It was as inevitable as China’s rise to the position of the most powerful economy in the world. Now it looks as though that title will return to the United States, as the ‘bubble economy’ holds China in its debilitating grasp.

It’s deja vu for observers from Japan, who experienced the same property bubble decades earlier, and with equally destructive social consequences. Inflation, fuel shortages and the ever ballooning urban population conspired to create the bubble; now it has burst, and China is in financial disarray.

The irony is that China fueled its meteoric growth with planned construction of city upon city – some unique designs, others modeled on western examples of urban design and aesthetics. All of this construction provided jobs, contributed to output, and kept demand for raw materials at an artificially inflated level.

Simultaneously, the urban influx pushed up property values in the booming industrial centers. Shanghai and Beijing topped the list, and mortgages were easy to acquire. But no-one wanted to live in a ghost city, with no jobs. Apartments and shops lining the deserted streets were overpriced and unattractive, so they stayed empty and unproductive.

Without the natural balance of supply and demand, the bubble has burst, and the most sought after city properties are unsellable at their original prices, while bank finance has dried up. Millions of construction workers and materials suppliers see their businesses collapsing.

After the heady pressures of growth and inflation, government now faces the awful prospect of recession and deflation. This sort of turmoil will hurt more than national pride, as people lose their homes and livelihood – it’s bound to boil over as people take to the streets.