Home Price Decline Begins in June

No trend change in real estate prices, but prices were still rising in many cities in May. Now it looks like prices will be down month-on-month in almost the entire country when official government stats are out later this month.

China Housing Prices Fall for Second-Straight Month in June
Average new-home prices fell 0.5% in June from May, data provider China Real Estate Index System said Monday. Prices declined 0.3% in May from April, the first month-to-month decline since June 2012.

Out of the 100 cities surveyed, 71 showed a decline in home prices, up from 62 in May.

......Some of China's wealthiest cities are showing signs of strain. In Beijing, average new home prices fell 0.6% in June from May, a turnaround from a 0.7% gain in May from April. In the affluent southern city of Shenzhen, prices declined by 1.8%, extending a 0.9% fall in May, the survey said. In Shanghai, prices rose 0.3%, a turnaround from a fall of 0.4% recorded in May.
These numbers have a different magnitude than government statistics. For instance, the government reported new home prices increased 0.2% in Beijing in May. See May Home Prices: Accelerating Price Declines. I put weight on the trend, not the magnitude of the change.

In that post, I said April-May would likely mark the peak of the housing market, at least in the short-term. This appears confirmed based on the trend in June data. Imagine throwing a ball into the air. As it reaches its highest point, its acceleration slows rapidly and at the very peak, it appears suspended, weightless for a fraction of a second as the force of the toss and gravity hit a momentary equilibrium. That was the Chinese housing market in April and May. In June, the downside acceleration started.

Since summer is not a good time for real estate in China, prices should slump at least until the September/October period. Prices could drop substantially in July and August if some small developers rush to recoup capital ahead of the competitive sales season. Since September looms large and many buyers have the "wait and see" attitude, it may require large price cuts to move small developer property this summer.

Transformers Sell Real Estate

There's been really little interesting news in the Chinese financial press the past few days, the calm before the storm that should kick off tomorrow. Here's a look at how Transformers is being used to market real estate. This is from iFeng's website, in what I assumed is paid promotional advertising. Source: 楼市汽车人!出发! Basically, they are comparing the character in the movie to the real estate. Optimus Prime is the prime real estate.

The movie itself is like a 2.5 hour advertisement, the amount of product placement was over the top for both American and Chinese brands.

WMP Update thru June 27

Charts from 金牛理财.

The 金牛 WMP Yield Index.

The yield on state-owned/large bank products (yellow), versus small/medium banks (orange) and the spread (blue).

The yield on guaranteed products (yellow) versus non-guaranteed (orange) and the spread (blue).

The yield on short maturity products (yellow) versus medium/long maturity (orange) and the spread (blue).


China's Impact on Hollywood

‘Transformers 4′: Why the Box Office Smash is a Turning Point in China
The world’s second largest film market cast a shadow over the move business this week, pumping up the global grosses of “Transformers: Age of Extinction” by injecting a record-breaking $90 million into its opening haul. That crushes the previous high-water market of $64.5 million for “Iron Man 3″ and nearly matches the $92.5 million that Chinese-made “Journey to the West” grossed in its first seven days of release.

In total, China contributed roughly half of the fourth “Transformers” film’s international gross and nearly matched its U.S. debut.

“It’s a turning point for the dynamic between Hollywood and China,” said Phil Contrino, vice president and chief analyst at BoxOffice.com. “This taps into a whole new potential in terms of what a movie can do when it opens at the same time in the U.S. and China.”
How to get into the China market? Make sure the film is timed correctly. There are no U.S. releases for the next month, giving the summer to Chinese films, and the next U.S. film is American Hustle, which won't earn much.

Why Release Dates Matter for Hollywood Films in China
Synched international release dates keep people from downloading pirated versions, Mr. Curtin said, noting that they also create the most of online buzz for a film in a crowded market where advertising is tightly regulated. “X-Men: Days of Future Past” opened simultaneously on May 23 in the U.S. and China. The film took in $119 million in China, according to Beijing-based film data firm EntGroup, 54% of its U.S. results.

Many filmmakers want to build hype and bring their casts to China for red-carpet events, but they may know their opening dates only a few weeks before they happen, so they have to scurry to buy ads and promote the movie, said China film expert and producer Lora Chen, who splits her time between China and the U.S..

Regulators sometimes manipulate the revenue balance between Chinese and foreign-made films at the box office by scheduling two at the same time, as was the case in 2012 with “The Dark Knight Rises” and “The Amazing Spider-Man.” They also schedule blackout periods or roll out unexpected intervention tactics. In 2006, as live-action animations “Happy Feet” and “Garfield: A Tail of Two Kitties” gained popularity, China announced a ban on TV shows and films blending cartoons with live actors.

The controls are meant to protect the rise of the local film industry, but experts say they’ve resulted in foreign studios creating alliances with influential Chinese partners who can sway regulators to clear a date for them. Some have cozied up to real-estate bigwigs. A few others have tried to secure government approval for so-called Chinese co-productions; although these result in set and secure release dates, they also require giving creative control to Chinese officials.

Bart & Fleming: Is China Hollywood’s Future, Or Folly?
Everyone I encounter in town this week seems fixated on Chinese takeout — only it’s finance, not food. Specifically, funding for films and theme parks. Here’s the catch: For every mogul who claims he’s made a ‘killer deal,’ I run into ten who say their deals imploded. “Once your deal closes with the Chinese, that’s when the real negotiations begin,” according to one veteran of the co-production process. Jeff Robinov and Ryan Kavanaugh may have announced megadeals, but will they get their money? On a smaller scale, look what just happened to Paramount on their Transformers: Age Of Extinction deal – a Chinese partner (the Pangu Group) changed their minds when they saw the film and it endangered the China release of the movie. Two weeks ago China abruptly scrapped a giant alliance between the world’s three largest container-shipping companies, triggering confusion among Euro entities like Maersk as well as US lines.

...... Inhibiting the potentially lucrative co-production process is a long list of “no nos” imposed by Chinese censors. Movies can’t “re-interpret” history, depict the supernatural or display “gratuitous violence.” Those are the official censorship bans. Unofficially, movies can’t depict an American looking smarter than a Chinese character. Bruce Feirstein, the very successful writer of two James Bond films, who has written and produced several co-productions in China, tells me it’s a disastrous mistake for a movie to portray an American leading man who goes to China, does an action scene with, say, Jackie Chan, and then gets the girl. The Chinese girl, that is. “There are 650 million Chinese men who would not like that scene,” he reminds me.

...... no vigilante-ism; no civil disobedience; police and military can have guns, but no guns or serious violence by Chinese civilians; no Chinese villains unless they are from Hong Kong or Taiwan; no explicit sex; no Chinese prostitutes. On the genre front: no horror films; no ghosts, no vampires and no werewolves; no religious-based films; no time-travel movies.


China Loves Transformers

Transformers earned over ¥200 million at the box office on Friday. Nearly all of the screenings at the theater I went to were sold out today (except for the last of the day), and they have the movie playing on about 13 of 17 screens.


Here's a comparison of midnight showing sales: up to ¥20 million this year.

Be Quiet About Easing Buying Restrictions

Some Chinese cities know how to read between the lines, others do not. Shenyang and Hohhot publicly announced an end to buying restrictions only days and weeks after an official from the Ministry of Housing said no city has done so. They both pulled their announcement within hours. Wuxi tried a similar move and said it was all just a rumor.

