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China can tackle property bubble, says PaulsonBloomberg20 February 2010China can handle parts of its commercial real estate market that may have been “over-stimulated”, former US treasury secretary Henry Paulson said.Paulson said China’s government has the tools it needs to handle possible overheating of the real estate market in some cities, including Shanghai.Paulson made the comments, which he said were based on news media accounts, during an event at the 92nd Street Y in New York, where he discussed his recent memoir On the Brink: Inside the Race to Stop the Collapse of the Global Financial System, with General Electric chief executive Jeffrey Immelt.“I think China is dealing with that,” Paulson said. “They turned their machine on. They pumped in excess of a trillion in lending” into the market. “You can’t do that without some side effects. I think they made a decision that was the lesser of two evils.”China and the US depend on the vitality of each other’s economies, he said in response to a question about whether America’s economy is ceding its position as the world’s largest.China has “many more problems”, he said. “We have still the biggest, richest economy in the world and you know we are great at innovation.”The issue in the US is the government’s ability to deal with problems quickly in the absence of a crisis, he said, calling it the most “sobering” lesson he learned in Washington.“Here China gets credit: their ability to stay focused and continue to make progress with their very difficult problems,” he said. “We want them to continue to do well. I do not take it at all as a given that the US is not going to do well relative to China. We’re going to come to grips and solve our problems, the debt being a huge one.”Immelt, who GE said earlier this month disagreed with Paulson’s recollection of their discussions involving GE’s commercial paper as the financial crisis swelled in September 2008, did not address that topic. He questioned Paulson on the economic crisis and his leadership during it and fielded some questions submitted on note cards by the audience.
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