China is struggling with reducing the property bubble while maintaining adequate housing for the population along with adequate growth in the property sector. Now, there is talk of an expansion of local property taxes to replace land sales as a source of revenue. Can China restructure its revenue system from land to taxes without causing a financial crisis? What are the political obstacles? A 10 to 20 percent collapse of the property market could cause a 5 to 10 percent fall in GDP (Rogoff).
One important question is the political power of home owners. Who are the property owners, how large a group do they comprise, and what is their socio-economic status? Their power as a group reflects their income level and their size. If property prices fall, how serious is the threat of political opposition within this group?
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