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Monday 26 October 2009
China risks property bubbles for economy
China is risking property-market ‘bubbles’ to encourage growth in the world’s third-largest economy, according to former Morgan Stanley Asian economist Andy Xie.
(HONG KONG) China is risking property-market ‘bubbles’ to encourage growth in the world’s third-largest economy, according to former Morgan Stanley Asian economist Andy Xie.
‘People are looking at the bubbles as a way to gain economic growth in the short term,’ Mr. Xie said in a Bloomberg Television interview here yesterday. ‘They are not sure of long-term damages that they may suffer.’
Property sales and values have surged as the government implemented a US$585 billion stimulus package and banks extended a record US$1.27 trillion of credit.
China’s economy expanded 8.9 per cent in the third quarter from a year earlier, the statistics bureau said yesterday, while home prices rose at the quickest pace in a year in September, government reports showed last week.
Soho China Ltd, the biggest property developer in Beijing’s central business district, said on Oct 20 that pre-sales will surpass 10 billion yuan (S$2 billion) for the first time this year ‘largely’ because of the government’s stimulus plan.
‘Land prices have become so elevated,’ said Mr. Xie, who correctly predicted in April 2007 that China’s equities would tumble. ‘The economy has become so dependent on property and the prices are so high and it carries a lot of risk for the country going forward.’
The country’s cabinet said it will continue with monetary and fiscal stimulus measures even after the economy exceeded officials’ expectations for the first nine months of the year.
China will ‘maintain the continuity and stability of macroeconomic policies’, the State Council said in a statement on a government website on Wednesday.
China faces increasing difficulty in managing liquidity and the structure of loans is ‘not rational’.
A measure of property developers on the Shanghai Composite Index has more than doubled this year, compared with the 68 per cent gain by the broader gauge. The Shanghai measure fell 0.3 per cent to 3,063.01 at 2:09pm.
China Vanke Co, the nation’s largest developer by market value, increased average apartment prices last month, charging 10,168 yuan per square metre, 26 per cent more than a year earlier and 4 per cent more than the previous month, the developer said last week.
‘Actual consumption depends on government consumption and enterprises,’ said Mr. Xie, now an independent economist based in Shanghai. ‘The only thing they can think of they could get it up is property, and so they are going for that.’ - Bloomberg
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China risks property bubbles for economy
Bloomberg
23 October 2009
(HONG KONG) China is risking property-market ‘bubbles’ to encourage growth in the world’s third-largest economy, according to former Morgan Stanley Asian economist Andy Xie.
‘People are looking at the bubbles as a way to gain economic growth in the short term,’ Mr. Xie said in a Bloomberg Television interview here yesterday. ‘They are not sure of long-term damages that they may suffer.’
Property sales and values have surged as the government implemented a US$585 billion stimulus package and banks extended a record US$1.27 trillion of credit.
China’s economy expanded 8.9 per cent in the third quarter from a year earlier, the statistics bureau said yesterday, while home prices rose at the quickest pace in a year in September, government reports showed last week.
Soho China Ltd, the biggest property developer in Beijing’s central business district, said on Oct 20 that pre-sales will surpass 10 billion yuan (S$2 billion) for the first time this year ‘largely’ because of the government’s stimulus plan.
‘Land prices have become so elevated,’ said Mr. Xie, who correctly predicted in April 2007 that China’s equities would tumble. ‘The economy has become so dependent on property and the prices are so high and it carries a lot of risk for the country going forward.’
The country’s cabinet said it will continue with monetary and fiscal stimulus measures even after the economy exceeded officials’ expectations for the first nine months of the year.
China will ‘maintain the continuity and stability of macroeconomic policies’, the State Council said in a statement on a government website on Wednesday.
China faces increasing difficulty in managing liquidity and the structure of loans is ‘not rational’.
A measure of property developers on the Shanghai Composite Index has more than doubled this year, compared with the 68 per cent gain by the broader gauge. The Shanghai measure fell 0.3 per cent to 3,063.01 at 2:09pm.
China Vanke Co, the nation’s largest developer by market value, increased average apartment prices last month, charging 10,168 yuan per square metre, 26 per cent more than a year earlier and 4 per cent more than the previous month, the developer said last week.
‘Actual consumption depends on government consumption and enterprises,’ said Mr. Xie, now an independent economist based in Shanghai. ‘The only thing they can think of they could get it up is property, and so they are going for that.’ - Bloomberg
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