This is not the first time I have heard this, but:
Which does China face? A popped real estate bubble could exert a big drag. Housing construction exceeds 10 percent of GDP. That’s historically high, says Lardy. At a similar stage of economic development, Taiwan’s housing investment was 4.3 percent of GDP. In the recent U.S. real estate boom, housing peaked at 6 percent of GDP. In China, housing stimulates much consumer spending (furniture, appliances) and accounts for 40 percent of steel production, notes Lardy. Land sales are also a big revenue source for local governments. All would suffer from a housing bust.
There are mitigating factors. Outside Beijing and Shanghai, it’s unclear that housing prices are “out of line with household income growth,” says economist Eswar Prasad of Cornell University. Chinese buyers also typically make large cash payments for their properties. Compared to United States, a housing bust is less likely to become a banking crisis as mortgages sour.
Whatever happens, China’s economic model is reaching its limits, as Lardy argues. It has relied on exports, promoted through the controlled exchange rate, and investment, including housing, subsidized by cheap credit. Meanwhile, Chinese savers have been punished by the low returns on deposits. This dampens their incomes and consumption spending. The trouble is that the global slowdown threatens exports and housing’s excesses threaten investment. Unless China can switch to stronger consumption spending, its economy will slow — or it will achieve growth by becoming even more predatory toward other countries. — Is a Chinese economic slump on the horizon? – The Washington Post
Go read that whole thing, because this is the best case for this belief. The funny thing, the people over a GoldSilver.com have been saying this for a while:
Go check them out and get into Gold and Silver; before you lose it all.