Skip to content

Economy/Resources - 3. page

Sohu: Average Chinese People Face Heavy Housing Debt and a Housing Surplus in Small to Mid-sized Cities

Sohu published an article on China’s housing market stating that average Chinese people face heavy housing debt. It predicts that a surplus in the housing market will develop in many small to mid-sized cities and in the countryside. A translation of two major points contained in the article follows:

1) For an average Chinese family the value of their house accounts for the largest portion of their wealth. According to a 2017 Wealth Research report that The Economic Daily published, the value of a family’s property accounts for 70 percent of their total assets. Those wealthy families who sit at the top of the pyramid find it very affordable to pay cash for their housing. However, an average family can only afford such a purchase if they take out a loan and borrow money. As they enjoy an increase in wealth they also have to bear a heavy debt payment on their loan. For cities like Beijing, Shanghai, and Shen Zhen, a house can easily cost over tens of millions of yuan. For an average middle income family that has an income of 30,000 to 50,000 yuan per month (US $4,760 to US $7,934 a month), many take out home loans in the millions of yuan. They only have 10,000 – 20,000 yuan (US $1,587 to US $3,174 a month) left to spend each month and they still have a child to raise. Their money situation is so tight that they live like poor people but sit on a high priced property.

2) We don’t need to wait for a sharp decrease in population to see signs of a housing surplus in China right now. The signs are here. For example, in Northeastern cities, where the population is decreasing and the economy is declining, the real estate market is very slow. There is a serious housing surplus in those regions. In the third or fourth tier small to middle sized cities, largest numbers of houses are vacant. For those who were born after 1980, 1998, or 2000, if they live in fourth and fifth tier cities, they may own at least two pieces of residential property. One is their own house and the other one is the house they inherited from their parents. Many of them may own as many as three or four houses. It is expected that, after decades, as the population in China drops rapidly, other than those top 20 big cities, the rest of the small to middle sized cities and the countryside will have a surplus of housing.

Source: Sohu, February 8, 2018
http://m.sohu.com/n/530472818/

Sinchew: Most of the Contractors of “The Belt and Road Initiative” Are Chinese

Major Singapore newspaper Sinchew recently reported that, based on a U.S. think tank study, China’s grand “The Belt and Road Initiative” which pushes infrastructure work across Eurasia has largely contracted out work to Chinese bidders. Among the 34 current projects in Europe and Asia, around 89 percent have been contracted to Chinese construction companies and only 11 percent have been given to contractors from other countries. This dramatic difference made the lofty tone of the Belt and Road Initiative look questionable, especially when China is counting on the Plan to win friends in over 70 countries. International analysts have expressed their concern about this China-centric approach, since more and more countries are rethinking their support for the grand Chinese Plan. Compared to the Chinese way of favoring its own contractors, contracts that the West has funded, typically under the World Bank and the International Monetary Fund (IMF), are more neutral toward the bidders and the grants have been more diversified. The study showed that 41 percent of these grants were given to local contractors, 29 percent went to Chinese contractors, and 30 percent went to a bidder from a third country.

Source: Sinchew, January 25, 2018
http://bit.ly/2rJLUtN

More Fake GDP Numbers Reported in China

Xinhua reported that, recently, the Inner Mongolia Autonomous Region and Tianjin City revised down their 2016 GDP numbers. Inner Mongolia adjusted down its public budget revenue by 26.3 percent, or 53 billion yuan (US$8.5 billion) and industrial added value down by 40 percent, or 290 billion yuan (US$46 billion). Tianjin lowered its Binhai District’s GDP from the previous amount of 1 trillion yuan (US$160 billion) down to 665 billion yuan (US$106 billion), a cut of one-third.

These are the second and third cases in which local governments have revised the 2016 level they reported for GDP. The first to admit reporting an inflated GDP was Liaoning Province in early 2017, when it said that its GDP in 2016 actually went down 23 percent from the 2015 level.

It has long been known that China inflates its GDP. Cheng Xiaonong, a political and economic researcher, provided two reasons why the local governments are now willing to admit faking GDP:

First, Xi Jinping’s administration no longer uses the GDP growth rate to evaluate local officials. The newly appointed officials feel that they don’t have to carry the weight that the incumbent left them because they may not be able to make that fake number anyhow. If they cut down the previous year’s number, they can show a growth in their years.

Second, with a lower GDP, the local government can show the central government that they had less money and can request more financial help from the central government.

Sources:

1. Xinhua, January 21, 2018
http://www.xinhuanet.com/fortune/2018-01/21/c_1122289640.htm
2. Epoch Times, January 20, 2018
http://www.epochtimes.com/gb/18/1/20/n10073822.htm

Xinhua: Chinese SOEs Are “Big but Not Strong”

According to an article that Xinhua published, in 2002, only 11 Chinese companies made the Fortune Global 500 list, but, in 2017, 115 Chinese companies made the list compared to 132 U.S. companies. Most of the Chinese companies are from the bank, insurance, telecommunication, and electric grid industries while 60 percent of the companies were SOEs (state owned enterprises) and accounted for over 80 percent of the net capital and total income. However the article called these SOEs “big but not strong.” They lacked the ability to be competitive, especially in value creation ability. The article stated that the Chinese companies lagged behind in Internet, information technology, pharmaceutical, automotive, military, semiconductor, and chip industries when compared to the Western companies. Among those 109 Chinese companies on the Global Fortune 500 list, the Return of Asset rate was only 1.65 percent compared to 4.79 percent for the U.S. companies. Chinese SOEs are behind in the high end core technology and the spare parts industry and there are no companies that are even comparable with the Western companies in the pharmaceutical and semi-conductor industries. The article reported that the Chinese SOEs need to make breakthroughs in renovation and resource dependency and to rely less on core product imports while improving on brand position and quality.

Source: Xinhua, January 15, 2018
http://www.xinhuanet.com/politics/2018-01/15/c_1122258015.htm

Duowei: Another Case of a Local Chinese Government’s GDP Data Fraud

Duowei news reported that, following the three northeastern provinces, another act of “cheating the Party Central Committee” had occurred. In recent days, one of China’s local governments was exposed for committing GDP data fraud. Officials from Inner Mongolia admitted that they had committed massive falsification of financial and economic data. Those responsible had artificially increased the industrial added value in 2016 by 40 percent. The falsified accounts amounted to an addition of 290 billion yuan (US$44.69 billion), which was the equivalent of the total GDP of Inner Mongolia’s capital city Hohhot. On January 7, Chinese media reported that Inner Mongolia, after the financial department’s repeated auditing corrections, had to reduce its income from its public budget in 2016 by 53.0 billion yuan (US$8.16 billion), accounting for 26.3 percent of the total. The industrial added value in 2016 should be reduced by 290 billion yuan, accounting for 40 percent of the industrial added value for the entire region.

Source: Duowei, January 8, 2018
http://news.dwnews.com/china/news/2018-01-08/60034109.html

Free High Quality Images Download Free Stock Images Download Free Images Free Stock Photos & Images Beautiful Free Stock Photos (CC0) Free stock photos