Whose Subprime is Less Sublime?

The South China Morning Post is running an unsettling little story [subscriber only] suggesting that a looming Chinese mortgage crisis will make the current US mortgage meltdown look gentle by comparison. The key paragraphs are simple statements of fact:

Yi Xianrong , of the Chinese Academy of Social Sciences’ Institute of Finance and Banking, said the US home mortgage crisis should be ringing alarm bells on the mainland because “the quality of housing loans are much worse than the subprime loans in the US”.

“At least there has been a credit check system in place [in the US], but in China anyone can borrow money to buy a house,” he said.

Professor Yi said the value of housing loans on the mainland had reached 3 trillion yuan by the end of last month, and the bubble would burst “sooner or later”.

Of course, this isn’t the first instance of a sensible person sounding dire warnings about China’s heated housing market. And I suppose there’s no reason to believe that this instance will be taken any more seriously than the others. But when the reckoning comes – and it will come – these quotes will make for colorful additions to the post-mortem why-didn’t-we-see-it-coming articles that are sure to run in the aftermath (see: Warren Buffett quotes in the aftermath of the dotcom crash).