It is often said that China will grow old before it gets rich. The argument goes that China’s rapidly-aging population and gender imbalance – a result of its one-child policy – will stymie growth before economic living standards have caught up with those in advanced countries.
But could China’s aging problem also result in a spectacular property collapse? The Bank of Japan’s deputy governor Kiyohiko Nishimura thinks so. Doing his bit for Sino-Japanese relations, Mr Nishimura on Tuesday claimed that Chinese property prices are about to go into the “danger zone” because of this demographic trend.
In a fascinating talk at a Bank for International Settlements and Reserve Bank of Australia conference in Sydney on Tuesday, Mr Nishimura argues that so-called “malign” property bubbles, ie those which result in a spectacular collapse, are often a result of demographic transition from a “population dividend”, when the working-age population is at its height, to the “burden of an ageing population”.