NEW YORK (TheStreet) -- Despite fears of a real estate and stock bubble, record foreign exchange reserves, the possibility of inflation and political obstacles, China still remains attractive and for good reason.
Many suggest that China's massive government stimulus package and the decision to allow the nation's state-owned banks to lend freely resulted in easy credit and easy money, which further drove appreciation in both real estate and the nation's stock market.
On the positive side, it appears that the Chinese government has realized that a potential threat is prevalent and has taken measures to alleviate the situation. Most recently, Chinese authorities told some banks to curb loans and the Chinese central bank ordered state-owned banks to set aside a bigger chunk of their deposits as a reserve against failed and deteriorating loans.
Additionally, genuine demand for residential and commercial real estate is expected to increase with the expected growth of incomes, growth in the Chinese middle class and overall expansion of major cities. This uptick in demand, combined with the government's efforts, will likely weaken fears of a significant real estate bubble.A third reason China is likely to remain attractive is the recovery and expansion of its neighboring nations, which is resulting in an explosion in exported Chinese goods. In fact, some economists suggest that China is stealing market share from Europe and Japan and will likely balloon to be the world's second-largest economy by the end of the year. This is likely to happen sooner than later, if China keeps up its double-digit growth pace that it witnessed at the end of 2009.
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