住建部:限购对百姓无影响 没城市公开取消 (Ministry of Housing: Buying Restrictions Have No Effect on Average Buyers; No City Has Openly Cancelled Buying Restrictions)

Other cities have eased "buying restrictions" in ways the central government would like to see, such as easing residency requirements. Technically, these aren't the buying restrictions talked about in the press, these are more fundamental changes in residency rules. Buying restrictions mainly refer to the rules aimed at stopping investment and speculation in the housing market, which keep buyers from buying more than two homes in a given city. Haikou and Wuxi are two examples of easing residency rules.

Then there are the cities who are keeping their mouths shut about easing buying restrictions. The unwritten rule in easing buying restrictions is, don't talk about easing buying restrictions. I do not think eased restrictions will have much effect, but up to as many as 20 cities have quietly eased rules.

Since April, including Fujian, Tongling, Shenyang, Wuxi and other cities, are caught in a save the property market, "the government leaked - Opinion Focus - reacted strongly - Government rumor" cycle.

However, Hohhot released two documents directly ripped urgent local government bailout fig leaf. Reporters learned that the contents of government documents is no longer required to provide housing residents purchase inquiries prove copy number, which means completely cancel the purchase .

So far, Hohhot became the first truly carry the banner of the capital city to save the property. Interpretation of the market, the central or local rescue behavior began to default. The problem now is that after Hohhot, how many follow suit? The property market has been skyrocketing, really can not tolerate decrease? Save the property market is still strong pull to avoid market crash rates?

"Hohhot property close to collapse, has its particularity, in principle, the Ministry of Housing is still required capital city can not be disclosed to relax the restriction, only more secretly executed." Persons who participated in the end of May the Ministry of Housing, Guangdong forum told the "China Times" reporters.

At present, Guangzhou, Shenyang, Wuxi and other cities have relaxed the restriction in the dark, "do not say." According to incomplete statistics, this year, there Hangzhou , Tianjin, Changsha and other cities about 20 settled by relaxing the conditions college housing subsidies, loans and other ways to adjust the fund, directly or indirectly, to implement a "liberal."

Strange to cancel the purchase

Hohhot public bailout process was full of drama.

June 20, Hohhot Real Estate Regulatory Office's official website issued a notice "really good job promoting the implementation of housing security views of the city's real estate market healthy and stable development," the proposed housing residents to purchase goods (including second homes), it does not then asked to provide housing ploidy queries proof.

Although the text of avoiding the "Cancel purchase" words, but no longer for buyers of houses ploidy query, means completely liberalized the purchase, which led to public attention.

5 days later on the 25th, Hohhot Housing Authority said, because of a printing error and the word appears above the emergency recovery "notice", the document also withdrawn from the official website.

In this regard, even a local Planning and Land Committee insiders also said the reporter, the local papers are written carefully worded, printing errors just an excuse, Hohhot bailout may well be "day trip."

"Let the media reported it, the result is too large response, the government not sure on referrals to the Ministry of Housing, Ministry of Housing expressly not allowed, Hohhot can only be recovered by the wrong word go." Person to the bureau a city "China Times" reporter revealed that this is the case, he learned from Hohhot Housing Authority internally.

But unexpectedly, Hohhot in 26 evening, the above "notice" after changes to the re-issue of a word. Hohhot Real Estate Regulatory Office officially published "corrected statement," said the second row in the seventh bracket "with two sets of housing" to "including second-hand housing."

This also means that, after the bailout was considered a restricted area restriction "red line", the first to break from the Hohhot.

"It may be another, and the Ministry of Housing repeated communication, the Ministry of Housing also know Hohhot problems can only default to release it." Above the bureau, told reporters that, Hohhot compile a printing error episode precisely also shows that the local and Central tough game.

"Logically, only changed one word, is not required to recover files, not to mention the second-hand housing is not a big problem, there is not a single original commodity housing means new housing , already includes all the real estate. "Research Director of Marketing Department of Beijing Centaline Dawei analysis said it only shows the mentality of caution and tangled local governments.

But before Hohhot, publicly posting bailout there Tongling city and Shenyang.

Tongling is known as "naked" bailout, but since May 1 after the implementation of the document by the media reports, immediately withdraw from the Internet, after which were not disclosed. Shenyang City Housing Authority, who told reporters, did not release the purchase, "We are not the final say, do not put Shenyang release, to ask the city to ask the center."

Earlier, Fujian "Min ten", and Ningbo, Wuxi, Changsha, Hangzhou and other places came to rescue the market version, but ultimately in charge of government departments denied.

Deep market adjustment

Such persons to participate in the forum, told reporters in Guangdong, wind Ministry of Housing is required in principle to open up the capital city of the purchase. As the capital city, Hohhot how to successfully break through?

"Although part of the capital city of Hohhot, but the size of the population, and not a lot of third-tier cities, and the single industrial structure, typical of the resource-based cities and now release only shows Hohhot oversupply of real estate too." The source said.

Statistics show that the resident population of 300 million people in Hohhot, where urban population of only 200 people.

Centaline According to the official website of Hohhot real estate statistics, from January to May this year, Hohhot new housing units for 3780 sets of transactions, and the current inventory can be sold up to about 120,000 units. At the current rate of destocking, need 10 years. But the last five years, the government granted a total 21.2 million square meters of residential land, as well as potential future supply 100,000 sets.

"Hohhot property market on the verge of collapse, the problem is much more than inventory is too large, but the hands are the wealthy city now no money." Said Zhang Dawei, real estate and economic adjustment in a double superimposed period of sharp contraction in demand Hohhot.

And Haikou, Wuhan, Guiyang and other cities to promote urbanization, buyers settled on behalf of the curve bailout is different, Hohhot although urbanization is also the name of the new flag, but it does not solve the problem settled, it is clear only to stimulate the property market.

Local governments to stimulate the brains behind the property, one reason is that the depth of the real estate has indeed entered a period of adjustment, in addition to the relatively low drop-tier cities, the 234 line of new properties have been secretive kicked upstairs from the front in April, into a Today fanfare drop out. Sudden reversal of the real estate market, the whole industry unexpected.

Central Plains real estate statistics show that from January to May this year, 54 cities housing 968,000 units were sold, representing a reduction rate reached 22.5%.

"It is difficult to sell the land, unsold widespread, local real estate investment growth is more substantial decline, these local governments have made restless." Land Bureau, a city in Zhejiang insiders said, as banks deleveraging, using high leverage over developers Excessive investment in the Yangtze River Delta region has become the hardest hit overstock.

Reporters found that, Jiangsu, Zhejiang, Shanghai three ground ten thousand real estate non-performing assets are on auction on ebay, but very few bidders. Wenzhou Intermediate People's Court judge told reporters, many of which are listed twice, still nobody cares.

And more "do not say"

It is worth noting that the recent macro wind started to change, the central "micro-stimulus" policy has made it clear, revert to keep the lower limit of 7.5%.

Since June, a number of provinces of Heilongjiang, Hebei, Sichuan, Guangdong, Shanxi, considerable efforts have introduced a steady growth measures; which includes investment shantytowns and infrastructure occupy the position of the head, steady growth to become the most important weight.

