First, mainland China’s GDP growth figures have never been an economic issue, but a political one. The Communist authorities have always believed that mainland China’s GDP growth must be guaranteed to be above 7%, or 6%, for mainland China’s economy and society to develop properly. Mainland China’s GDP growth rate for 2019 is 6.1%.
In fact, around the world, many scholars and institutions are skeptical of the official data coming out of the Chinese Communist Party, but they just suffer from the lack of evidence. But from some of the data of mainland China’s Bureau of Statistics from everyone to each other, we can actually still find a lot of problems. For example, the author himself found contradictions in the data of fixed asset investment in 2019 and 2020. Obviously, the fixed asset investment is down, the statistics bureau hard to say that it is an increase. This is a clear way to poke holes in their data lies, many of which are probably fabricated.
Even though they know that we know their data is falsified, they still need to make up a set of data to show the world a good image of China’s economy, internally to make the people feel that they are governing the economy well and enhance the legitimacy of their rule, but also to help show the international economic achievements of mainland China and attract foreign investment in, so to speak, two birds with one stone.
So, if the economic growth rate is below the figure of 6%, it may be a case of poor management of the economy, and society will go wrong. Of course last year’s Epidemic was a special case, this year is a normal year, if Li Keqiang put mainland China’s GDP growth target below 6%, it may instead trigger more suspicion.
Second, I think this figure is estimated based on mainland China’s overall economic performance last year. Last year, mainland China’s first quarter was down 6.8% year-on-year, the second quarter grew 3.2%, the third quarter grew 4.9%, and the fourth quarter grew 6.5%. The first and second quarters were not considered normal because of the impact of the epidemic. And the third and fourth quarter on average, basically is about 6% growth rate. In particular, the fourth quarter growth rate reached 6.5%. You can push the economic growth rate for next year to be the same as the fourth quarter. If you then consider the slow withdrawal of loose monetary policy next year, after the implementation of monetary policy normalization, as well as China’s exports this year without the dividends of last year’s epidemic, exports may not be so strong, these discounts down to set a growth target of 6% is understandable.
Again, last year’s economic growth in mainland China was only 2.3%, the base is relatively low, this year many services will be more open, in a low starting point to achieve 6% growth, as long as a little effort can be achieved, it is not a difficult thing.
Of course, finally, there is a “trick” is the National Bureau of Statistics of mainland China, even if the economic growth target can not be achieved, as long as the Bureau of Statistics overtime, basically can make these data very beautiful look.
When it comes to Li Keqiang’s work report, the target of adding 11 million new jobs in urban areas is also very strange. Last year, the economy grew by 2.3%, but 11.86 million people were employed in new cities and towns. This year’s economic growth target is 6% GDP growth, which is 2.5 times of last year’s, but the number of new urban workers is only 11 million, which is the same as last year. This can only mean two things, either last year’s economic growth rate was fake and the number of new jobs was fake. Either the target for this year is set too low and there is extreme pessimism about economic growth this year.
Then there is the Consumer Price Index (CPI), which is set at a target of about 3% annual growth this year, while last year the CPI rose 2.5%. Of course this is all watered down data released by the mainland China Bureau of Statistics, which we will assume is true. The upward revision from 2.5% last year to 3% this year indicates, first, that Inflation is worse this year than last. Secondly, the target of 3% may only coax officials who can be reimbursed for Food, clothing, housing and transportation, but for the common people whose energy, food, oil, food and daily necessities are all going up in price, no one may believe that the CPI will only rise by 3%. This year, the global release of water, the pattern of inflation has basically been established. Just be prepared to meet the price hike.
When it comes to real estate mentioned in this year’s government work report, here, incidentally, I also give you an explanation. Because many people are concerned about the property trend in mainland China, and the two sessions can be said to set the tone for the whole year real estate.
The work report mentions protecting the housing needs of the masses. It seems official, but the actual meaning may be very deep, and it can even be said that “protect the masses’ housing needs” is more important than “housing is not speculative”. The latter includes the former, and it is obvious that the latter is increasingly more important than the former. Of course, it is one thing to say, but it is another thing to be able to make the people of mainland China live in their own houses.
