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China's property bubble represents a social risk: Renowned Chinese economist

Smoke billows from the chimneys of a factory, rear, located near residential buildings in Dalian, China, on Tuesday, Jan. 17, 2017.
Qilai Shen | Bloomberg | Getty Images
Smoke billows from the chimneys of a factory, rear, located near residential buildings in Dalian, China, on Tuesday, Jan. 17, 2017.

BOAO, China — China faces the risk of youth disenchantment as property prices rise beyond their reach, a renowned Chinese economist said Friday.

"In a regular country, wealth should be concentrated in the financial markets, not fixed assets," said Renmin University of China Vice President Wu Xiaoqiu at a media interview at the Boao Forum in the province of Hainan.

He highlighted the risks from the current property bubble in China, such as negative asset values if prices tank.

More importantly, the social risks that come from the property bubble in the form of youth disenchantment with not being to afford a home will be damaging, he said.

"If young people lose hope, the economy will suffer, as housing is a necessity," he said.

Wu said he was hopeful the authorities would find a solution to constrain the froth in Chinese real estate, but admitted that repeated measures to curb speculation have so far only met with short-term success.

Wu's comments follow a People's Bank of China survey published on Tuesday, which found that 52.2 percent of urban households perceived housing prices to be "unacceptably high" in the first quarter of the year, Reuters reported.

In February, gains in Chinese home prices picked up pace after they slowed in the previous four months despite government efforts to curb speculation, Reuters reported on Sunday. Prices in the big cities of Beijing, Shanghai and Shenzhen rose 22.1 percent, 21.1 percent and 13.5 percent, respectively, from a year ago.