...ARTICLE Huayi Yu China’s House Price: Affected by Economic Fundamentals or Real Estate Policy? © Higher Education Press and Springer-Verlag 2010 Abstract Many theory and empirical literature conclude that house price can reflect economic fundamentals in the long-term. However, by using China’s panel data of 35 main cities stretching from 1998 to 2007, we find that there is no stable relationship between house price and economic fundamentals. House price has deviated upward from the economic fundamentals since government started macro-control of the real estate market. We consider that the mechanism between the house price and economic fundamentals is distorted by China’s real estate policy, especially its land policy. Meanwhile the policy itself is an important factor in explaining the changes of China’s house price. Then we estimate the dynamic panel data model on house price and the variables which are controlled by real estate policy. The result shows: land supply has negative effects on house price; financial mortgages for real estate have positive effects on house price; and the area of housing sold and the area of vacant housing, which reflects the supply and demand of the housing market, has negative effects on house price. We also find some differences in house price influence factor between eastern and mid-western cities. Finally, we propose policy suggestions according to the empirical results. Keywords house price, economic fundamental, real estate policy, dynamic...
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...C.H.I.N.A.: ‘Cheap House Is Not Allowed’ Will China’s real estate bubble burst? Since the onset of the global financial crisis in 2007, China has faced some critical problems linked with the excess of liquidity in its internal market, due to the stimulus plan launched by the Government to soften the effects of the crisis. As a result China is now fighting against a high rate of inflation (especially food prices) and a high cost of property. While the inflation issue has been partially solved in the first term of this year, the fear for the real-estate market trend is still alive. This essay aims to critically analyse the real estate market in China, which is also strictly linked with the health of this country’s economy, by examining this issue from two different perspectives: from the point of view of those scholars who believe that the Chinese bubble will burst and from the point of view of those who believe that the Chinese market is still safe. First of all the essay will give the historical and economic background of the price rises in the Chinese real estate market, from the birth of this important economic sector to the global financial crisis. Secondly, in the core part, this paper will explain the main theory regarding the possibility of the real estate bubble burst and the counter argument. To better understand the actual situation in China there will be also a short comparison with the burst of the American bubble in 2007. In the conclusive paragraph some...
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...Cadim: The China and India Real Estate Market Entry Decisions I. INTRODUCTION Cadim is a real estate division of Caisse de Depot et Placement du Quebec (Caisse), Canada’s largest pension fund management firm. Caisse is the largest institutional investor in Canada, overseeing more than $245 billion in assets and carrying out more than $12 billion in transactions daily. Cadim is one of Caisse’s three real estate divisions comprising around 6.23% of Caisses portfolio ($15.3 billion). Cadim focuses on residential and hotel markets, while the other two real estate arms focus primarily on shopping malls and business. Currently Richard Dansereau, Cadim’s Chief Operating Officer is in the process of deciding whether or not to move in to the India and China real estate markets. This case study will review the key issues, the general environment of India and China, Cadim SWOT, alternatives to moving into India and China and will conclude with our recommended course of action. II. KEY ISSUES Richard Dansereau, Cadim’s Chief Operating Officer has been tasked with making the final decision whether to enter real estate markets in India and China. Cadim has been forced to look toward external markets due to the average risk- adjusted return of real estate in their current markers, North America, averaging considerably below Cadim’s internal required return rate...
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...Abstract Since 2005, real estate problem has become a hot topic, when two meetings convened life during, the central and local governments offer some corresponding measures, but also makes the real estate problem into hot issues the top spot. Real estate to measure a country's economy lost the rise. Real estate industry continues to heat up to China's economy will surely caused significant effects that have positive and negative. When the rise in house prices range in control and its influence will when outweigh the costs, conversely when house prices do not control, its influence will do more harm than good. Introduction Real estate prices question has been one of the important bothers Chinese governments, in my personal view, China's real estate prices continued to raise a few reasons. Was the total population growth, income level, continue to improve, housing costs rising prices, housing loan stimulation, rising expectations, etc. These reasons have been plagued by domestic real estate researchers, real estate prices also leads to national many influence. Its positive influence is can promote economic growth and increase GDP; Negative influence is can lead to inflation, expand the gap between rich and poor. 3.0 Research Methodology Choosing the topic and search the information on the Internet Neatening up the information I search from the Internet Collecting the data Making conclusions Analyzing the reasons by myself Coming up with the solutions...
