12/03/2020
- In response to the 2008 global financial crisis, China pumped a 4 trillion yuan (US$575 billion) into its economy but it led to a mountain of local government debt
- Various early indicators suggest China’s economy will slow in the first quarter of 2020, with some suggestions it will suffer a first contraction since 1976
President Xi Jinping said China must accelerate construction of “new infrastructures such as 5G networks and data centres” on top of speeding up “key projects and major infrastructure construction” in response to the economic impact caused by the coronavirus outbreak. Photo: Xinhua
China should not try to bolster its coronavirus-hit economy by again resorting to a massive debt-fuelled fiscal and monetary stimulus programme, according to a group of government advisers.
Various early indicators suggest China’s economy will slow in the first quarter of 2020, with some even suggesting it will suffer a first contraction since the end of the Cultural Revolution in 1976.
This raises the question if China will miss its key 2020 growth target, with voices on both sides of the debate discussing what stimulus policies are needed to offset the deep impact of the coronavirus.
China is already leaning towards some additional stimulus, with Premier Li Keqiang ordering the central bank pump additional money into the banking system, while President Xi Jinping has announced the need for more spending on “new infrastructure”.
Are there other ways out for China except stimulus policies?Liu Shijin
“Are there other ways out for China except stimulus policies?” rhetorically asked Liu Shijin, who previously worked closely with Vice-Premier Liu He, the top economic aide to Xi, at the Development Research Centre, the think tank attached to the State Council.
“If it really works, why can’t Japan and the United States reach a 5 per cent growth rate?”
It is believed China will need to achieve an average 5.6 per cent growth in 2020 to achieve its goal of doubling the size of its economy from 2010, which is a key goal for
of creating a “comprehensively well-off” society.
China’s economy grew by
6.1 per cent in 2019, and while it was the slowest in 29 years, the US economy only grew 2.3 per cent, with Japan’s estimated to grow by 0.9 per cent.
What is gross domestic product (GDP)?
Liu Shijin, who is now a deputy head of the China Development Research Foundation and a policy adviser to the People’s Bank of China, argued that a growth rate averaging 5 per cent over the next decade is sufficient for China to meet its development goals.
Growth in 2020, though, may well be below 5 per cent given that the impact of the coronavirus is “unprecedented” and larger than both severe acute respiratory syndrome (Sars) in 2003 and the 2008 global financial crisis.
Xi said earlier this month that China must accelerate construction of “new infrastructures such as
5G networks and data centres” on top of speeding up “key projects and major infrastructure construction already included in state plans” like additional high-speed railway lines in response to the economic impact caused by the coronavirus outbreak.
But as this will mainly rely on corporate and private investment, Liu Shijin feels it will be too small to engineer a major rebound in the growth rate.
When encountering challenges, we should first push forward new reform measures to unleash growth potential. Now is the right timeLiu Shijin
“It’s a different thing compared to real [government-led] economic stabilisation,” Liu Shijin told a web seminar hosted by Peking University’s National School of Development on Wednesday.
“When encountering challenges, we should first push forward new reform measures to unleash growth potential. Now is the right time.”
Instead, to support longer-term growth, China should put its efforts into the development of its “city clusters”, which could lead to higher spending on housing construction, urban infrastructure and manufacturing, added Liu Shijin, which would increase the growth rate by up to an additional percentage point over the next decade.
China has so far refrained from the massive stimulus programme it adopted in 2008 in response to the global financial crisis, which included a 4 trillion yuan (US$575 billion) plan that pumped cheap money into government-backed projects but also created a mountain of local government debt.
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Zhang Bin, a senior researcher at the Chinese Academy of Social Sciences, said infrastructure construction will remain an important part of any plan to support growth.
“If the funding [for the 4 trillion yuan stimulus] had come solely from treasury bonds or local government bonds [rather than risky lending], there wouldn’t be so much shadow banking, unmanageable credit expansion, high leverage, implicit liabilities or financial risks,” he said.
“If the balance sheets of corporations, households and local governments can’t be repaired, it might lead to insufficient demand and a decline into a vicious [downward] cycle.”