But the real estate industry as an economic pillar, and now has become a sensitive word, local public bailout easily aroused resentment, and the bear went over the old heavy infamy, so more local governments to take "do not say" strategy. From "has in fact been discovered much release the purchase, but are outside the official denial" can be discerned.

An industry source told reporters, Shenyang relax after recovery program, into the "underground." Specific operation is to lay greeted with developers, home buyers to buy a house if there really are sincere order to tell each other to relax, but not blatantly posted notice to cancel the purchase at the sales office.

Research Institute of Shanghai E-House Yanghongxu that the market mechanism and new urbanization is the center of major policies, "two-way control" and "guidance" is this year's national housing policy oriented. Similar Hohhot so sluggish property market, prices stop rising city, cancel the purchase, the reason is pretty full.

Not long ago, Feng Jun, chief economist of the Ministry of Housing for the future of local government how to adjust the policy statement said the property market, property market adjustment policies around the overall tone is "always encourage the protection of consumer demand, curb investment demand"; while whether to cancel the purchase, every place should make judgments based on their own situation.

From the supply of data, whether it is the Tianjin Binhai New Area , or Shenyang, Hohhot, property stocks are a common problem is too big, the imbalance between supply and demand. In the industry view, initially as a control rapidly rising short-term rates, administrative emergency measures, the purchase of the property no longer meet the current downstream environment.

But what is puzzling is that, since the decision rests with the place, and indeed a number of cities facing oversupply, falling house prices, why the local government to cancel the purchase and bailout measures so terrified?

"On the one hand from the pressure of public opinion, on the other hand it is still central to secretly resistance." Shenzhen Urban Planning and Land Committee insider told the "China Times" reporter, twice in 2008 and 2011 bailout, are stimulating the demand side from the start, This time, the central hope local governments from the supply side to solve the problem of the imbalance between supply and demand, rather than advance overdraft future needs, but many places still take the old road, so where there are concerns.

A source close to the Ministry of Housing, said: "The current ' hidden rules 'yes, many still can not relax the restriction or imposing public bailout, local government secretly executed without saying all right. "

But after Hohhot will change? Dawei that the purchase of the policy may be in addition to the first-tier cities and over 10 million population of the city still exists, the other cities are likely to gradually be canceled more than 30 cities are expected to limit the options may be canceled during the year.

"Dare to be saved, the public does not open, are too subtle." Above the Shenzhen Land Planning Committee who then told reporters that now measures more than one place, and let the purchase of the bailout, and still take the old road, which is the central " adjusting structure, promoting transformation "direction does not match, so the place inevitably indecisive, as long as central to adhere to this line, it will not allow local governments free to relax the restriction.

The estate itself is indeed at a crossroads. Real estate, "eldest brother" Wang recently audible again: There is not enough to completely adjust the extent, the adjustment period may last for 2-4 years. If the market is not adjusted, the real estate market bubble could really be broken, like Japan's that will be very bad.

Tianjin Rebuilds Manhattan in Binhai; Has 90% Empty Ghost City in Baodi

This story was going around on Friday: China Builds Its Own Manhattan -- Except It's a Ghost Town
China’s project to build a replica Manhattan is taking shape against a backdrop of vacant office towers and unfinished hotels, underscoring the risks to a slowing economy from the nation’s unprecedented investment boom.

The skyscraper-filled skyline of the Conch Bay district in the northern port city of Tianjin has none of a metropolis’s bustle up close, with dirt-covered glass doors and construction on some edifices halted. The area’s failure to attract tenants since the first building was finished in 2010 bodes ill across the Hai River for the separate Yujiapu development, which is modeled on New York’s Manhattan and remains in progress.

“Investing here won’t be better than throwing money into the water,” Zhang Zhihe, 60, said during a visit to the area last week from neighboring Hebei province to look at potential commercial-property investments. “There will be no way out -- it will be very difficult to find the next buyer.”

......Conch Bay’s ghost-town appearance isn’t necessarily an indication the area will fail. Shanghai’s Pudong district overcame struggles in the mid-1990s to thrive as the nation’s financial center. Zhengzhou, capital of central Henan province, now suffers from traffic jams in its new-city district instead of the vacancies from a few years ago, said Nicole Wong, Hong Kong-based head of property research at CLSA Ltd.
Pudong residential real estate was empty all the way into the early 2000s. Tianjin's problem is the same faced by Pudong's back then: economic slowdown. See: Tianjin Industrial Growth Rate Falls to 13 Year Low in May; City Government Shocked

Here's a video of this area in Tianjin.

Here is some background on the Binhai area: Binhai is intended to replicate development seen in Shenzhen and Pudong in Shanghai. It is a Special Economic Zone (SEZ) of the PRC, meaning experimental reforms are taking place here.

Recently there was the story of abandoned villa development in Baodi, an area between Beijing and Tianjin that failed to secure a high speed rail stop.
Abandoned Villas in Tianjin. There are now many more photos coming out. Chinese media now dubs this Asia's largest villa development and 90% of it is empty. They planned to build 8000 villas, but so far only 3000 have been built. More photos here.

First here's a map of the area. I highlighted Qinhuangdao in Hebei province, site of overbuilding. Tangshan is on the map, also an overbuilt city, and I highlighted Caofeidian, which is an industrial development that drove a lot of growth in the region. Then in the southwest there is Baoding, which is hoping to become part of the larger regional economy. In Tianjin, I highlighted the Binhai development, as well as the Baodi area where all these empty villas are located.


China: Rent vs Buy

When I look at rents vs home prices in many parts of China, there is no way residential housing makes financial sense from an investment perspective unless you expect rapid price appreciation. In some cities an entire year of rent may only come to the cost 1 sq meter of property. In terms of yield, residential property rental is only competitive with the lowest bank deposit rates, it cannot hold a candle to WMPs or online money market funds. Although no one is interested in buying at the moment, there are plenty of stocks that offer competitive yields and offer inflation protection. As an investor I'd be buying shares.

This article below runs some specific numbers for Nanjing.

A 70 sqm apartment, total price ¥600,000, or ¥8571 per sqm. Buying directly from the developer, the home buyer must pay a ¥180,000 down payment (30%); the balance of ¥420,0000 is borrowed. Adding in sales taxes and the property management fund adds another ¥24,000, so the buyer needs ¥204,000 cash up front.

Assuming the loan is for 15 years and the borrower receives the 15% discount off the benchmark 7.38% mortgage rate, they will pay 6.273% interest on the loan. They will pay ¥3606 yuan per month for 15 years, with interest costs totaling ¥229,000.

Total costs is ¥180,000 down payment; ¥24,000 taxes and fees; ¥420,0000 loan principle; ¥229,000 in interest. A grand total of ¥853,000.

If the buyer decides instead to rent the same apartment, they must pay ¥1706 per month in rent. The other ¥1900 per month that would have gone to the mortgage, goes into the bank each month and adds to the ¥204,000 that would have otherwise gone to the down payment, taxes and fees. Assuming the money is put into a 1 year CD each year for 15 years, currently yielding 3.33%, the renter would earn ¥129,000 in interest on the lump sum and ¥85,000 on the monthly additions.

Assuming no rent increase, the renter pays ¥307,000 in rent. But the down payment and savings (¥1900 a month for 15 years comes to ¥342,000), plus the interest of ¥214,000, comes to ¥760,000.

