Morgan Stanley analyst/economist Andy Xie seems to hold the view that the housing bubble in China is about to burst due to contraction in the country's export growth.

Mr. Xie argued in a Morgan Stanley Global Economic Forum article (see link below) that China has a tough task at hand to avoid a hard landing in its booming housing market.

Mr. Xie cited the extraordinary export growth in China over the last four years as the primary driver for the current housing boom (or bubble). A strong export (over $760 billion in 2005) coupled with low deposit rate in China provided ample liquidity for the housing market. Expectation in currency appreciation also induced capital inflow hence additional speculation in real estate property.

In the article, however, Mr. Xie failed to provide any analysis over how increasing domestic consumption of China's industrial production would offset the decline in export growth, which would certainly be an important mitigating factor in a soft landing.

Link to Andy Xie's original article.