, that in the primary industry, the secondary industry and the tertiary industry went up by 9.7 percent, 22.4 percent and 30.0 percent respectively. The investment in eastern, central and western regions grew by 24.4 percent, 26.2 percent and 30.0 percent respectively. In the first quarter of this year, the investment in real estate development was 659.4 billion yuan, up by 35.1 percent year-on-year, or a rise of 31 percentage points.
Also in the report is the following GDP summary:
According to the preliminary estimation, the gross domestic product (GDP) of China in the first quarter of this year was 8,057.7 billion yuan, a year-on-year increase of 11.9 percent, which was 5.7 percentage points higher than that in the same period last year.
11.9 percent growth. Massive.
Since China’s GDP is around $4.72 trillion if you annualized the above number, this is a huge amount of growth in terms of absolute numbers – about $502 billion. Since the USA’s GDP is about $14.2 trillion, it would be equal to about 3.5% GDP growth in the USA.
To put this in another perspective, Canada’s GDP is about $1.4 trillion and it would be as if Canada’s economy grew by 36% for the year!
China’s economic growth is explosive, and whenever you have economies that are on fire to that extent, the boom and bust cycles will be profound.