HK Finance Expert Cautions China on Handling Real Estate Boo
- 14 years ago
China’s property market shot up once again last year. According to Business Week magazine, in Shanghai, prices of high-end real estate increased by 54% in 2009. In Beijing, apartment prices more than doubled.
In an interview with state-run Xinhua, Chinese Premier Wen Jiabao acknowledged that property prices have increased too rapidly in some cities. Wen says his government will work on cooling down the market.
Hong Kong finance expert and Executive Director of G-Resources Group, Lew Mon-hung, agrees that the property market needs to be cooled down. But he also warns that it must be done carefully.
[Lew Mon-hung, Hong Kong Finance Expert] (male, Cantonese, 2nd quote in footage)
“If the property market is cooled down too quickly, it will shrink consumer spending in the mainland rather severely. With the export market already suffering, if consumer spending decreases, it will be a difficult situation to rely solely on investments. This would be a major blow to the economy.”
Lew says the real estate boom is a result of collusion between developers and local officials.
[Lew Mon-hung, Hong Kong Finance Expert] (male, Cantonese, 2nd quote in footage)
“Property developers and their collusion with corrupt local officials has turned them into a one body with mutual interest. The hotter the property market is, the more inflated the local GDP will be. The impressive local economic growth [looks good, which] translates to a stepping stone for officials wanting to climb up the ranks. The numbers are propelling them up.”
The property market boom has put home ownership out of reach for many ordinary Chinese. The 2009 Blue Book on China’s Economy released by the Chinese Academy of Social Sciences in December last year says 85% of Chinese households cannot afford to purchase a home.
In an interview with state-run Xinhua, Chinese Premier Wen Jiabao acknowledged that property prices have increased too rapidly in some cities. Wen says his government will work on cooling down the market.
Hong Kong finance expert and Executive Director of G-Resources Group, Lew Mon-hung, agrees that the property market needs to be cooled down. But he also warns that it must be done carefully.
[Lew Mon-hung, Hong Kong Finance Expert] (male, Cantonese, 2nd quote in footage)
“If the property market is cooled down too quickly, it will shrink consumer spending in the mainland rather severely. With the export market already suffering, if consumer spending decreases, it will be a difficult situation to rely solely on investments. This would be a major blow to the economy.”
Lew says the real estate boom is a result of collusion between developers and local officials.
[Lew Mon-hung, Hong Kong Finance Expert] (male, Cantonese, 2nd quote in footage)
“Property developers and their collusion with corrupt local officials has turned them into a one body with mutual interest. The hotter the property market is, the more inflated the local GDP will be. The impressive local economic growth [looks good, which] translates to a stepping stone for officials wanting to climb up the ranks. The numbers are propelling them up.”
The property market boom has put home ownership out of reach for many ordinary Chinese. The 2009 Blue Book on China’s Economy released by the Chinese Academy of Social Sciences in December last year says 85% of Chinese households cannot afford to purchase a home.