-->Andy Xie MSDW:

Property market is approaching turning point. Sales of new properties are stagnating, household debts in major cities are approaching extreme levels by international standards, household savings
deposits are stagnating. China's property market is exhibiting symptoms of supply overwhelming demand. The coming adjustment could be quite painful.

One third of China's fixed investment may represent overshooting accumulated between 2002-04. The resulting adjustment will entail enormous pain, in my view.

China should accept a sharp correction. When property prices begin to fall, fixed investment will slow sharply throughout the economy. The government may be tempted to borrow to increase its investment. This would be a mistake, in my view, as it would prolong the pain and creates a bigger
problem.