broadsword
Brigadier
What could possibly be the reasons for this?
Chinese Economics Thread
- Thread starter Norfolk
- Start date
What could possibly be the reasons for this?
Corruption and easy profits
Real estate has been an engine for growth for China for the last 2 decades. No question there is a lot of corruption involved but without the real estate boom, there wouldn't be the great infrastructure development in China and the emergence of many Chinese companies in construction, railway, utility, and even many high tech manufacture firms
China has benefited greatly through the real estate boom. Many regional government has been able to greatly develop and modernize their provinces and cities from land sales and those infrastructure development has also attracted many investment from manufacturers as railway and roads have made transportation cost lower.
Although, it is also true that many local government has become over-leveraged since 2008 and housing has become less affordable ever since. However, the turning point is 2015 when China again tried to crack down of over-leveraged property sector and signal to the property developers to stop from overbuilding and local government from diversify from land sales as the sole source of income.
However, capitals flight, an economy slowdown, and trade wars have forced the Chinese government to abandon the crackdown. As a result, Chinese government gave the property sector another chance to deleverage through shantytowns redevelopment. At that time, the Chinese government has explicitly told property developers that they should take the opportunity as the last chance to cut down debts and overbuilding of inventory. The result is housing price doubles or even triples in a matter of months for some cities.
Surprisingly, the Chinese government took the coronavirus restrictions as a chance of cracking down on everything especially property sector, My guess is that the restrictions prevent those shady businessmen from fleeing the countries. However, the crackdown has put a dent on Chinese economy as pandemic also took a toll on service sector. But the Chinese government probably doesn't have a choice as housing price had gotten out of hand and it is now or never and pandemic actually is the perfect opportunity for deleverage from their perspective.
China has benefited greatly through the real estate boom. Many regional government has been able to greatly develop and modernize their provinces and cities from land sales and those infrastructure development has also attracted many investment from manufacturers as railway and roads have made transportation cost lower.
Although, it is also true that many local government has become over-leveraged since 2008 and housing has become less affordable ever since. However, the turning point is 2015 when China again tried to crack down of over-leveraged property sector and signal to the property developers to stop from overbuilding and local government from diversify from land sales as the sole source of income.
However, capitals flight, an economy slowdown, and trade wars have forced the Chinese government to abandon the crackdown. As a result, Chinese government gave the property sector another chance to deleverage through shantytowns redevelopment. At that time, the Chinese government has explicitly told property developers that they should take the opportunity as the last chance to cut down debts and overbuilding of inventory. The result is housing price doubles or even triples in a matter of months for some cities.
Surprisingly, the Chinese government took the coronavirus restrictions as a chance of cracking down on everything especially property sector, My guess is that the restrictions prevent those shady businessmen from fleeing the countries. However, the crackdown has put a dent on Chinese economy as pandemic also took a toll on service sector. But the Chinese government probably doesn't have a choice as housing price had gotten out of hand and it is now or never and pandemic actually is the perfect opportunity for deleverage from their perspective.
broadsword
Brigadier
My idea of a Chinese utopia is one where even the migrant workers can afford a private apartment with three bedrooms, each with its own toilet, and a big kitchen. All without subsidies so that the family can afford to raise a family with three or more children.
Therefore, the price of housing has to be controlled, whether directly or indirectly.
Therefore, the price of housing has to be controlled, whether directly or indirectly.
It isn't going to happen for Shenzhen, Shanghai, Beijing or Guangzhou and some top tier cities. Migrant workers would never be able to afford that kind of apartment. However, it is possible for second tier cities and below as many of these cities can have average housing prices of 5000 yuan to 20000 yuan per sq meter.
As for top tier cities, Chinese government is using subsided apartment to house them just like Hong Kong and Singapore were doing. Hong Kong has a rental price of 2000 HKD for subsided housing. And China is planning to increase such housing but at bigger space for poorer population.
As for top tier cities, Chinese government is using subsided apartment to house them just like Hong Kong and Singapore were doing. Hong Kong has a rental price of 2000 HKD for subsided housing. And China is planning to increase such housing but at bigger space for poorer population.
antiterror13
Brigadier
but but but, NATO has extremely modern armed forces and very professional and proven forces ... and China hasn't fought a war since 1979 and lost to Vietnam (thats you would hear from western medias and military "experts")