The Political Bureau of the Communist Party of China (CPC) recently held a meeting to set the tone for its economic work next year and vowed to promote economic development from a “politically high level” and promote the “healthy and stable development” of the real estate market. The analysis highlights that the mainland’s real estate problems are worsening.
On December 11, xi jinping, presided over the politburo, mouthpiece media said meeting to study the economic work in 2021, is also done to the current economic situation judgment, admitted that “COVID – 19 outbreak, there exist many uncertainties and external environment”, and put forward to enhance the political consciousness, is good at from the height of the “political” to promote economic development.
In addition to “focusing on the demand side reform” and “strengthening anti-monopoly and preventing the disorderly expansion of capital”, the meeting also mentioned the real estate market and stressed “promoting the steady and healthy development of the real estate market”.
A few days ago, on December 3, the Ministry of Housing and Urban-Rural Development held a symposium, in which Han Zheng again stressed that “houses are for living in, not for speculation”, and that “the real estate market should be tightened all the time”.
Words such as “no speculation about housing” and “stable development” have also been included in the CPC’s “14th five-year Plan and 2035 vision proposal”.
“Real estate is the biggest ‘grey rhino’ in terms of financial risk in China at this stage,” wrote Guo Shuqing, chairman of the China Banking Regulatory Commission. His reason is that of the more than 130 financial crises in the world, more than 100 are related to real estate. “Right now, real-estate related loans account for 39 percent of bank loans in China, and a lot of bonds, equity, trusts and other funds are going into the real estate sector.”
Ms. Li, a marketing manager at a mainland real estate company, told epoch Times that officials have repeatedly said that “houses are for living, not speculation,” but the Communist Party has been unable to curb this phenomenon, and the crisis has intensified.
Despite a series of policy initiatives, total financing in real terms rose 17.2% year on year (September data), she said, citing data from the Krei Research Institute, a popular reference in the property sector. “In the long run, real estate should not be used as a short-term stimulus to the economy. What China needs is sustained, stable and long-term economic development. But it will be hard to change that in the short term. “Land deals are still the quickest and roughest way for local governments to solve fiscal crises,” he says.
She further analyzed that all kinds of property speculation has already spread from tier 1 and 2 cities to tier 4 and 5 cities. Various concepts of “new areas” and “high-tech zones” have been flying around the country. “Real estate are also began to change the pattern property speculation, are emphasized that there is a self sustaining transition property of ‘run’, ‘business’ and ‘brigade operations’ and’ urban operators, from the earliest industrial estate (happiness) of an ancient name for China, the article brigade property (wanda, melting), such as to all kinds of endowment real estate, but inside is still to estate planning.”
“So there is a conflict between China’s desire to get away from a short-term stimulus based on real estate and the overall financial market’s desire for a short-term stimulus,” she said. I have seen a set of data, real estate accounted for 47 percent of bank loans in 2019, higher than guo shuqing said 37 percent, may actually be higher.”
Li Hengqing, a scholar at the Institute of Information and Strategy in Washington, SAID in an interview that the “gray rhino” guo saw would overwhelm many industries. “The first is to crush the real estate industry itself; Second, the collapse of China’s banking sector. It’s the same as the whole Wall Street crisis of 2008, “he said.
“There could be a big crisis in this sub-prime follow-on loan, the secondary loan. So these are real volcanoes that are now superficially hidden under a false vocabulary of prosperity.”
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