e-magazine
The Hot Zone
China's newly announced air defense identification zone over the East China Sea aims to shore up national security
Current Issue
· Table of Contents
· Editor's Desk
· Previous Issues
· Subscribe to Mag
Subscribe Now >>
Expert's View
World
Nation
Business
Finance
Market Watch
Legal-Ease
North American Report
Forum
Government Documents
Expat's Eye
Health
Science/Technology
Lifestyle
Books
Movies
Backgrounders
Special
Photo Gallery
Blogs
Reader's Service
Learning with
'Beijing Review'
E-mail us
RSS Feeds
PDF Edition
Web-magazine
Reader's Letters
Make Beijing Review your homepage
Hot Links

cheap eyeglasses
Market Avenue
eBeijing

Business
Print Edition> Business
UPDATED: August 9, 2013 NO. 33 AUGUST 15, 2013
Market Watch No. 33, 2013
Share

OPINION

Loosen Property Curbs? Not so Fast

China's real estate market is mired in a dilemma: The more the government tries to regulate the market, the more prices go up. This has led to an outcry among the general public.

A meeting held at the end of July by the Political Bureau of the CPC Central Committee, the country's top decision maker, vowed to "promote the stable and healthy development of the real estate market." This deviated from last year's "strengthen the regulation of the real estate market and affordable housing construction," triggering market speculation that regulations could be relaxed. The possibility of any relaxation, however, is slim.

Any relaxation in property curbs would lead to a huge rebound in home prices. Home prices climbed markedly during the first half of 2013, with surging land sales and record-high land-transferring fees, despite tightening property curbs. How can the government let loose such a red-hot market?

Worse still, there are simmering risks in the property sector, which has been a pillar of growth in the Chinese economy. Yu Yongding, a professor of the Chinese Academy of Social Sciences, said China, a country with per-capita income of only $5,000, shouldn't have invested so many resources in real estate and shouldn't have let the sector become an economic growth engine. After having visited many countries, Yu found the growth in China's real estate market has surpassed that of any other country. A medium-sized city in Japan can hardly compete with a county in China in terms of property development. Property investment accounts for too high a proportion in total investment and in GDP.

According to Xinhua News Agency, the average home size is only 47 square meters in Hong Kong, a city with a per-capita income of $20,000 to $30,000. In sharp contrast, the average area of an affordable apartment is 90 square meters on the mainland.

In short, a severe misallocation of resources in the property sector is likely to ruin the national economy if the situation continues to exacerbate.

A long-term solution, such as a property tax, should be established to further regulate the property sector. This can lead to a transition from short-term solutions to long-term regulations.

Three elements should be taken into consideration when designing a property tax. First, the tax shouldn't be seen as a source of regular fiscal revenue, but as a special tax to be put toward improving or maintaining the city or community environment. Second, community planning determines the total budget, and the total budget determines the property tax rate. Overall community planning should refer to last year's fiscal revenue and expenditure. Government spending should depend on fiscal income and no fiscal deficit should be allowed. The next government should not shoulder the responsibilities of the previous one. Finally, while a community committee would have the power to levy the property tax, the whole process should be subject to supervision.

In the end, a reform on property tax is no easy task. Before the above-mentioned problems get sorted out and well-functioning policies are formulated, short-term administrative property curbs should not be loosened.

This is an edited excerpt of an article by Zhou Zixun, a financial commentator, published in Securities Times

THE MARKETS

Volvo Sales Boom

Volvo Car Group reported on August 5 that the company's global sales increased by 14 percent in July compared to the same month last year thanks to substantial growth in China and Europe.

Retail sales in July amounted to 33,650 vehicles, while sales in China rose by 61.6 percent to 4,640 cars in July, according to a press release from the company.

The performance in China was largely attributed to sales of the 2,278 XC60 model, which created a new all-time sales record for a single month.

Local Brand Smartphones

China Mobile Ltd. officially entered the booming mobile terminal market on August 2 as it unveiled its own-brand of smartphone models.

The China Mobile M701, a 5-inch screen Android-based smartphone, is priced at 1,299 yuan ($212). The China Mobile M601 is a 4-inch screen, dual-core Android smartphone that targets price conscious consumers with a pricetag of 499 yuan ($82).

The two smartphones are produced by equipment manufacturers, Hisense Group and Shenzhen-based BYD Co. Ltd., respectively. They will hit the Chinese market through China Mobile's online and offline outlets in August.

Industry watchers say China Mobile's move aims to create a platform that seamlessly integrates its current mobile services and other mobile applications.

The other benefit for China Mobile in launching its own brand of smartphones is that it helps the carrier expand in county-level markets.

NUMBERS

2.85 tln yuan

GDP of south China's Guangdong Province in the first half of 2013, the highest among all provinces, autonomous regions and municipalities in China

12.5%

GDP growth rates of Tianjin Municipality and Guizhou Province in the first half of 2013, the highest among all provinces, autonomous regions and municipalities in China (not including Qinghai Province)

8

Number of provinces and municipalities with a GDP of between 1 trillion to 2 trillion yuan in the first half of 2013, which include seven provinces and Shanghai

Email us at: yushujun@bjreview.com



 
Top Story
-Protecting Ocean Rights
-Partners in Defense
-Fighting HIV+'s Stigma
-HIV: Privacy VS. Protection
-Setting the Tone
Most Popular
 
About BEIJINGREVIEW | About beijingreview.com | Rss Feeds | Contact us | Advertising | Subscribe & Service | Make Beijing Review your homepage
Copyright Beijing Review All right reserved