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The Chinese Communist Party (CCP) official data shows,
this November housing prices have dropped in more cities.
According to the '2012 Social Bluebook' published by CASS
(Chinese Academy of Social Sciences), the real estate's collapse will fatally impact China's economy.
The survey shows, in November, the average housing prices
dropped second month in a row in China's 70 major cities.
The number of cities with month-to-month
decreasing new housing prices rose to 49, out of 70.
This is 15 more compared to last month's figure.
In 16 cities housing prices remained flat.
'2012 Social Bluebook' released by CASS on December 19,
states, China's property development is closely linked to the local economy.
The real estate sector's collapse
would have a fatal effect on the economy.
Thus, the issue of how to handle the new situation
becomes critical for the economy's healthy development.
Professor in economics at University of South Carolina,
Frank Tian Xie analyzes the reasons.
Prof. Xie: "China's housing prices' soaring
stems from two reasons.
One is the monopoly of the state, the second is the vested
interest groups' gaining predatory benefits from the populace.
The current housing price plunge is due to cash flow shortage.
That is, Chinese civilians lack money to spend.
The powerful groups push housing prices, but if civilians have
no money to buy, the houses will sit, unable to be sold."
Prof. Xie said that the housing bubble is becoming too large,
beyond the limit of what the Chinese people can afford.
The housing prices' drop may ease some of them a little bit.
But not those who have bought houses.
Especially new owners, prices' plunge may turn their houses
into negative equities, thus wasting their savings.
That would incite people's discontent,
triggering social unrests.
Prof. Xie: "A sudden drop in house prices
is likely to bring an economic turmoil.
Because many houses that were sold, that have been built,
and that are stocked up now for sale, are all in loans.
China' state-owned banks granted massive amount of loans
for local infrastructure development.
Once housing prices fall, these loans will become bad debts
and pull down the banking system."
Economics scholar Qi Yanchen believes that many
property developers had fled due to operation failures.
Then the authorities had to take over,
which added to the local financial burden.
On the other hand, the construction sector directly impacts
its downstream enterprises, like materials' suppliers, etc.
However, Qi sees a positive side in the falling house prices,
as it can give a hope to the not so rich to buy a house.
Qi Yanchen: "The house prices falling is likely to hit
most directly the local authorities' land finances.
The local land finances in a broad sense
still include tax revenue from housing transactions.
So, local authorities' fiscal revenue will be affected."
The New Housing Price Index of 70 cites shows a steady
drop in the average month-to-month decrease since April.
In November, the figure reached 0.19%,
with a full-scale dropping starting in the first-tier cities.
Prof. Xie points out that the CCP regime is very concerned
about the house prices' plunge.
Firstly, it is worried about the losses
of vested interests' groups.
Secondly, it fears the aftermath will lead to the collapse
of its banking and financial system.
However, the CCP regime is unwilling to see a quick hike,
as it will fuel discontent amongst the populace.
Thus the regime is caught up in a dilemma on the issue.
Prof. Xie analyzes that the Beijing regime is helpless
in stopping the housing prices from falling.
Putting more money into it will only cause further inflation.
He concludes, China's property will face further decline.
Prof. Xie: "China's economy is clearly worsening.
The real estate bubble should burst soon.
So my guess is that next month,
the housing prices will continue to fall."
The '2012 Bluebook' also states, commodities' and houses'
prices are ranked as the top two concerns for people in China.
NTD reporters Zhou Yulin, Song Feng and Xiao Yan
《神韵》2011世界巡演新亮点
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关键时刻:中国泡沫 China Bubble!!!by TheChentq2,111 views
@sciflyer67 Not only that, but that will quadruple their GDP tomorrow, will become the military superpower of the world next week, will colonize the moon by February, and rule the world by Spring.
TheDualEconomist 2 months ago
But I thought China was going to save Europe by buying all those soverign bonds from bankrupt countries???
That is what Merkozy was saying. EFSF = FAIL
sciflyer67 2 months ago