In order for the home buyer to have the home worth ¥760,000 at the end, would require the price to rise from ¥8571 per sqm to ¥10857 per sqm, an increase of 26.7%.

One side is whistling prices jump up, the other side of the bank's rate hike and heard the sound of market regulation initiatives frequently "punch" so many people caught up in what is the cost of buying or renting more confusion. Public Wang on this phone call, ask reporters to help count afterwards. Second-hand housing professionals to set in the main urban area of 70 square meters, the total price of 600,000 yuan of real estate, for example, carefully compare the pros and cons of buying a house and renting.

In addition to setting the value of the property, in order to facilitate the calculation, analysts also assume intend to solve the housing problem of the person 20.4 million in cash on hand, and can be disposed of 3,606 yuan a month of spare cash. If you buy directly from the developer's words, buyers need to down 180,000 yuan, and handle commercial loans 420 000, in 15 years to pay off. Based on the existing preferential interest rate 7.38% and 15%, the actual rate mortgage is 6.273%, for the month to 3,606 yuan per month, for 15 years the total interest of 22.9 million. Plus 2% and 2% of the property deed maintenance fund to pay when buying (in multi-storey residential for example), taxes were to spend 24,000.

Total cost of the above together, the cost of buying this house, including cash 204,000 (including 180,000 down payment, taxes 24,000), invested 3,606 yuan a month, after 15 years is 649,000 (equivalent to 420,000 loans, interest 22.9 million). In other words, after 15 years, buyers have spent 853,000 yuan a house.

If you use the same money to rent a property with the words, for ease of calculation, the person renting the hands of 20.4 million for savings and spare cash 3,606 yuan a month apart, with a monthly rent of 1,706 yuan, and the remaining 1,900 yuan still used as a savings. Among them, 204,000 yuan for a 15-year time deposits, compound interest calculation, the new deposit rate is 3.33%, 15-year profit of 12.9 million yuan. In addition, based upon the bank deposit 1,900 yuan per month, simple interest calculation, taking the average interest rate of 3.33%, 15 years down the interest on deposits is actually about 8.5 million.

Rentals: 15 years after funds owned 760,000

To sum up, the total capital of renters spent 853,000 yuan remains unchanged, the actual expenditure was 1,706 yuan per month rent, the total after 15 years was 30.7 million, and increased profits for the 129,000 plus 85,000 equals 214,000. In other words, renters in the balance after 15 years is 853 000 -30.7 Wan +21.4 million = 760,000.

Comparison: prices rose only cost to buy a house

Analysts said that in this example, the difference between renting and buy a house in that: when the same money invested after 15 years, homebuyers have a home, and renters are holding 760,000 yuan, it is to compare this then the house is worth 600,000 to 760,000 added. Calculated according to the total price of 600,000 yuan, the property is priced at 8,571 yuan; If calculated in accordance with the words of 760,000 yuan, the price must reach 10,857 yuan, that is, only the price per square meter rose 2,286 yuan, home buyers and renters was called "tie"; If or flat, then buy a house is not worth; If prices fall, thanks to more home buyers.

Professionals said that from the perspective of trends in real estate development, once prices approaching the million mark, the price increase will become increasingly slow and the possibility of a sharp rise in house prices in Nanjing is not large. It is worth mentioning that the central bank to raise interest rates "footsteps" I am afraid that will continue during the year, this way, to buy a house costs will continue to increase in the long term, renting may be more suited to resolve their housing needs.

Weapon: Who is suitable to rent

Suitable for renting crowd divided into three categories

One young man entering the workplace, especially university graduates, their economy is not strong, especially choose to rent shared more cost effective.

Second, a large crowd job mobility, if the work is not yet stable buy at the time, once the job transfers, accommodation units and the situation appears more distant, it will generate a lot of money in transportation costs.

Third, unstable income groups, if blindly home loans, once the situation is difficult to repay the emergence of real estate may even be forfeited. In comparison, suitable for buying real estate in the crowd should be relatively mature, white-collar workers, including many years, economic strength, but also a strong desire to upgrade some home buyers, existing home to buy a new house can be sold to satisfy the pursuit of quality of life. In addition, if the couple getting married insufficient funds, then used the new premises within the city limits is a good marriage room selection.

One Day Only Buying Restriction Relief

Chinese media notices that many cities cancel their buying restrictions for only one day (usually less than a day). Local governments can ease buying restrictions, but an outright cancellation is the "red line."

The article doesn't really get at the heart of why cities are doing this. There's discussion of wanting to rescue the real estate market, high inventory, etc. This isn't news. What is news is that instead of using various methods such as easing hukou regulations and other buying restrictions, Hohhot did an exact repeat of what happened in Shenyang. They announced a full cancellation of all buying restrictions and then rapidly retracted. Somehow Hohhot and Shenyang received the exact same message within hours of announcing their policy. My best guess is they are testing the waters.

Even if the cancellation held, easing buying restrictions is a bad policy because it won't work. It allows speculators and investors to buy up homes, but the trend now is for investors and speculators to sell homes. It may help the big investors who need to offload 100 homes to another big investor, but speculation has died down considerably. In cities that have eased policy, they have made it easier for home buyers to obtain residency. Those cities have made home buying more attractive. Easing residency rules is also the policy favored by the leadership. Hukou reform and urbanization involve moving millions of people from the countryside to the cities, and the biggest impediment right now is the fact that non-residents cannot gain residency in many cities. Without residency, they cannot gain access to many social services, including sending their children to a government funded school. Easing residency rules kills two birds with one stone as far as the central government is concerned.

多地救楼市政策一日游 触碰取消限购红线就被叫停
June 25, Hohhot relevant departments issued a document called "copy number of queries are no longer required to provide proof housing," which is equal to cancel the purchase, sometimes caused widespread concern.

But that afternoon, the file is removed. Some media said that the department is responsible for related work Minister Li said, "The government has a word document printing error, you need to re-publish." But as " First Financial Daily ago, "reporter writing, these files are not republished.

Also on the 25th, there is news that, following the April Wuxi hukou Deal lower threshold after housing area, June Supervision Center in Wuxi for each property buyers no longer check the original housing conditions, and the staff of the Commissioner of property confirmed that indeed no restriction.

However, Wuxi City Housing Authority official microblogging later said, Wuxi has canceled the purchase of houses purely a "rumor." Wuxi experienced a suspected cancel the purchase of the "tour" phenomenon.

Multi-city bailout "day trip"

"First Financial Daily" reporter Statistics found that not only Hohhot, in recent years, including Shenyang, Foshan, Wuhu and other cities, have experienced a property market bailout "tour" of the phenomenon.

First began relaxed restriction "tour" of the city of Foshan. October 11, 2011, Foshan building housing the Bureau issued a document that from now on the purchase of four people to relax.

However, late in the day 23:24, Foshan building housing the Bureau has issued an emergency notice, said a stay of execution.

Coincidentally. November of that year, Chengdu was relaxed restriction policy, ranging from the purchase of the family as a unit to relax on an individual basis, after media reports, this policy has been tightened hole then.

Subsequent February 9, 2012, Anhui Wuhu city government introduced a number of home buyers grants, subsidies policy. However, after only three days, Wuhu shouts suspended this policy.