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...Executive Summary The Real Estate Investment in China is considered a growing business in the future. China being one of most populous place, people are seeking better living places. By seeing this investment opportunity in China, our group was highly interested. We believe that China has considerable amounts of land for this opportunity and our business to grow. Real Estate demand is raising in China since their economy continues to increase as well as people is becoming more wealthier. With our resources and experience in the field, our investment will be on its way. This report outlines the investment specifications. It is outlined in these categories: Country Analysis, Real Investment Analysis, Specific Components of the Project, the Best Mode of Entry, and the investment Risks Involved. Each outline analyzes the investment’s specific opportunity given the condition of the country. Based on this analysis, our group made a conclusion. A final recommendation of the proposed investment is given below. Country Analysis China is a developing country that has a great opportunity for foreign investors 5to establish their international business and make profits. China has a booming investment market and based on our research, the Livecast states that China’s investment environment is improving in recent years. Take an example from the Livecast, many enterprises transferred their business to China and trying to reduce the investment loss during the economic crisis in 2008...
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...A Viable Market for Inflation-Linked Products in China How serious is the inflation in China? According to official statistics, inflation rate in China is about 3%~4% at present, which seems very moderate. But this result contrasts with the feeling of Chinese people and is considered incredible. Other evaluation methods are proposed by economists, showing quite different outcomes. In the report Research of the inflation degree in China, Yanchen Qi selected prices of diesel and corn as samples and reached the conclusion that current inflation rate is nearly 30%. In addition, the compound inflation rate from 2000 to 2011 can be estimated using the price of pork, which increased from RMB 6 to RMB 15 per kilogram, with a compound inflation rate of 9.6%. What causes the inflation? External Factors Subprime mortgage crisis. This has led to the implementation of quantitative easing monetary policy in mainstream global currency markets, especially the Federal Reserve Bank (QE1 and QE2 totalled 2.3 trillion dollar). Its influence to China has two main aspects: Firstly, massive inflow of hot money. China's economic stability and prosperity gives a strong expectation of RMB appreciation. As a result, hot money flows into China through false declarations of trade, FDI and underground banks, pushing up asset prices. Secondly, “Dollar Flooding” forces China to increase money supply passively because exchange rate mechanism is not fully marketoriented, bringing about asset price inflation...
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...Thesis statement: The soaring property prices in China’s coastline and major cities such as Beijing, Shanghai, Shenzhen, and Dalian has formed the biggest bubbles in the real estate market in the decade. However, we do not see any slowdown in these cities. As of today, the property prices seem to keep on growing forever. Will China’s housing bubble pop? Compare the housing bubbles in the United States with that in China * A brief background information about the housing market in US before it crashed down * Elaborate on China’s current housing market and see how close is it to the housing market condition in the US Different views on China’s housing bubble * Optimists think that even if the housing market crashes down in the near future, it will not create another global financial disaster * Some think that the bubble will never crash under the guidance of our communist party * Some debate on the implementation of the new policies Conclusion: China and the world have to learn a lesson, and try to maintain a healthy, long-term economic sustainability. Will China’s housing bubble pop? Is it just merely a matter of time when the housing market comes to a crash, or will it not at all? Should a burst of the bubbles cause another worldwide economic downturn and probably a global recession? These are probably the most heated debates by the economists of the world today. The soaring property prices in China’s coastline and major cities such as Beijing, Shanghai...
