{"id":1714374,"date":"2022-10-28T06:00:09","date_gmt":"2022-10-28T10:00:09","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1714374"},"modified":"2022-10-28T06:04:09","modified_gmt":"2022-10-28T10:04:09","slug":"expert-does-not-believe-policy-will-solve-chinas-real-estate-bubble","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/expert-does-not-believe-policy-will-solve-chinas-real-estate-bubble\/","title":{"rendered":"Expert Does Not Believe Policy Will Solve China\u2019s Real Estate Bubble"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">22<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fexpert-does-not-believe-policy-will-solve-chinas-real-estate-bubble%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1714374&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>After Xi Jinping said \u201cHousing is for living in and not for speculation,\u201d and China will \u201cbuild a housing system featuring multiple suppliers and various channels of support that encourages both housing rentals and purchases\u201d at the party\u2019s 20th national meeting, the party media reported that \u201cpolicy has set the tone\u201d for Chinese property development in the next five years.<\/p>\n<p>While policy could affect the direction of the market, the market itself is the key for development, a financial expert told The Epoch Times.<\/p>\n<h2>Real Estate Crisis<\/h2>\n<p>When China delayed releasing the third-quarter gross domestic product (GDP) for a week amidst the 20th national meeting, media <a href=\"https:\/\/www.reuters.com\/world\/china\/chinese-property-developers-tenterhooks-ahead-communist-party-congress-2022-10-14\/\">reported<\/a> that <a href=\"https:\/\/www.theepochtimes.com\/t-property-developers\">property developers<\/a> in China were anxious for clues from the leadership that would resolve the market crisis.<\/p>\n<p>The latest Chinese data in property investment showed a year-on-year decrease of 8 percent from January to September of 2022.<\/p>\n<p>The Chinese analysts believe the \u201cpolicy\u201d gives direction to the developers and the market, and the government strategy will assist a sustainable development of the market by \u201csupporting rentals and purchases\u201d as its fundamental \u201cpath,\u201d according to party mouthpiece, China News Service (<a href=\"https:\/\/twgreatdaily.com\/a1d95215fe55f0caaa0ce1f8baee9d67.html\">CNS<\/a>).<\/p>\n<p>However, past experience has proved that it is CCP policies that have often caused market speculation and declined investment, said <a href=\"https:\/\/damore-mckim.northeastern.edu\/people\/w-paul-chiou\/\">Paul W. Chiou<\/a>, a finance expert at Northeastern University, Boston in a recent interview with the Chinese language edition of The Epoch Times.<\/p>\n<p>Chiou explained that governmental subsidies might provide developers some relief for a few months, but won\u2019t be enough to cover the crisis caused by the slow sales and the lack of cash flow.<\/p>\n<h2>Crisis Building for 20 Years<\/h2>\n<p>Chinese housing reform in 1998 initiated a new phase of commodification of real estate. \u201cThe housing prices increased by four to five times between 1998 and 2019,\u201d Chiou said.<\/p>\n<p>Housing prices in the prime lots of first-tier cities such as Shanghai and Beijing are even higher than those in New York and Los Angeles, he said, but \u201cChina\u2019s per capita GDP is around one-fifth that of the United States. The backbone to support high housing prices does not exist.\u201d<\/p>\n<p>Under the circumstances of lacking investment channels, China\u2019s large foreign exchange reserve at that time, was part of the reasons local governments chose property development to boost the economy. \u201cBut two decades of overdevelopment, coupled with the misconception that housing prices will only go up and not down, have formed such a serious bubble today,\u201d Chiou explained.<\/p>\n<figure id=\"attachment_4240066\" class=\"wp-caption alignnone\"><a href=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2022\/01\/27\/GettyImages-1237086341-1200x810-1-1200x810.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"lazy size-medium wp-image-4240066\" src=\"https:\/\/www.theepochtimes.com\/assets\/themes\/eet\/images\/white.png\" data-src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/10\/GettyImages-1237086341-1200x810-1-600x405-1.jpg\" alt=\"Epoch Times Photo\" width=\"600\" height=\"405\" \/><figcaption class=\"wp-caption-text\"><noscript><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-4240066\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/10\/GettyImages-1237086341-1200x810-1-600x405-1.jpg\" alt=\"Epoch Times Photo\" width=\"600\" height=\"405\" \/><\/noscript><\/figcaption><\/a> A worker in front of a sign showing Evergrande Group\u2019s China operation at one of the company\u2019s housing complexes in Beijing on Dec. 8, 2021. (Noel Celis\/AFP via Getty Images)<\/figure>\n<h2>Three Factors<\/h2>\n<p>Chiou says there are three factors affecting Chinese real estate development.<\/p>\n<p>First, the asset quality and funds.<\/p>\n<p>Data shows that the delinquency rate on all loans, for all commercial banks, was <a href=\"https:\/\/pic.bankofchina.com\/bocappd\/report\/202204\/P020220429517674270178.pdf\">1.73<\/a> percent by the end of 2021, higher than that of the United States at <a href=\"https:\/\/tradingeconomics.com\/united-states\/delinquency-rate-on-all-loans-all-commercial-banks-fed-data.html\">1.31<\/a> percent.<\/p>\n<p>Chiou explained the reasons for the bad debts include the wide spread of unfinished buildings and mortgage boycotts in China; the hidden burden to the Chinese banks from the annual loss of more than $10 billion and more than $1 trillion debt from the Chinese national high-speed railway; the unpaid foreign loans or aid associated with the Belt and Road Initiative, and the global economic decline.<\/p>\n<p>He said that the asset quality of China\u2019s financial sector has dropped to a worrying level, and funds are obviously lacking.<\/p>\n<p>Second, people\u2019s unwillingness to invest in real estate.<\/p>\n<p>For two years, Chinese real estate investment demonstrated huge negative growth almost every month, and indicated a low willingness to invest.<\/p>\n<p>Third, China\u2019s foreign relations.<\/p>\n<p>Chiou said that China\u2019s deteriorating international relations with the United States and Australia, for example, will eventually become a trade issue. Declining foreign trade and export will affect China\u2019s economic development and consumption power.<\/p>\n<p>Chiou said that for a policy to be effective it needs time to evolve. Judging from the aforementioned phenomenon, he expresses reservations about the Chinese real estate market.<\/p>\n<p>After all, he said, \u201cMarket is determined by supply and demand.\u201d<\/p>\n<p><em>Lin Cenxin contributed to this report.<\/em><\/p>\n<div class=\"author_wrapper\">\n<div class=\"one_author_block round\">\n<div class=\"top_row\">\n\t\t\t\t\t<a href=\"https:\/\/www.theepochtimes.com\/author-mary-hong\"><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/10\/Mary-Hong.jpg\" alt=\"Mary Hong\" \/><\/a><\/p>\n<p>Follow<\/p>\n<\/div>\n<p>Mary Hong has contributed to The Epoch Times since 2020. She has reported on Chinese human rights issues and politics.<\/p>\n<\/p><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>After Xi Jinping said \u201cHousing is for living in and not for speculation,\u201d and China will \u201cbuild a housing system featuring multiple suppliers and various channels of support that encourages<\/p>\n","protected":false},"author":1,"featured_media":1714377,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[547],"tags":[],"class_list":["post-1714374","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-bongino-report"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1714374","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1714374"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1714374\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1714377"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1714374"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1714374"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1714374"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}