Shanghai E-House Real Estate Institute researcher Yan Yuejin said that in 2011, in 2012 the local government a bailout would lead to the fate of being suppressed, indicating that the timing of the bailout has not arrived yet. When "that time is precisely the power of purchase of the policy cast, many cities suited to policy tightening, so the urge to adjust, but at that time the entire property prices rose a lot of pressure, so from the overall consideration, the bailout is tantamount to violation of policy ideas, so will lead to pressure. "

In the new round of market downside period this year, according to the central government classification regulation requirements, a number of second and third tier cities or untied fund by way of purchase or deed of subsidies to stimulate the market, and the last round is different, the current round of deregulation , to save the city more than a dozen cities get most of the upper default, Shenyang and Hohhot is the only exception.

June 10, the real estate market in Shenyang heavy news broke, saying Shenyang expressly abolished the purchase, just buy a house, locals and foreigners can purchase multiple dwellings. Message a market in an uproar. However, one day after the Shenyang municipal government departments that this message be denied, Shenyang cancel the purchase only experienced a "day trip."

Centaline chief market analyst Zhang Dawei told the "First Financial Daily", the one that no matter what action will be stopped, as long as this one is to cancel the purchase without touching the root of the red line on the right, but once touched will was stopped. Because direct cancel the purchase, its impact on the market too obvious, all too risky.

Why flip-flop?

So why would frequent the local government of this capricious "day trip" phenomenon? This is one of the biggest key is to bring the property inventory downstream pressure force high [ Introduction News ] enterprises, real estate development and investment growth decline in land premiums decrease, thereby affecting regional economic development.

Shenyang, for example, the data show that a quarter of the average turnover of Shenyang has been declining, dropping gradually increased. As of the end of May, Shenyang 18.28 million square meters of new housing stock over Shanghai, Tianjin, second only to the country's highest (21.1 million square meters), to the needs of 22 months.

According to Institute data, Hohhot inventory to require 37 months in 35 cities ranked inventory to the greatest pressure.

"Land supply in these cities are large, the potential to have a lot of pressure." Said Zhang Dawei, compared to 2011 and 2012 only affected the real estate property market cycle, the current round is not only the property market, the economic downturn in many parts of the region more obvious, so the current round of local rescue impulse greater.

Yan Yuejin also believes that local government bailout, on the one hand due to pressure on the stock, housing prices relatively slow-paced real estate sale, the credit tightening a greater financial pressure; on the other hand, from the industrial point of view, a lot of urban economic development on the property market reliance on large, this model is currently hard to change.

Dawei noted that the last round of the place was stopped shortly after the bailout, credit began to relax, and this more than anything bailout policies have used. This round of the Central Policy adopted classification regulation, the regulation allows local governments to adopt different policies according to their own situation, but did not significantly relax credit. Therefore, the current round of bailout in place-based, local government policy "day trip" also means having to test the market reaction.

However, after Shenyang and Hohhot cancel the purchase of the "tour", the local government at the time of the next bailout should try to avoid touching the outright cancellation of the purchase of this red line. Dawei said that the local government will try to adopt a verbal notification window guidance way to take some of such residence, population release of "Bypass" deregulation policy, rather than directly to cancel the purchase.


Chinese Commodity Finance System On Edge as $15 Billion in Gold Fraud Uncovered

To reiterate: the issue here isn't the missing commodities, it is the breakdown in the commodity finance system. That is the direct threat to the metals markets. More broadly, none of this is good news for credit growth.

With regards to the metals themselves, there is financial demand for gold because gold is money. There is no financial demand for copper and other industrial metals if the banking system does not allow them to be monetized or cannot monetize them due to fraud concerns. Without financing demand, the industrial metals either go to end users or get dumped on the market.

More broadly, these loans flowed into speculative real estate, much of it likely in the form of high interest rate loans to developers (we don't know if that's the case with gold yet, but it is the case with copper, steel and other commodities). There is a network of fraudulent lenders who conspired to defraud banks and have guaranteed each others' loans, putting them all on the hook for bad debts. These scandals are systematic to a local economy or an industry, and this latest gold scandal involves 25 firms. It's the same pattern seen over and over again in China, with the steel traders, the copper traders, in Xiaoshan, Wenzhou, etc. Beyond these companies then, are dozens upon dozens of firms who are suppliers and customers.

China economic system is also pro-cyclical. The demand for industrial commodities is fueled by these financing deals which funnel debt into the real estate sector. Commodity demand also backs China's sovereign wealth fund investments. Many emerging markets export commodities, and emerging markets are the main source of growing demand for Chinese exports. The growth in China's economy and the financial demand for commodities was all boosted by rapid credit growth. That rapid growth is over. So while these financing deals are big news, the really big story is whether this isn't the start of something much larger.

FT Alphaville wonders in When commodity collateral shenanigans go wrong:
The biggest implication of the missing collateral revelations is if foreign trade partners, who have financed much of this speculation. are put off and withdraw that cheap dollar liquidity even further.

That, at the end of the day, will put pressure on the yuan and extend the potential dollar short problem, which may only be resolved via a direct swap line with the PBOC and the Fed, or a liquidation of some of China’s public dollar reserves.
If dollar reserves are liquidated, the yuan goes down in HK. It fell when reserves simply stopped growing or dipped very very slightly in 2011 and 2012. A similar move to the ones back then would take the yuan below 6.30 offshore.

Bloomberg on the fraud:
China Finds $15 Billion of Loans Backed by Fake Gold Trades
China’s chief auditor discovered 94.4 billion yuan ($15.2 billion) of loans backed by falsified gold transactions, adding to signs of possible fraud in commodities financing deals.

Twenty-five bullion processors in China, the biggest producer and consumer of gold, made a combined profit of more than 900 million yuan from the loans, according to a report on the National Audit Office’s website.

Some gold firms (and money printers) are also in trouble for lying to the government about their assets and profits, which was uncovered by an audit of the central bank.

Part of the assets and liabilities of enterprises directly under the profit and loss is not real

Compared to the central headquarters and branch offices, central banks and enterprises directly under the China Gold Coin Corporation China Banknote Printing and Minting Corporation (hereinafter referred to as the Gold Coin Corporation, the note Corporation) and its subsidiaries existing main problems may be more representative .

First, some units balance profit or untrue.

The audit found that from 2009 to 2013, Shanghai Banknote Printing and Minting Co., Ltd and Shanghai will place financial subsidies and other types of grants 9,817,500 yuan between subjects included accounting, resulting in less total revenue, which in 2013 4,486,600 yuan;

2012-2013, Xi'an Printing Limited, Shenyang Mint note Corporation Limited and Multi accruals 3,012,200 yuan, of which 2013 2,412,200 yuan;

The end of 2013, Gold Coin Corporation and other five units total assets of 1.061 billion yuan less.

Secondly, part of the non-compliance of financial management units.

For example, in 2013, Beijing Kaiyuan China Gold Coin Distribution Centre 108 million yuan according to the specified VAT taxable sales invoice;

2013, Beijing Banknote Printing Co., Ltd., Shijiazhuang Printing Limited and Technology Co., Ltd. in the use of special security note irregularities invoices for reimbursement of expenses 1.4292 million yuan;

2013 in banknote printing Co., Ltd. 7 Guanghua accounts using non-standard units, involving an amount of 4.6505 million yuan;

The end of 2013, Gold Coin Corporation and the Corporation notes the existence of long-term receivables and other financial issues, such as losses are 51,290,900 yuan.