The house is used to live, not for speculation positioning, stable land prices, stable house prices, stable expectations. “This is the basis of the commercial housing market and is a major principle, the three stable is the overall approach of “housing is for living, not for speculation”, the two are the relationship between the means and the goal. At the beginning of this year, dozens of control measures were intensively introduced across the country, regardless of the three red lines of debt of real estate enterprises or the red line of banks issuing mortgages, including the policy of housing land supply, so to speak, are heavy-handed. There are also waves of property market regulation in Shanghai, Hangzhou and Shenzhen. More subtle is not mentioned “city-specific policies, a city a policy”, it can be seen that this year from the national point of view or a year of tight real estate.
The third concern about housing mentioned in the work report is to solve the outstanding problem of housing in large cities, by increasing land supply, arranging special funds, centralized construction and other methods. The reference to “solving the outstanding housing problems in big cities” first appeared in the Central Work Conference at the end of last year, but we didn’t pay attention to it at that Time. But the facts tell us that no phrase here is for nothing, especially some kind of new mention, which means that there will be a series of market regulation to start.
As expected, less than 100 days after speaking these twelve words, the regional regulation and control policies for real estate hotspot cities are really one after another, especially Shenzhen and Shanghai are the most prominent.
Shenzhen is obviously “catching up on homework”, from the large-scale start according to the points shake, to strict investigation of the inflow of business loans, and then to the highly innovative official reference price introduced and applied to the bank loan issuance. It is clear that Shenzhen is implementing the spirit of this statement.
Shanghai, which is much smarter than Shenzhen, also saw prices jump in the fourth quarter of last year, and Shanghai also began adjusting its policies fairly frequently. But the difference with Shenzhen is that Shenzhen is completely austerity policy, while Shanghai is a tight side, while the release, just the other day planning the five new cities around Shanghai policy, it is clear that the government to guide the hot money, guide the direction of purchasing power. Neither let the purchasing power out of Shanghai, nor let a certain area speculation is too hot.
The fourth question of the work report and property-related expression is to effectively increase the supply of guaranteed rental housing and common property rights housing, standardize the development of long-term rental housing market, reduce the burden of rental housing taxes and fees, and do their best to help new citizens, young people, etc. to alleviate housing difficulties.
For the protection of low- and middle-income group housing, the work report discusses the most. One of the methods can be summarized as two: renting housing and buying shared property rights. The issue of rental housing is familiar to everyone, and there are many projects landed by various city governments.
In addition, because there were many long term rental apartment company mines last year, many young people were pitted and lost their money, which became a big focus of the whole society. Whether it is the tenant or social capital will not touch this field immediately, the state is also guiding investment in this field, the most obvious is “tax reduction”, this field in the future tax will drop to a very very low stage, and even the state money to subsidize is not impossible.
For the method of “buying”, the Chinese Communist authorities recommend the model of “shared ownership”. This semi-guaranteed, semi-commodity housing product has been implemented in Beijing for several years and is supposed to have some effect on stabilizing the Beijing market. This time, it will be extended to the whole country, most likely in the first few big cities where real estate is hot.
So to sum up, first of all, for eighty percent of the city, stabilize the current situation on the line, do not require tightening, of course, can not relax, you can engage in some talent to warm the market can be, but large-scale open restrictions on purchases, loan restrictions, price restrictions and other major policies are not allowed.
Secondly, for ten percent of the house prices may fall more substantial cities, such as Tianjin, the government should acquiesce to its small-scale adjustments, such as phased release, regional release, after all, the three stable in stable land prices, stable house prices, stable expectations is a two-way goal, including not only to prevent too fast rise, also includes too big fall. For example, the current domestic Tianjin as the representative of the northern cities of housing prices fell relatively quickly, this very bad momentum, is the top of the Communist Party of China to focus on preventing.
The key is to reflect the phrase “solve the outstanding housing problems in large cities”, so it is basically certain that this round of intensive regulation and control for first-tier cities will continue at least until the first half of this year, and those who need to buy homes in these cities should be prepared in their hearts.
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