Thursday, June 3, 2010

Another China data dump

Been a bit busy this last month with various stuff so the posts have been a bit light.

Here's a dump of China information from the last month. Something for you to chew on while I ready the next wave of postings.

I posted some video a while ago about the empty city of Ordos China. Someone recently went there and took some pictures.  Time magazine no less. Go over to Randomroger and get all the details.

Intelligent speculator has some more video on Chanos and how and where to invest in China, both up and down.  Please notice the name of the web site. Be careful investing in China whether bullish or bearish.

In a previous post I mentioned the idea of a property tax had been floated by the local officials in Shanghai.  The Chinese Feds came in and squashed the idea, stating it was a federal matter. Looks like the back and forth will continue.  From Caixin online on 05/18/2010:
(Beijing) - China's tax agency said that the authority to levy property taxes lies in the central government rather than local governments.

Niu Xinwen, the spokesperson for the State Administration of Taxation, said that local governments have no right to interpret property tax policy, either.
The Shanghai government was quoted by Xinhua as saying that it was determined to curb housing prices with "harsh measures." However, the scope of taxable residential properties has yet to be determined.
Individually-owned, non-business real estate is taxed in Provisional Regulations on Property Taxes issued in 1986. In order to curb surging housing prices, local governments are considering a residential property tax in order to tamp down demand.

Then again 4 days earlier a pilot project for property taxes was announced.  From Caixin online (05/14/2010)
(Beijing) - Living a life of ease in an upscale Chongqing villa soon may cost a lot more.In April, the Chongqing municipal government announced a plan to tax high-end apartment owners as part of a nationwide push to curb surging housing prices. Under the municipality's pilot proposal, the owner of a villa worth around 3 million yuan would pay about 10,000 yuan in property taxes every year. Chongqing Mayor Huang Qifan unveiled the plan on a government website just three days after the central government's cabinet, the State Council, announced April 17 new measures designed to cool real estate sales.
The preferred method of stimulus in China appears to be ordering the banks to LEND.  The banks then ask 'how much'  This may not work again if the Chinese deem another boost is needed.  The banks have run out of excess capital.  Don't be suprised if you see some serious secondary offerings from Chinese banks soon. From Caixin online -- 04/29/10
(Beijing) - First quarter reports by five joint-stock banks, the second rung of China's bank industry ladder after the five biggest state-owned banks, have revealed that behind the rapid growth in net profits, capital adequacy ratios have fallen. Some banks have dipped below the regulatory capital requirement.

Just a few days ago Shanghai announced stricter measures to cut down on home 'speculation'  From Chinadaily 05/29/2010
"Shanghai will take more strict measures in line with the central government policy," Chen said, adding that more efforts will be made in building economically affordable houses and cracking down on speculative house purchasing.
The Economist jumps into the fray with their own opinion of the Chinese property market.  They are of the opinion China will survive the upcoming property bust.  From The Economist 05/27/2010
If mortgages did turn sour, how badly would China’s banks suffer? China Merchants Bank’s mortgage book grew by 70% in 2009. But mortgages still amounted to only 23% of its total loans. In China’s other big banks, the share is less than 20%. Loans to property developers account for another 8% or so, according to Mr Rothman.

Local governments may be more exposed. They suffer from a chronic shortfall of tax revenues, which they partly fill by expropriating land from farmers and selling it to developers at a hefty markup. Their dependence on property for income is often overstated, however. They are counting on land sales and property taxes for less than 17% of their revenues this year, according to Vincent Chan of Credit Suisse, once fiscal transfers from the central government are taken into account.
You know it's serious when officials sitting on the equivalent of the Federal Reserve board acknowledges the problem.  From Naked Capitalism 06/01/10
“The housing market problem in China is actually much, much more fundamental, much bigger than the housing market problem in the US and UK before your financial crisis,” he said in an interview. “It is more than [just] a bubble problem.”…

Mr Li said the high cost of housing could hamper future growth by slowing urbanisation. Rising prices were also a potential political flashpoint, especially among younger people who felt locked out of the property market.
“When prices go up, many people, especially young people, become very anxious,” he said. “It is a social problem.”

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