Third, the general public is more concerned about compensation management, audit also found some problems. For example, from 2012 to 2013, Beijing New Era Gold Man Culture Communication Co., Ltd., 13 units of bonuses and subsidies in addition to total wages 25.913 million yuan, of which 25.3369 million yuan in 2013;

From 2006 to 2013, the Corporation and other six units notes exceed the standard pay "insurance policy" and 183.1845 million yuan, of which 2013 181,101,200 yuan;

2010-2013, Gold Coin Corporation exists to employ retired cadres affiliated companies or executives in the office to receive remuneration.

In addition, the audit also found several other problems spending irregularities.

As in 2013, Chengdu Banknote Printing Co., Ltd., 10 units of fees charged to the publicity, money and other gifts purchased hospitality, involving an amount of 6.6252 million yuan;

2013, Baoding banknotes Paper Co., Ltd., 5 units of official vehicles that exceed the standard configuration, involving an amount of 5.0028 million yuan.

For problems found in the audit, the Audit Commission recommendations: The People's Bank should further strengthen budget management, standardize accounting, strengthen the supervision and inspection of branches and enterprises belongs budget execution and financial management.

Audit report also showed that the People's Bank to carry out self-examination before the audit and correct some of the self-identified problems. Audit findings, the People's Bank is organizing for rectification, now part of the relevant branches have been adjusted accounts. Specific rectification results announced by the People's Bank to the public.

Overdue Government Debts A Growing Concern

The issue with local borrowing is that many cities do not have debt management/warning systems, many cities are borrowing in order to repay old debt, and local governments are violating regulations when borrowing and spending debt. Another issue is whether the muni bond system comes online before the land finance system breaks down. Most cities will continue to rely on the local financing platform, but some of this borrowing uses land sale revenue as collateral.

地方债务现“逾期未还” 违约动机渐强
The latest audit report shows that local debt default has occurred, although the default rate is still unknown, but this phenomenon is not a good sign. Although the overall debt is still controllable, but the establishment of sustained-release mechanism, to find a solution is desperately needed.

June 24, a Chinese auditor general Liu Jiayi audit report on the Standing Committee of National People's Congress submitted show that in the end of June 2013 to March 2014, at the end, the focus of the audit 9 Sheng Benji old debt by the new larger amounts. By the end of June 2013 to the end of 2014 3 9 Sheng Benji and nine first municipal government borrow new debt to repay maturing debt 57.931 billion yuan, but there are still 821 million yuan overdue. This means that the breach has occurred.

Audit report shows that, at present, all kinds of government debt management by the Ministry of Finance are responsible for different business divisions, yet unified centralized management, offshore renminbi bond issuance and other systems are not perfect, some places do not regulate the use of debt and borrowing. 9 Sheng Benji and nine first municipal government debt grew 3.79% balance audit.
But the good news is that debt dropped seven percentage points over the first six months of 2013 the average growth rate of nine city level due to the 2013 land transfer revenue growth, the debt burden has been reduced.

December 2013 issue of the six major economies in the Central Economic Work Conference pointed out, the local government debt ranked second. In 2014 the government announced the launch of a pilot program that allows the total 10 provinces and cities in issue was 109.2 billion yuan in local government bonds.

Zhu Haibin, chief China economist at JP Morgan noted that although local government bonds is a welcome initiative, but the actual implementation is very difficult. The pilot's success depends on the revenue and expenditure transparency, strict local government budget constraints and objective risk assessment and risk-based pricing - all of which involve a wider range of structural reforms.

Debt situation is not optimistic

Liu Jiayi submit audit reports show that in 2014, from the audit situation, the Ministry of Finance and other relevant departments and local debt statistics reinforce the reconciliation of work and risk analysis and early warning, local government debt growth has slowed. But the problems have to throw three points: First, government debt management system is not perfect. Audit nine Sheng Benji and nine city level, the two did not develop a comprehensive management system for government debt, 9 did not develop government debt risk warning system; Second Sheng Benji old debt by the new larger amounts ; three individual debt borrowing and the use of local irregularities. The audit found that, since the end of June 2013, four city level irregularities or non-compliance by the government-guaranteed mortgage financing 15.7 billion yuan, 10.862 billion yuan in violation of the contract will be debt capital for real estate development, capital projects or other construction projects . In addition, four provincial city level through non-public new ways of financing instruments, such as private debt borrowing 6.9 billion yuan.
Although the pilot has commenced issuance of local autonomy, but the effect may be limited in the short term.

Zhu Haibin noted that the amount of local government bonds issued by the central government allocated 400 billion yuan quota allocated from the 2014 central government to local governments set up by the. The pilot and past practice is different. In the past, the Ministry of Finance and representatives of local governments to issue bonds to repay; Now, the local government will be solely responsible for the issuance and repayment of their debt. Bonds will be extended to a maximum period of 7 years 10 years (5,7,10-year bond ratio is 4:3:3), must be bond rating, rather than to review from time to comment.

"This action is a step in the action has encouraged local governments to solve the debt problem towards which the local government has opened a new financing channel." Said Zhu Haibin, to replace the local government bond financing platform to clear responsibility Alternative implied, and the requirements for the bond rating will improve financial transparency, and promote local government fiscal discipline. Moreover, the extension of maturities would reduce the risk of local government debt maturity mismatch.

But from a practical effect, there are many problems to be solved. In the pilot phase, the small size of local government bonds, and the central government is likely to follow the quota system in order to avoid excessive local government borrowing. For example, a pilot program in 2014, most provinces issuance quota is insufficient to cover even the interest on loans. In the near term, expect local government bonds and other financing will be (including corporate bonds - also known as the City investment bonds) coexist together to meet the financing needs of local governments. Government will continue to distinguish stock issues and traffic issues, which means avoiding the existing local government debt default motive remains strong.

Debt-release mechanisms need to be improved

International analyst Yan Wentao long been concerned about the integrity of local debt risk, he pointed out that the risk of local bonds feedback out of the need to be vigilant. In the background of the current slowdown in revenue, expenditure will further increase the rigidity of local government debt pressure this year. Land real estate market boom down, have a greater impact on local government financing, the whole, this effect is also divided into two categories, one is the land market downturn for local financial impact, without regard to the central transfer payments , where 52% of income to rely on land and real estate to support. Second is the impact on the balance sheet platform, the land market downturn could undermine platform enterprise's balance sheet, while the majority of companies rely on this platform to obtain bank loans secured by land or get some credit collection. In this case, the land may be further diminished reserve credit collection effect.

"General local government funds to repay the debt in addition to land, as well as some of their own cash flow, but now the situation is the fact that as of 2012 the national average to land revenue source for the repayment of part of the debt which accounted for 37.23, We have accounted for all the provinces, the dependence on the land transfer to sort out and found some provinces the proportion of land more than 50% to 66% of the highest in Zhejiang. "Wentao Yan pointed out that this description is a very dangerous signal. dependence on these areas of land and real estate market downside is very high, especially in the current downward trend in the real estate market land more obvious cases, the repayment structure will be a great risk, debt repayment over a single centralized structure will further increase local debt exposure in these areas.

Yan Wentao said that under the new financing environment, I believe that the future of the local bond market debt will be more abundant species, in addition to the previous city to vote bonds outside, but also have some local debt, project revenue bonds, special bonds shed change, sustainable debt specific business process platform also found that many companies are willing to do this kind of perpetual debt.

