When comparing the deflating Chinese property bubble to that of the US a few years ago there is one very important difference to bear in mind. In the US the dodgy debt that drove the bubble was very much consumer-driven, the notorious sub-prime loans that invited uneconomic borrowers into the market for a short but unsustainable party.
In China on the other hand, mortgage debt remains very low. The major sub-prime debt beneficiary of the boom in China was property developers, who accessed shadow baking credit en masse to build out the nation’s residential home segment for roughly five years in advance.
This is perhaps the major reason why Australian exports benefited so greatly, and why they are under so much pressure now.