Zhang, like Liu Shijin, is a key member of the China Finance 40 Forum, a group of state economists who advocate more structural reforms to support the Chinese economy. In particular, Zhang has set sights on reforms that would boost consumption, which accounted for 58 per cent of Chinese growth last year.
“The biggest weak link of the Chinese economy is that 200 to 300 million
migrant workers can’t [legally] settle in big cities,” he said. “Only if they are able to settle in the city that China can be called a real well-off society. It will also boost the economy, lift demand for manufactured goods and unleashed consumption potential.”
Currently, most large Chinese cities only provide social services including health care and schooling to residents who have a legal permit, or hukou. Most migrant workers who come to the big cities for jobs are blocked from obtaining a hukou, meaning they have to travel back to their rural hometowns to have access to basic social services, so often do not settle in their adopted city.
In response to this idea, Xu Yuan, a professor at Peking University, called for the government to build 10 million affordable housing units annually to accommodate new urban citizens, which would address short-term economic pain and serve the nation’s long-term development.
China will release its annual growth target as well as other key goals, including the fiscal deficit ratio and local bond quota, at the National People’s Congress, although the annual parliamentary convention, previously scheduled for March 5, has been postponed, with a new date yet to be announced.
Source: SCMP
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25/11/2019
- Unit 121 on Lanman Hutong, about 10 minutes’ drive from Tiananmen Square and the Forbidden City, changed hands last month for 1.28 million yuan
- The new owner bought a 5.6-square metre (72 square feet) cubicle covered in bathroom tiles large enough to fit a bunk bed, with standing room only
A view of the 5.6 square metre cubicle-size home in Beijing on 15 November 2019. The home sold for 1.28 million yuan at auction. Photo: Louise Moon
A subdivided home in a run-down alley in Beijing recently sold for a record price at auction, as eager buyers piled in to get hold of its much sought-after address to gain access to some of the Chinese capital’s best schools.
A subdivided unit at No. 121 Lanman Hutong, about 10 minutes’ drive from Tiananmen Square and the Forbidden City, changed hands on November 11 for 1.28 million yuan (US$182,400) after 136 rounds of furious bidding during an auction in Beijing.
For 230,000 yuan per square metre (HK$23,850 per square foot), the new owner bought a 5.6-square metre (72 square feet) cubicle covered in bathroom tiles large enough to fit a bunk bed, with standing room only. That’s smaller than even Hong Kong’s notorious micro-apartments – also known derisively as shoebox flats or nano flats – which average about 200 square feet. A standard car parking space measures 126 square feet.
What the dilapidated space does have is an address that entitles its owner to a hukou, the household registration that is the prerequisite for access to schools, homes, civil service jobs, public health care and almost every aspect of daily life in the Chinese capital.
The alley on which No. 121 Lanman Hutong sits in Beijing on 15 November 2019. Photo: Louise Moon
Lanman Hutong, or the Alley of the Brilliant Drapes, sits in Xicheng district, a chequerboard neighbourhood criss-crossed with hundreds of alleyways that boasts three of the five highest-ranked schools in the city.
According to Beijing’s real estate regulations, one square metre entitles the owner a
hukou. That fuelled the rush by parents to buy property in the area to qualify for sending their children to such eminent schools as the Beijing No. 4 High School, whose alumni include
former Chongqing Commissar Bo Xilai, former China Development Bank president Chen Yuan and Citic’s chairman Kong Dan. Most of these bolt holes are now unoccupied after they have served their purposes, local residents said.
Lanman Hutong, or the Alley of the Brilliant Drapes, in the Xicheng district of Beijing, about 10 minutes drive from the Tiananmen Square and the Forbidden City, on 15 November 2019. Photo: Louise Moon
The auction result offers a peek into the growing speculative bubble in Beijing’s property market, a development that has defied more than two years of policymakers’ attempts to control. The average price of newly built homes rose 4.3 per cent in October to 60,894 yuan per square metre in Beijing, according to China’s statistics bureau data and Lianjia, a major real estate broker.
“Beijing’s homes have always been expensive, [particularly so] in Xicheng, where only the ultra-wealthy can afford to stay,” said Midland Beijing’s analyst Zhao Jia. “A million yuan is not expensive at all, to find space that close to the Forbidden City.”