Bonds species diversity, while bond issuers will be more diverse, in addition to the previous platform enterprise, and some local governments, state-owned holding enterprises volatile shantytowns special bond, there are some items corresponding debt The SPV has set up a number of such projects the company.

He believes that although the peel is a function of local government financing platform for the main direction of the company's future development, but is more difficult to achieve in the short term, financing platform will continue to be the subject of future major debt, but the body and in the financing of local government debt in the future financing will gradually diversified, local bonds and project bonds will become an important complement to the issue of local debt, although it is supplemented believe the future of this step is to establish a substantial debt financing mechanism for local governments to government bonds as the main future China will establish a local debt-led local debt issuance system.

Zhu Haibin hope Budget Law Amendment (budget law currently prohibits local governments to borrow from banks or issue bonds directly) can be completed as soon as possible, which will officially introduce China to pave the way local government bonds.

Hohhot Cancels Buying Restrictions, Or Do They? Developers Skimp On Sales, Rely on Chat and SMS to Bring in Customers

Once again a city says buying restrictions are gone and pulls the announcement within hours. In one story (呼和浩特撤回取消“限购”文件引热议), it says that Hohhot prices have been flat since March and some developers are not even opening sales departments to move new properties. They are instead using Weixin (chat program) and SMS messages to attract customers.

Hohhot may lift home purchase limits
The residents of Hohhot will not be required to offer documentary evidence of units of apartments owned by a family when they plan to buy apartments, according to the notice published on the website of the Hohhot real estate development and supervision department.

That means Hohhot will become the first city to completely withdraw its home purchase restriction policies, which have been implemented in at least 40 major Chinese cities since 2011, as part of the central government's efforts to curb property speculation.

But late on Wednesday, the notice was deleted without official explanation. Chinese news portal NetEase quoted an official from the department as saying that they "deleted the notice because of two wrong words, and will repost very soon."

呼和浩特取消楼市限购 30城市或年内松绑
In the classification regulation policy, there are a growing number of second and third tier cities to join the army to rescue the market deregulation, the latest is Hohhot, some experts expect the year will likely have more than 30 cities relaxed restriction policy.

  Hohhot cancel the purchase of "Rashomon"

  June 20th, supervision and management of real estate development in Hohhot announced Hohhot Government Office issued the "Opinions on really good job promoting the city's housing security healthy and stable development of the real estate market" (the "Opinion") of the notice.

  "Opinions", give full play to the decisive role of the market in resource allocation, cancellation of commercial sales program filing system, residents buy commodity housing (including second homes) in the process of signing, net signed, taxes, loans, and ownership registration, no then asked to provide housing ploidy queries proof.

  Centaline Dawei, chief market analyst for "First Financial ( microblogging ) Daily "said that housing is one of the core elements of copy number of queries the purchase of. Copy number of queries are no longer required to provide proof housing, essentially equivalent to cancel the purchase of the policy.

  But in the afternoon of the 25th, on the supervision and management of real estate development in Hohhot at the website link has expired. Some media said that the department is responsible for related work Minister Li said:. "Government documents printed word wrong, you need to re-release"

  At 16:00 on the 25th, "First Financial Daily" reporter called to ask where the main person in charge, the official said there is no clear introduction of this file, copy number of inquiries regarding the cancellation of not understanding.

  Hohhot Housing Security and Housing Authority property at a source told reporters, have heard of the municipal government issued this document, as currently No specific documents issued to the department, and therefore do not know whether to cancel.

  "This matter is likely to last as Shenyang that, due to the direct cancel the purchase of the action too, political risk is relatively large, so they take it back." Case Dawei said that in many cities to take "Bypass relaxed" approach could save the city, local Government does not need to touch the red line to cancel the purchase of this root, because the risk is too great.

  Shanghai E-House Real Estate Yan Yuejin researcher also believes that although there are many cities after deregulation, but no city directly to cancel the purchase, "estimates the action too, and taken away."

  Prior to June 10, the real estate market in Shenyang heavy news broke, saying Shenyang expressly abolished the purchase, just buy a house, locals and foreigners can purchase multiple residential units. Message a market in an uproar. However, one day after the Shenyang municipal government departments that this message be denied, Shenyang cancel the purchase only experienced a "day trip."

  Hohhot, according to March 2011 introduced restriction policy, the city has a housing units (including four city districts and five counties) residence households (including some family members of city residence for the family, including spouses and minor children, the same below), non-city residence households, the purchase of a set of housing (including new housing and second-hand housing).

  Subsequent follow-up of more than 30 cities

  This year, the property market downside to many cities have brought no small pressure. In Hohhot, for example, according to the National Bureau of Statistics released monthly in 70 cities nationwide housing sales price movements, Hohhot new commercial housing price index from March to May MoM change in amplitude is 0, which means that the new Hohhot commercial housing prices have stopped for three consecutive months, growth.

  Hohhot property market is facing high inventory pressure. 35 large and medium cities in 2013 spot commodity housing inventory to cycle studies based on Shanghai E-House Real Estate Institute, Hohhot sales ratio value of 37, in 35 cities ranked inventory to the greatest pressure.

  According to the "First Financial Daily" reporters to incomplete statistics, at least 16 cities in the first half of the purchase or through deregulation, or ride to the rescue fund by way of the New Deal. Two years ago, Foshan and other places with the purchase of a deregulation policy was halted different, most of the current round of bailout to get the upper acquiescence, which also reflects the "classification regulation" requirement of the central government earlier this year.

  Local rescue the city's urgent, real estate is largely due to the downward impact of the local economy. Dawei analysis, real estate investment is generally the total investment in fixed assets into two or three, if coupled with upstream and downstream industries, will occupy half of the country. Therefore, the economic impact of the downstream areas of real estate is very obvious.

  Hohhot Bureau of Statistics data show that as of the end of March, the city's real estate investment totaled 1.506 billion yuan, an increase of 10.78%. The growth rate down 15.3 percentage points from a year earlier, the city's total investment in real estate investment accounted for 46.5 percent, down 8.7 percentage points.

  Dawei said that the current economic development is not satisfactory in many places, many of the city's industrial investment are significantly shrinking in consumer cases to be ineffective in the short-term stimulus, increase consumption and stimulate investment in real estate has become an important choice.

  For example, the introduction of Chengdu, 23, steady growth "22" should be made in the consumption of housing, the first suite of Chengdu residents will promote and improve housing consumption and housing accumulation fund loan to accelerate progress, give priority to first-time buyers who paid into the loan fund needs.

  Dawei said that the current deregulation of the purchase from the city's main relaxation, limit, expand financial support for the purchase and adjusted household registration policy aspects. More than 30 cities are expected to limit the options will likely be relaxed during the year. However, even if the current widespread throughout the government bailout, the effect is very limited, the most important thing is to see whether the credit policy of the central government to relax.

  In Hohhot, for example, said Zhang Dawei, Hohhot end just a second-tier cities, other cities can attract buyers within the autonomous region, due to the city's purchase of the policy have been very loose, the immigrant population is fairly easy to buy a house in the city. As for the high-end consumer to buy more suites crowd, will choose to Beijing, Shanghai or other coastal cities investments.

