Tycoon raises alarm over 'biggest bubble'

Mr Wang said that "the problem is the economy hasn't bottomed out".
Mr Wang said that "the problem is the economy hasn't bottomed out".

BEIJING • China's richest man, real estate magnate Wang Jianlin, has warned that the country's property market is the "biggest bubble in history" - the latest alarm bell to be sounded on the world's second-largest economy.

The owner of real estate and entertainment conglomerate Wanda said property prices continue to rise in the big cities but have fallen in smaller ones saddled with huge inventories of unsold new homes.

"I don't see a good solution to this problem," Mr Wang, whose group owns more than 200 malls, shopping complexes and hotels in China, told CNN in comments published on its website. "The government has come up with all sorts of measures... but none have worked."

Urbanisation and property development have fuelled China's economy. The long property boom, driven by credit and government spending, made fortunes for many owners as new districts mushroomed across the country. But growth has slowed in the last two years, with new buyers priced out despite government borrowing restrictions.

The Bank for International Settlements - dubbed the central bank of central banks - said a gauge of Chinese debt had hit a record high in the first quarter of the year.

Mr Wang said he was not worried about a hard economic landing, but "the problem is the economy hasn't bottomed out". He added: "If we remove leverage too fast, the economy may suffer further. So we'll have to wait until the economy is back on the track of rebounding - that's when we gradually reduce leverage and debts."

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on September 30, 2016, with the headline 'Tycoon raises alarm over 'biggest bubble''. Print Edition | Subscribe