Beijing’s average home price is equivalent to 24.9 years of the city’s median net income, excluding expenditures, according to data by E-House China Research and Development Institution. Hong Kong, the world’s most expensive urban centre to live and work in, requires 21 years of average income to affordable the average abode, according to the Demographia International Housing Affordability Study, as the city also boasts of a higher income and lower tax rate.
A tiny alleyway leading to No. 121 Lanman Hutong, which sold earlier this week for 1.28 million yuan in Beijing. Photo: Louise Moon
“It is not that easy for the average person to own property in Beijing,” said Midland’s Zhao. “For most homes in the city, 1 million yuan is only enough for a down payment.”
Unit 121 on Lanman Hutong is located among a cluster of siheyuan, as Beijing’s traditional courtyard homes are called. Bicycles, old washing machines and other household junk are piled along the maze of alleyways leading to the ground-floor unit.
Its auction drew 29 bidders starting from 470,000 yuan. The final winning bid prices the Lanman cubicle 35 per cent higher than a 100-million yuan villa with view of the Summer Palace in Beijing’s outskirts, on a per square foot basis.
To be sure, the unidentified buyer of the unit may be speculating for a quick flip, when the property is torn down, said Zhang Dawei, an analyst at Centaline Property Agency.
“This is more like a gamble, betting on the unit being demolished,” Zhang said. “If the odds are good, the buyer can pocket the [compensation], which could be several times what he bought it for. Even if it is not demolished in the short term, it is not bad to have some asset in the heart of Beijing.”
Source: SCMP
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22/07/2019
- Some 150,000 residents of Baishizhou have to leave by the end of September to make way for malls, hotels and high-end residential projects
- They worry about finding affordable housing in the city, and their children’s education
Urban villages like Baishizhou provide affordable housing, mostly for migrant workers. Photo: Phoebe Zhang
As their eviction deadline nears, all Chen Jian can think about is the wrecking ball – and where his family is going to go. He often dreams about the negotiations – with officials, real estate developers, landlords. On other nights, he cannot sleep at all.
“I’m mostly worried about my daughter – she starts secondary school in September,” said Chen, 41, who works as a quality supervisor for a foreign trading company.
His family of four lives in a cheap one-bedroom flat in Baishizhou, one of the last standing chengzhongcun, or “urban villages”, in the flourishing commercial zones of southern Chinese city Shenzhen.
The villages provide affordable housing – costing from a few hundred to a few thousand yuan per month – to a mostly migrant worker population that provides services and labour.
But Baishizhou, in the Nanshan district, will not be standing for much longer. Many tenants in the area have received eviction notices since June, telling them to move out before the end of September to make way for a real estate project led by Shenzhen-based developer LVGEM Group.
The developer bought the land and buildings from their landlords, and it plans to knock them down and replace them with malls, hotels, high-end residential projects and skyscrapers.
Some 150,000 people are affected, mostly migrant workers, and they will have to find new homes, change jobs or even move back home at short notice.
Chen Jian lives in a one-bedroom flat in Baishizhou with his wife, daughter and son. Photo: Phoebe Zhang
For Chen and more than 2,000 other families, their children’s education is the most urgent issue. He said they could move somewhere else nearby, but the rent would be more than four times higher. A cheaper area would mean a long walk to school for his daughter from the nearest subway station.
As the breadwinner, Chen’s monthly income of 12,000 yuan (US$1,750) has to cover the whole family. His wife takes care of their three-year-old son and their daughter, 12.
“If I were here by myself, I would just pack up my bags and go,” said Chen, who moved to Shenzhen from Henan province. “But I can’t – I have children, I would do anything for my children.”
Families who’ve lived in old Chinese town for generations being kicked out to make way for tourists
Urban villages are a phenomenon that grew from China’s rapid development. In the 1980s, soon after Shenzhen became the country’s first special economic zone, the local government expropriated mostly vacant land from villagers and allowed developers to build commercial properties there.
The locals invested the large sums of money they received into new living spaces in their villages, which they rented out to the migrant workers that flowed into the city amid a manufacturing boom.
