Of all the world’s central banks, one cares especially about China’s construction boom – the Reserve Bank of Australia.
Residential construction requires gigantic amounts of steel and, thus, of iron ore. The bulk commodity is one of Australia’s biggest exports, so understandably the country’s central bank keeps tabs of the sector.
As the price of iron ore plunges to a three-year low and some talk about the burst of an “iron ore bubble”, the RBA has published this week an interesting study about the residential sector in China. The RBA’s paper “Chinese Urban Residential Construction to 2040”, does give some arguments to the bears, warning that Chinese residential construction will witness a “moderation of the strong growth we have seen over the past few years”.