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Massive Price Reduction on Pre-Owned Houses Is Expected

The week of May 1 (China’s Labor Day) used to be one of the hottest real estate sales weeks. However, this year, the sales volumes of both new houses and pre-owned houses have been low. For example, among the largest four cities with the highest housing prices in China, only 13,928 pre-owned housing units were sold in Beijing in April, a drop of 37 percent from the 22,192 units in March. Shanghai dropped by 27 percent and Guangzhou and Shenzhen were down by 14 percent and 19 percent, respectively.

On the other hand, a number of pre-owned housing units have kept coming on the market. Shanghai has around 200,000 units listed for sale. Approximately 13,000 units have been added each week for the past two months. However, only 17,000 units were sold in the entire month of April.

China had 606,000 foreclosed housing units auctioned off in 2022, an increase of 35.7 percent from 2021. Unlike the U.S. where a person can stop makjng payments on his mortgage and owe the bank nothing after declaring bankruptcy, Chinese law says that even if a person chooses to declare  bankruptcy or stop making payments on his mortgage, he is still liable for the remaining debt. Therefore, once a person is unable to make his mortgage payment, not only does he lose the down payment on his house as well as the subsequent payments, but he still has to pay the remaining debt and will be put on many spending restrictions until he clears his debt. This tough law gives people a great incentive to sell their house instead  of declaring bankruptcy if they do not want to continue their mortgage payments. China announced on April 25 that it implemented a nationwide real estate registration. Many people felt this was a step to prepare for adopting a real estate property tax, which is bad news to those who own many properties.

The “landlord tax” even came out faster than the property tax. Three provinces including Hebei, Hunan, and Yunan piloted the tax last year. The government will collect a 10 percent tax on rent if an individual rents out part of his own residence and 20 percent tax on rent from a non-residence.

All these factors will drive more people to sell their houses. A price reduction is unavoidable.

Source: VCT News, May 15, 2023
https://vct.news/news/f26f9d83-7acb-4ebc-99dc-88c82ffb3bd1

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The Chinese Government Refused to Help Its Citizens Who Were Kidnapped to Work as Slaves to Conduct Telemarketing Fraud

Some Chinese and Taiwanese were enticed to go to Southeast Asian countries for work and were then kidnapped there and forced to conduct telemarketing fraud against the Chinese people. Recently Little Chen, a man trapped in Myawaddy, Myanmar, called Radio Free Asia (RFA) to help. An RFA reporter spent a month attempting to contact various authorities in China to request help for him, but not a single office extended a hand.

Little Chen was from Hunan Province. He and two other fellow Hunan residents were sold by kidnappers to the East Wind Park in Myawaddy. He said that over 1,000 Chinese were working as slaves at that park. The slave master asked for US$30,000 to give him his freedom, but his family did not have the money. The slaves were closely monitored and were not allowed to contact their family members or friends for help.

Somehow Little Chen’s friend managed to contact his family in Hunan. His family reported the situation to the Hunan police, but the police took no action and instead, asked him to come back to China and warned that he would face criminal charge if he did not come back soon.

An RFA reporter tried to contract China’s Embassy at Myanmar, but none of the calls to listed public phone numbers went through. The reporter then contacted the Hunan Provincial Police Bureau, but the officer there rejected the request for help. The reporter contacted the office of China’s Ministry of Foreign Affairs and was told to contact the diplomat security bureau. The reporter contacted the diplomat security bureau, but the bureau staff said this was not their responsibility. The reporter contacted China’s Embassy in Thailand, since Thailand was just next to Myawaddy. The embassy referred the reporter to contact the Chinese Consulate General in Chiang Mai. The consulate told the reporter they knew that many Chinese were trapped in Myanmar, but said it was outside their scope. Only if those Chinese came to Thailand could they help. However, they do not suggest that they cross the Thai border since that is illegal. The reporter asked the progress of the joint effort to clean-out the telemarketing fraud by China, Myanmar, and Thailand; but the consulate staff said there is no such thing at all.

Little Chen has been losing his hope.

Source: Radio Free Asia, May 5, 2023
https://www.rfa.org/cantonese/news/myanmar-05052023125339.html

Briefings | | |   @CS Government/Politics Social Stability

Public Opinion: The Six Huge Costs of the Three-Year Zero-COVID Policy

Lao Man (老蛮), an individual commentator in China, known for his writing on China’s economy, posted an article to list six prices that China paid for adopting the “zero-COVID” policy for the past three years:

  1. The fiscal deficit increased by 60 percent in those three years.
  2. The collapse of municipal investment companies (these companies are set up by local governments as a vehicle to raise money to finance government spending, usually using land which the government owns as collateral).
  3. The collapse of the government’s credibility.
  4. The collapse of the birth rate.
  5. The withdrawal (departing from China) of foreign companies.
  6. The general public’s decision not to take out loans to finance their purchases after they lost hope in the future.

Source: China News Digest, May 8, 2023
http://hx.cnd.org/2023/05/08/老蛮：清零三年的六个巨大代价/

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Government Fined Companies for Lowering Housing Prices

Though many Chinese real estate developers are facing severe financial problems, the government does not allow them to lower housing prices to speed up the inflow of cash. The communist regime is afraid that if it lets housing prices float, a freefall in the prices will occur and wipe out the  tremendous savings that people have poured into their houses, and thus create social turmoil and shake up the Communist party’s rule.

