Lang Xianping: Control Inflation and Reform to Reduce Home Prices

Lang Xianping goes through the economic statistics, pointing out such facts as the U.S. manufacturing PMI is well ahead of China's. Why is China's manufacturing sector in recession? Lang says its due to higher exchange rates, higher wage costs, higher inflation, trade wars, etc. Manufacturers abandon their core business and speculate in housing, driving up home prices. In order to reduce home prices then, the government must tackle inflation and improve the business environment.

郎咸平:房价上涨一发不可收拾 一招就可“釜底抽薪”
Following the April 25, 2014 directed the commercial banks to reduce deposit reserve rate, the central bank on June 9 and enable the "quasi-directional drop" While this policy weights again, and put a lot of money to the market. According to the Central Bank document, only "consistent with prudent business requirements, and the 'agriculture' and small micro-enterprise loans up to a certain percentage of commercial banks, in order to cut the RMB deposit reserve ratio by 0.5 percent," that the government is to encourage financial institutions to fund allocation to private enterprises and rural areas, which is a guide to the transfer of funds back to the real sector. I think, to save the Chinese real economy is a necessary precondition for stable economic development. About Chinese manufacturing recession, massive outflow of funds, universal speculation and other social hot issues, I launched in April 2014 latest masterpiece, "" New Deal "could change China", the made-depth interpretation. The following is an excerpt text books to readers.

According to further research, I believe that prices itself is a fever phenomenon, but it is not by a single factor composed of several surface. After several years of observation of the Chinese property market, I summed up, summed up the "volcano theory" - inflation and soaring housing prices led to the decline of manufacturing.

Let me talk about inflation. In recent years we have serious inflation, so that in November 2013 the CCTV interview, the phrase "I'm sorry the Chinese renminbi," a hit. The fact is, official data showed that in 2007, 2008, 2010 as well as 2011, we are all in full-year CPI minus 5% of the cordon. In this case, the dollar has shrunk, not worth the money problems will appear.

Our people are hard to save his money down, how to make it add value to the purchasing power to keep it? First, the high inflation rate in the year, the money in the bank will encounter "negative interest rates." I'll give you to provide a set of data, in 2011, when the central bank to tighten monetary policy in our total to improve the four-year time deposit interest rates, it increased from 2.75% to 3.5%. However, our 2011 national monthly CPI inflation, there would be no lower than 4.1%, the maximum time even to 6.5%. From the figure we can see that in 2011 the national monthly CPI inflation is higher than the one-year deposit rate all month. In this case, what people do? Because of the limited investment channels, only stocks, buy gold, or buy a house.

We look at the second reason is also very important, the manufacturing crisis. I'll give you a set of macro data provided, May 2012 to May 2013 China manufacturing PMI index has been hovering around 50 Coorong line, the maximum only in March 2013 climbed to 50.9. Why should I choose this time? Since starting in 2012, had deep economic crisis in the United States has begun the manufacturing sector, to achieve the overall economic recovery. With our PMI best looking in March 2013, for example, this month the global manufacturing PMI was 51.2, the United States this month's PMI reached 54.6 (Markit company survey results). This shows that, in March 2013, when a thriving global manufacturing, we, as "a big manufacturing country," the United States can not keep up the pace of development, and even keep up with the global average.

Manufacturing PMI viewed from this perspective, I can assure you that our industry is experiencing a recession in such a process. What caused such a result? First, heavy duty; Second, the cost of capital is too high; Third, labor costs continue to rise; Fourth, exchange rate rising; Fifth, international trade war, and so on. To sum up is that we invest in manufacturing overall rapid deterioration of the business environment, a significant decline in profits. For manufacturing entrepreneurs, is to do business at a loss. In order to ensure their property does not shrink, they will withdraw the money from the industry in years, to buy a house.

Thus, the money from the people, the money from the manufacturing entrepreneurs, all merged into a surge of heat, forming a fiery magma. As more and more magma, volcanic eruption finally, our prices will go up out of control. This is why China's housing prices and the world are not the same, and why high taxes on high prices no inhibition. 32 market regulation simply take a big rock, suppress crater, has no effect on the cooling magma is only a deceiving behavior. China's response to the problem of high prices, only to curb inflation, improve the business environment, in order to achieve drastic.

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