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Urbanization is an essential process to modernize an economy, and it should, in turn, fuel growth even more by transferring productive factors from traditional sectors with low productivity to more dynamic sectors, while at the same time gradually concentrating them in urban zones. In countries like China, a dual land ownership system is predominant. On the one hand, land located in rural areas is generally collectively owned and set aside for agricultural activities, and on the other, land in the cities is the property of the state and allocated to urban purposes. [ABSTRACT FROM AUTHOR]

Although some economists have rejected the hypothesis of a real-estate bubble in China, the rise in real-estate prices has gradually become detached from the increase in real salaries, principally in major Chinese cities. Specifically, the exponential growth in bank loans may stir up fears of problems related to over-indebtedness for a considerable number of real-estate developers in the near future. However, these difficulties are only the tip of the iceberg of deeper problems within the Chinese economy. [ABSTRACT FROM AUTHOR]