On May 5, the Bureau of Housing and Urban-Rural Development of Kunshan City, Jiangsu Province, sent out an official notice to fine two companies for dropping the sales prices of their newly-built apartments by 20 to 30 percent. It said the two companies “had disturbed the regular order of the real estate market and created a social instability factor.”

On the other hand, the two  companies, after lowering their prices, were able to  sell their inventories quickly since the other companies stayed at the high price following the government’s request.

Source: Sina, May 7, 2023
https://news.sina.com.cn/minsheng/2023-05-07/doc-imysxqsz9123109.shtml#/

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Local Government Called for the Central Governments to Take Over Their Debts

Some China’s local governments admitted that they could no longer handle their debts and called for central government’s help. The Research Center on Development, Guizhou Province said that Guizhou Province “is unable to effectively resolve the (local debt) problem on its own.” The center made the statement in a report “Study on the Resolution of Local Government Debt,” which pointed out that local debt is a significant and urgent problem, but it is extremely difficult for the local governments to resolve it due to their limited financial capability. The report is unavailable on the Internet now.

Some local governments in Yunnan Province also reported desperate debt situation. By end of 2022, Yongping County’s total debt reached 3.44 billion yuan (US$500 million). Its debt ratio reached 991 percent and fiscal self-sufficiency rate was only 15.66 percent. Tengchong City also claimed financial difficulty where its fiscal capability could just keep the government payroll going.

Source: China News Agency (Taiwan), April 28, 2023
https://www.cna.com.tw/news/acn/202304280110.aspx

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Fact Check: Beijing Gave Money to Attract Countries to Switch Diplomatic Ties from Taiwan to Itself

On March 27, China’s Foreign Ministry spokesperson Mao Ning claimed that China didn’t use money to influence or, in fact, to buy diplomatic relations with Honduras. Honduras cut its ties with Taiwan (the Republic of China) and established relations with Beijing (the People’s Republic of China) on March 26. Mao further claimed that there were no preconditions for Panama or any other country when they established relations with China in the past few years.

Radio Free Asia, however, did a fact check and found that Beijng’s claim was false. RFA concluded, “The People’s Republic of China has indeed set preconditions for establishing diplomatic relations with China and has provided a large amount of economic and non-economic assistance and incentives to attract countries if they would break off diplomatic relations with Taiwan.”

For example, Costa Rica established relations with Beijing in 2007. China committed to provide US$30 million in cash within two years of the establishment of diplomatic relations and an additional US$100 million to be delivered through China’s regular “turn-key” program.

Panama established relations with Beijing in 2017. Since then, China has provided US$1.86 billion in infrastructure and other investments to Panama. Beijing also donated US$143 million to Panama after establishing their relationship. It didn’t disclose the donation because it didn’t want to give the impression that “they pay a price (for countries) to break off from Taiwan.”

The Dominic Republic established relations with Beijing in 2018. From 2019 to now, China has provided US$490 million in infrastructure and other investments to the Dominic Republic. The research estimated that Beijing provided US$3 billion in financial aid to the country. China also donated US$30 million in 2021.

During the year when El Salvador established diplomatic relations with Beijing in 2018, Beijing provided El Salvador more than 3,000 tons of rice and pledged US$150 million in aid.

Immediately after the establishment of diplomatic relations in 2021, China pledged to donate one million doses of COVID vaccine to Nicaragua. In addition, Beijing reportedly provided an unspecified amount of supplies to the Nicaraguan police riot squad, where the Nicaraguan police force is led by the father-in-law of Daniel Ortega, the dictatorial President of the country.

It is not clear how much Beijing provided to Honduras to get it to switch sides. Reuters reported that before switching to Beijing, Honduras asked Taiwan for US$2.5 billion in aid which its Foreign Minister Eduardo Enrique Reina called “not financial aid” but a “negotiated refinancing mechanism.”

Source: Radio Free Asia, April 21, 2023
https://www.rfa.org/cantonese/news/factcheck/internationalrelations-04212023141728.html

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Top Officials Will Report Work to the CCP Central Committee and to Xi Jinping

Xinhua News Agency reported on March 2 that, “According to the relevant provisions of the Party’s Central Committee, members of the Politburo; the Secretaries of the Party’s Central Committee Secretariat; members of the CCP committees at the Standing Committee of the National People’s Congress, the State Council, and the National Committee of the Chinese People’s Political Consultative Conference (CPPCC); and the Party Secretary of the Supreme People’s Court and the Supreme People’s Procuratorate shall report to the Party Central Committee and to General Secretary Xi Jinping in writing every year.”

All these officials are at the State level or Vice-State level. There are 24 members (including Xi Jinping) in the party’s Politburo, 7 Secretaries at the Secretariat, 10 members at the Congress’s party committee, 10 members at the State Council party committee, 12 members at the CPPCC party committee, one party secretary of the Supreme Court, and one party secretary of the Supreme Procuratorate. Excluding overlapping counts, a total of 57 officials will report to the CCP Central Committee and Xi Jinping.

Source: People’s Daily, March 3, 2023
http://politics.people.com.cn/n1/2023/0303/c1024-32635242.html

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