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...and intellectual property protection. A lack of specific provisions in the 1997 version governing foreign direct franchising allowed relatively few major international companies to have significant franchise businesses in China. Although many of these international brands such as 7-Eleven, McDonald’s, KFC and Pierre Cardin, normally do business through franchising, in China foreign franchising was still a grey area before the new rule was published. Because franchising typically does not involve investing in equities, the Chinese Government used to put less focus on such business. But the government came to find that franchises are a good business model for China to help solve its job problems and its scattered private capital. China’s capital markets are underdeveloped and franchising is one method that allows the assembly and concentration of capital from a wide capital base through investment in franchises. China has a great number of qualified potential Chinese franchisees with strong sources of funding. Franchising makes up for the commercial inexperience of the Chinese franchisers by linking their investments to completed...
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...the author discussed the risk of a real estate bubble in China. Given the financial crisis in the United States last year, there is a lot of fear that China is headed for a similar crisis. If the bubble burst, China’s economic growth is likely to slow or decline. Since the world is looking to China to lead economic growth, such down turn will have greater implication for the world economic recovery. The persistent real estate demand in China combined with the stimulus plans that were rolled out during the financial crisis have been boosting China’s economy, fueling the price growth in the Chinese housing market: this is one of the key reasons why China did not suffer significant loss during the financial crisis in 2009. Having learnt from the Asian Financial Crisis in 1997, the Chinese government has already begun to take actions to deal with the overheated housing market. At the end of last year, the Chinese government, central and local, imposed additional sales tax on homes sold within five years of purchase and raised the down payment requirements for families buying a second house or more with bank loans. The Chinese Central Bank had also raised the deposit reserve requirement ratio for banks for the second time in last month. Going forward, if the housing price growth persists, the Central Bank will need to take more drastic measures to control this growth, and reduce speculations. The article points out that the biggest real estate problem in China currently is access...
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...words: Housing market, price, increase, decrease, the bubble in housing market Body: In 2010, from January to October, the investment of national real estate is 3.807 trillion Yuan with an increase of 36.5%, which is 105.1% of the annual investment, 3.623 trillion Yuan in 2009. In the first half of 2010, in the context of macroeconomic stabilization and recovery, the Central Government has issued a series of regulatory policies toward the housing price which increases too fast. The severity and enforcement of these control policies of the housing market are both higher than previously. The performance of the housing market 1. Consumers now are likely to wait and observe the housing market, which leads that the housing price in some cities has a small decline. There are many measures being taken by government to protect the public interest, so many people would like to wait and see how the housing market will develop. Most of them are not willing to accept the current expensive housing price, and they do not want to be entangled into the housing market after they finished their purchase with expensive cost. Therefore, the phenomenon has been speared out, and more and more people are waiting for the development of the housing market. The trades of housing market in some cities have decreased obviously. 2. The real estate is very popular as a means of investment. The domestic economy keeps increasing, at the same time the investment of the real estate becomes popular...
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...Jordan December 11, 2011 Final research paper Introduction China has become one of world's most promising economic power. Since 1979 Chinese market has a great and quickly growth. Enter the twenty-first century, the Chinese economy has maintained steady growth. Although less than expected, but China's GDP growth still reached 9.1% in Q3 2011. "China's gross domestic product expanded at the slowest pace in nearly two years in the third quarter. GDP growth moderated to 9.1 percent in the third quarter from 9.5 percent in the second quarter. On a seasonally adjusted quarter-on-quarter basis, GDP rose 2.3 percent following a revised 2.4 percent gain the second quarter". (www.TradingEconomics.com) This situation shows China's economic growth is still high. Why China has this success, because China has many advantages. For example, low cost labor and a huge mark. China's economic advantages China's main advantage is the production capacity and low cost labor. The main reason is China's huge population, and the rich natural resources. Today China has become the famous factory of the world. China's cheap labor and huge market has attracted a lot of foreign investment. These investments have brought to China a lot of money, but also provides science and technology and management experience. First, Chinese low cost labor. This is China's primary advantages, most Chinese factories are located in the eastern region, mainly due to convenient transportation and a good industrial base...