These chengzhongcun emerged as a tangle of damp alleyways, where electricity and telephone wires hang like spiderwebs. They bustle with fruit carts, soy milk shops, cobblers, karaoke parlours, short-stay love hotels and hair salons offering massage services. The “handshake buildings” where people live are packed together so tightly that residents could reach out of the window and shake their neighbour’s hand in the opposite flat.
“I call this ‘voluntary urbanisation’,” said Duan Peng, an architect based in the city. Since he moved to Shenzhen in 2001, Duan has spent many days and nights in Baishizhou. He said its development was in line with the government’s urban planning policy, since it allowed migrant workers to live in a relatively prosperous area in the city centre rather than on its periphery.
“Handshake buildings”, where residents can shake their neighbours’ hands through the windows, are a feature of China’s urban villages. Photo: Phoebe Zhang
Chen moved to Shenzhen with his wife in 2000, and both their children were born there. They moved to Baishizhou in 2008 after he was introduced to his landlord, who is from Chen’s hometown and rented him the flat for 650 yuan a month.
The rent has gone up by just 300 yuan in the 11 years they have lived there. They have watched as new developments sprang up around them – amusement parks, a golf course, malls and an area that is home to some of the country’s top tech companies including Huawei, Tencent and DJI.
How the eviction of Beijing’s migrant workers is tearing at the fabric of the city’s economy
But away from the shiny new developments, 150,000 migrant workers from all over the country are packed into 2,500 buildings in Baishizhou, where rents and services are affordable.
The urban village is full of people like Chen. Small business owner Wang Fang came to Shenzhen from northeast China in 2003 and has lived in Baishizhou ever since. Six months ago, she signed a three-year lease on a commercial space and opened a dumpling restaurant, but she is worried about the future.
“I can’t go back home, I already have a Shenzhen hukou,” she said, referring to the household registration document that gives access to public services. “I don’t have land there any more and can’t make a living there [as a farmer].”
She has not been told she has to leave the restaurant, but Wang and her two sons have until the end of September – when the building’s water and electricity will be cut off – to vacate their flat.
“It’s only a matter of time before the business is shut down as well,” she said.
Small shops and street vendors line Baishizhou’s bustling alleyways. Photo: Phoebe Zhang
According to an online poll of 1,031 Baishizhou residents this week, about half said they may have to find another job, and more than 600 were concerned about their children’s education. The survey, conducted by Shenzhen University urban planning professor Chen Zhu, also found that 70 per cent of those polled planned to find another flat in the city, while 28 per cent would leave.
Duan said the evictions and redevelopment would inevitably affect the surrounding areas, as well as the residents.
“The prices of services in the neighbourhood will increase, because many of the workers [now providing those services] will move far away, and rents will increase as well,” he said.
But for many such redevelopments, while the government, landlords and village officials might be consulted, the tenants are left out.
“Most of these residents, their voices and their interests aren’t on the negotiating table – their losses aren’t calculated in the real estate developer’s demolition costs,” Duan said.
A receptionist at LVGEM said he was not aware of any complaints about the redevelopment, while emails to the company went unanswered.
Meanwhile the developer’s partner, Baishizhou Corporation, told Southern Metropolis Daily it would provide legal services, rentals support and school buses for tenants who will be displaced.
But it is not enough for migrant workers like Chen. Like many of those facing eviction, he fears he will have to pay more rent, and there may not be a school bus service in his area.
He mentions a slogan plastered on walls in the city, “Once you come, you’re a Shenzhener” – part of a government campaign to lure talent and investors.
Chen said he worried that Shenzhen wanted only hi-tech workers and luxury residential compounds in the city, leaving little room for low-income workers.
“Despite what the slogan says, you ask yourself, are you really a Shenzhener?” he said.
Source: SCMP
Posted in affordable housing, automotive special economic zone (SEZ, Baishizhou, breadwinner, chengzhongcun, commercial properties, dumpling restaurant, education, evictions, forced out, hotels, household registration document, hukou, landlords, malls, migrant workers, Nanshan district, negotiations, officials, real estate developers, residential projects, residents, Shenzhen, Shenzhen University, Shenzhener, skyscrapers, subway station, tourists, Uncategorized, urban villages, wrecking ball |
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