Economy China announces new measures to arrest housing slump and boost growth

[LeonardoBjj]

Benefits to rise for poorest and local authorities to be given powers to intervene in real estate markets

Phillip Inman

Chinese leaders have vowed to arrest a slump in the housing market and boost growth after conceding that measures by the central bank to stimulate investment this week were likely to prove inadequate.

Promising to deploy “necessary spending” by the state to meet this year’s economic growth target of 5%, China’s politburo said it would increase benefits for the poorest and give local authorities the cash and power to intervene to prevent further falls in house price values.

Households with two or more children will be offered 800 yuan (£85) a month per child, excluding the first child, Reuters reported. Local authorities will have the backing of up to £213bn in extra borrowing by the state, allowing them to intervene in real estate markets, including buying empty properties.

China’s economic growth had been supported by a surge in residential housing developments and rising property values that underpinned consumer spending. An oversupply of homes in recent years has caused prices to tumble in many cities, pushing households into negative equity.

Some of the biggest property developers in the world’s second largest economy have either gone bust or been weighed down by huge debts.

The planned intervention, which came after a monthly meeting of top Communist party officials, marks a reversal of previous piecemeal policies and an admission by China’s president, Xi Jinping, that the ailing economy needed a more coordinated programme of measures backed by a larger package of subsidies.

“New situations and problems” demanded a sense of “responsibility and urgency”, state media reported, citing the politburo meeting.

A wide range of economic data in recent months has fallen short of official forecasts, raising concerns that the growth target was at risk and that a reliance on a combination of rising domestic property values and exports was holding back growth. The 5% growth target is relatively modest by historical standards.

China’s central bank cut interest rates and eased local bank lending rules this week in its boldest intervention to boost the economy since the pandemic.

The People’s Bank of China cut interest rates on existing mortgages by 0.5 percentage points and supported new lending by reducing the level of reserves banks must set aside before making loans.

After the politburo announcement, Chinese property shares jumped by more than 8%, and among companies registered in Hong Kong values jumped by 9%. The yuan and Chinese bond yields also rose.

The politburo said the government should “promote the stabilisation of the real estate market” by expanding a list of approved housing projects that could receive further financing and revitalise idle land, according to official news agency reports.

Officials “will respond to people’s concerns, adjust home purchase restriction policies, lower existing mortgage rates and improve land, fiscal, tax and financial policies as soon as possible to push forward the new model of property development”, it said.

Bruce Pang, the chief China economist at the real estate services company Jones Lang LaSalle, said the politburo’s endorsement of a further stimulus “represents a strategic shift in macro policy, from piecemeal policies to a highly orchestrated package in the right direction”.

He added: “A pickup in government spending will probably be sufficient to drive a turnaround in business confidence, market sentiment and economic activities, helping China to catch up with potential trend growth.”

Xi is understood to have faced criticism from economic advisers, including from Zhu Hengpeng, a member of a government-funded thinktank, who has reportedly disappeared.

https://www.theguardian.com/world/2024/sep/26/china-new-measures-housing-slump-growth

 

[cincymma79]

We could send them some Haitians?

 

[LeonardoBjj]

Top Chinese economist disappears after criticising Xi Jinping in private chat – report​

Zhu Hengpeng, who worked for an influential government thinktank, has reportedly not been seen in public since making disparaging remarks on WeChat

Helen Davidson in Taipei

-One of the Chinese negociators


A leading Chinese economist at a government thinktank has reportedly disappeared after being disciplined for criticising Xi Jinping in a private chat group.

Zhu Hengpeng, 55, is believed to have made disparaging remarks about China’s economy, and potentially about the Chinese leader specifically, in a private WeChat group. Zhu was subsequently detained in April and put under investigation, according to the Wall Street Journal which cited anonymous sources.


Zhu worked for the Chinese Academy of Social Sciences (Cass) for more than 20 years, most recently as the Institute of Economics deputy director and director of the Public Policy Research Center. He has reportedly not been seen in public since April when he spoke at an event organised by Chinese media outlet Caixin, which he had done previously. Efforts by the Wall Street Journal to contact him at home were unsuccessful. The Cass has not responded to queries from the Guardian.

Earlier this month Hong Kong media reported a shakeup of the institute’s senior ranks, with the director and secretary also removed from their posts at the same time Zhu was stripped of his role. The other two officials were reassigned, according to Sing Tao Daily, but Zhu was not, and is no longer listed on the Cass website. Websites related to his work at Tsinghua University have also been taken offline, although the Guardian could not confirm when.

The Cass is a leading thinktank in China, which reports directly to the cabinet of the Chinese Communist party (CCP), the State Council, and has long been an influential policy advisor, sometimes providing relatively frank analysis. However under the increasingly authoritarian rule of Xi, criticism of the CCP and his individual leadership has become increasingly frowned upon, and treated punitively.

China-based academics have previously told the Guardian of a growing fear among their profession of reporting or discussing negative assessments of China’s economic, social, or political situation for fear of reprisals. Discussion of Xi as an individual, especially in online spaces which are censored and monitored, is largely avoided or done through vague or coded statements.

Notices on the Cass website show staff engaging in several political education sessions in recent months, with a heavy focus on party loyalty and adherence to Xi Jinping Thought – the name given to the enshrined political ideology of the CCP leader.

“The meeting emphasised that we must always bear in mind that the Chinese Academy of Social Sciences is a political institution whose work is centred on scientific research, put strict enforcement of the party’s political discipline first, work hard to enforce strict discipline and abide by rules,” said a report on one July meeting, led by Cass president Gao Xiang. Gao, a Xi loyalist, was appointed to the role in 2022 and has overseen a campaign to improve party loyalty at the institution.

The specifics of what Zhu wrote in the private WeChat group are not known, although Sing Tao Daily described it as “improperly discussed central policies”. The Wall Street Journal also reported he allegedly made a reference to “Xi’s mortality”.

China’s economy is struggling, and there are concerns that the world’s second-largest economy will miss its own 5% annual growth target, a relatively modest ambition by historic standards. On Tuesday the country’s central bank announced the biggest stimulus efforts in years in a bid to boost growth, but experts expressed concern the measures, including a cut in interest rates, would not be sufficient.

A growing crisis in China’s property market has unfolded since authorities cracked down on excessive borrowing by developers, leading many to default on their debts. Property developers and owners continue to cope with high mortgage payments, dragging on their ability to invest and grow.

Regulators have avoided making large-scale cuts to borrowing costs, fearing that the stimulus would reignite a boom in sales and values, creating a fresh property bubble.

https://www.theguardian.com/world/2...peng-disappearance-xi-jinping-wechat-comments