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...China’s Real Estate Bubble China has been nothing short of a financial miracle. In just 30 years, this state-controlled economy became the world’s second largest, deftly managed by government policies and decrees. But one of the biggest concerns is the real estate and construction that may have created the largest housing bubble in human history. If you go to China, it’s easy to see why people concerned about this problem. Many place in China are building new apartments and houses right now. But nobody is living inside, many cities are just like ghost city, Why are they empty? They have actually been sold, but most of them are sold to those investors. Owned by people in China’s emerging middle class, who now have enough money to invest but few ways to do it. They’re not allowed to invest abroad, banks offer paltry returns, and the stock market is a rollercoaster. 15 years ago, the government changed their policy and allowed people to buy their own homes and the floodgates opened. People believed that their property price would always go up by more than inflation. Actually, property values have doubled and tripled and more. So people in the middle class have sunk every last penny into buying five, even ten apartments, fueling a building bonanza unprecedented in human history. No nation has ever built so much so fast. As we know, the growth of GDP is very important to a country, and one of the biggest facts inside the GDP is the real estate. Real estate has become the main...
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...[Abstract] agricultural tax system reform of China's basic objectives are: to establish a market economy can meet the requirements are conducive to the Economic integration of urban and rural areas will help to support agriCulture and the world to protect and facilitate the integration of the tax system. Around this goal, the agricultural tax system reform, the basic points should be highlighted the following aspects: 1. Abolish agricultural taxes taxes, the tax burden on farmers into the main tax system. Lower taxes, reduce the tax burden on farmers. Can be considered in bringing agricultural products into value-added tax system, tax, agricultural value-added tax should be set at 10%. In other taxes, there are also all the necessary tax concessions given to the farmers. 3. The agricultural tax in the form of money from a material change. China's current agricultural tax system is the formation of the initial founding of New China, and its impact on national control grain resources, stability, economic relations between urban and rural areas, increasing the state's financial revenues and ensure the supply of agricultural products and so the city has played an active role. However, with the economic Development caused by changes in socio-economic relations, especially in the establishment of a socialist market economy, the overall institutional arrangements and accession to the World Trade Organization trend, the current agricultural tax system is not adaptive and even disadvantages...
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...Chinese Capital Markets JC de Swaan Caijing Magazine July 3rd, 2009 The institutional development of Chinese capital markets has lagged – while a growing body of academic literature has demonstrated the positive linkages between the development of capital markets and economic growth, China has managed to grow at a breath-taking 10% CAGR over the last 30 years despite lacking commensurately developed capital markets. Several announcements in the past months suggest a potential shift – China may be finally paving the way to modernize and open up its capital markets, a process that has been long in the making. This time however, a date has been set with the announced objective of turning Shanghai into a global financial hub by 2020. In order to achieve that goal, several seminal changes will need to take place. Foremost among these will be convertibility of the Rmb and opening up of equity capital markets to foreign investors beyond the tightly controlled QFII program in existence. A set of domestic-oriented reforms, including a broadening of financial service offerings, will also be critical to the transformation. While the US-borne financial crisis has triggered much soul-searching in developed economies and a vigorous debate on reforms of financial institutions, it has had none of that effect in China. If anything, it appears to have accelerated plans to reform Chinese capital markets. At a high level, this can be seen as part of a broader effort to assert China’s naturally evolving...
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... | | | | |Mode of examination : | | | |Essay | |For Students |School International School Major IET | | |Name 謝玉麟 Student No. 2010054425 Mainland Student [ ] Non-mainland Student [√] | | |Essay topic Understanding China’s trade surplus | |Evaluations | | | |Comments： | | |...
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