Ha Jiming of Goldman Warns on Short-Sighted Policy in China

At the China Finance 40 Forum, Goldman's Ha Jiming warned of risks stemming from policies aimed at short-term growth.
Looking ahead, we believe that the authorities seem to lack an effective policy tool, their policies tend to be more stable short-term growth while ignoring the long-term risks, such as the recent rumors of non-performing loans replaced with equity, and real estate policy to relax. The latter is likely to further encourage housing estate bubble, the proportion of mortgage loans in total bank loans went from 9% in early 2007 to the current 15%, soaring house prices also led to rapid deterioration of housing affordability in first-tier cities: We estimate price - earnings ratio display, Shenzhen, Beijing and Shanghai, the house is now much harder to bear than in Hong Kong, London and New York.

...In addition, soaring housing prices has led to the deterioration of cities Family Housing Affordability. According to our estimates, the ratio of Shenzhen housing prices to household disposable has reached 29 times, while Beijing, Shanghai this multiplier already risen to about 20 times, higher than in Hong Kong, London and New York. This suggests that, compared to the high prices and the famous Hong Kong, London and New York and other cities, China's first-tier cities are even less affordable.

In conclusion, we believe that the recent real estate policy loosening description, policy authorities seem increasingly inclined to achieve long-term risk at the expense of short-term growth and stability.

...January February data consistent with our previous judgment of the Chinese economy.

In the case of both domestic and external demand weakening economic growth slowed further.

Supported by the real estate recovery may be short and fragile recovery in investment.

Due to weak economic fundamentals, the rebound in investment is also unlikely to stimulate the economic growth results.

On the contrary, the rapid growth of investment will further push up the lever and bring more risks to the long-term growth.

Policy, we published in January 2016, "Siege: China's Dilemma," the report predicted, the Chinese government lacks an attractive policy tool. China's policies are increasingly inclined to raise long-term risk to achieve short-term growth growth and stability, and the recent loosening of real estate policy and rumor of swapping non-performing loans for equity policy are good examples.

iFeng: 报告:当前政策愈趋向保短期增长而忽略长期风险

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