  Data show that the end of 2013, the resident population of Hohhot 300.11 million, increasing 5.23 million more than last year, of which the urban population was 198.79 million, the population growth rate is relatively slow.

  "From an economic point of view Hohhot or three-tier cities, the population of these cities to import speed displeasure." Said Yan Yuejin, Hohhot property market in May has seen a stagnation, increase the risk of future declines, so even if the ongoing bailout, is also very hard to impress buyers purchase psychology in the short term.

Natural Resource Dependent Provinces See Tax Revenues Tumble

This article focuses on the natural resource producing provinces, who have seen their tax revenues slump. This is now several years into a natural resource recession, but revenues may be finally succumbing to weaker industrial growth and the real estate slowdown.

Inner Mongolia tax revenues down 12.4% yoy in May, non-tax revenue is up 31.3% yoy. Year to date, total revenue is up 0.1% yoy. Revenues are currently 37.1% of projected 2014 year-end levels. Non-tax revenues are 37.5% of total revenue, which makes Inner Mongolia's revenues "low quality" since non-tax revenues are not stable.

Shanxi also sees poor revenue growth. Total revenues are up 2.7% ytd through May, but tax revenues are down 9.6%.

Shaanxi saw tax revenues increase only 1%, non-tax revenues grew 23.5%, for total growth of 13%.

内地多省现税收负增长 靠非税收支撑
Financial resources in the province's income situation of recent years seems deteriorating.

One obvious indicator is that, as in May, an Inner vested local tax revenue fell 12.4%. The same is "hard" last year, ending the year in May, Inner Mongolia, tax revenues are still 2.5 percent growth.

Inner Mongolia is just a typical representative of the resource provinces. Several provinces of Shaanxi, Shanxi, Henan, such as the taxation data firm behind, in fact, appear weak revenue growth, or even negative growth, mainly by non-tax revenue to support the phenomenon.

According to the 21st Century Business Herald reporter, in the second half of last year, Inner Mongolia Autonomous Region government transfer payments allocated gave grassroots counties, municipalities and counties for the financial difficulties of some of the basic operating expenses.

Chinese Academy of Social Sciences Institute of Finance Strategic Financial Research Director Yang Zhiyong, the 21st Century Business Herald reporter said that, overall government revenue situation is relatively stable, some of the provinces resources will be affected by some local governments affected. Government revenue situation is good, difficult transition; financial stress, and let the market play a decisive role in the pressure also increases.

Weak growth in tax revenue

According to statistics, the first five months of this year, the national tax authorities of tax revenue 5.09 trillion yuan organization, an increase of 8.6%, the growth rate was down trend. State tax revenues fell resources, and much more violent.

1-5 months, Inner public revenue 68.25 billion yuan, increase 060 million yuan, an increase of 0.1%; completed 37.1 percent of the annual budget, behind time series. Among them, the tax revenue 42.65 billion yuan, down 12.4% ; non-tax revenue 25.6 billion yuan, an increase of 31.3%.

Unlike non-tax revenue tax, their income is not sustainable. In recent years, with the growth of tax revenue weakness, many provinces have taken efforts to increase non-tax revenue, since, by supporting the overall revenue growth. Inner Mongolia in May non-tax revenue in fiscal revenue accounted for 37.5%, the proportion of poor revenue means high quality.

Other provinces have similar phenomena. 1-5 months, Shanxi local public finance revenue was 77.48 billion yuan, an increase of 2.7%. The first five months, Shanxi tax revenue 47.63 billion yuan, down 9.62% ; among local tax revenues attributable to the completion of 13.813 billion yuan, an increase of only 0.21%.

According to the IRS, Shanxi explained by industrial slowdown, coal and other factors leading sources of tax revenue to shrink, resulting in a reduction in the province's tax revenues 5.071 billion yuan.

Such as Henan, April, Henan province's total fiscal revenue 32.34 billion yuan, an increase of 7.8% over the same period last year. Among them, the tax revenue 16.47 billion yuan, an increase of 2.1%.

Again, Shaanxi, as of the end of May, Shaanxi local fiscal revenue 72.535 billion yuan, an increase of 13.08%. Among them, the tax revenue of 50.747 billion yuan, an increase of only 1.0%; non-tax revenue accumulated 21.788 billion yuan, an increase of 23.5%.

Grab revenue, for the "double half"

Recently, the State Administration of Taxation issued a circular on the organization of the work of tax revenue. SAT noted that the current economy is generally stable, but downward pressure is still large. Tax authorities at all levels should strengthen tax analysis, strengthen tax collection and safeguard the legitimate rights and interests of taxpayers, stimulate the vitality of market players, to lay a solid foundation for the successful completion of the task of tax revenue.

With the first half will be coming to an end, our budget "double half" of the task has become more urgent. Recently, the provincial down to the cities and counties in research, have stressed the need to strive to complete the balance of payments objectives and tasks.

June 18, deputy director of Shaanxi Provincial Department of Finance 苏新泉 held a forum in Baoji City, he pointed out that in terms of revenue, should the tax, non-tax revenue close up firmly prohibit arbitrary tax relief, but to do tax law, focusing on revenue quality; spending, spending to speed up the progress of work, while ensuring that the money is used wisely.

June 18-19, Local Taxation Bureau, Inner Mongolia Party Secretary Zhang Enhui led, to Manchuria research. Manzhouli Local Taxation Bureau Zhou Shiming stressed convey speech, "At present, the priority is to catch income."

Zhou Shiming pointed out that to everyone who has indicators, give full play to the initiative and creativity, to mobilize the enthusiasm of all aspects to create a strong joint effort to tackle tough, determined to complete the first half of the income of the organization of work tasks.

Specifically included attention to trying to project construction, firmly grasp the economic growth, in-depth judged economy trends closely track the impact of macroeconomic changes on tax sources closely tracking the fixed asset investment and progress of key projects.

Reduce unnecessary expenses

Inner Mongolia Academy of Social Sciences Institute of Economics at the light forces, on the 21st Century Business Herald reporter, said this year's financial tensions in Inner Mongolia, on the one hand because it is resources in the province, by the macroeconomic impact of a few large heavy chemical industry in Inner Mongolia accounted for than high impact on government finances. On the other hand, due to the Government's initiative to let, reduction of some taxes, has a policy of reduction.

Light military bluntly, government financial stress, reduce government intervention in the market is a good thing. However, Inner Mongolia, some higher proportion of agricultural counties, local public services are mainly provided by the government, reducing government financial resources, the impact is relatively large.

According to Ministry of Finance data, cumulative to May, the national fiscal revenue 6.11 trillion yuan, an increase of 8.8%. With the first quarter GDP growth rate of 7.4%, the situation is more considerable revenue.

For those financial growth fell significantly province, what can the Government do?

Yang Zhiyong said that economic indicators is not very good, do not immediately think of what government can do. Overcapacity now very prominent macroeconomic adjustment which is some of the out of business should be eliminated, the government should not mess helping hand. Money is tight, you can reduce unnecessary expenses and livelihood expenses should also be within their means

New Incentive for Home Buyers: Additional Space; Downside: Can't Own It

The headline says "buy a house, get free space, is it a treat or a trick? buyers must keep their eyes open." This example comes from Neijiang in Sichuan province. Many developers are offering larger space, such as a terrace, bay window, or garden area. Many buyers believe they are not responsible for property management fees on the "gifted" area. Most importantly, the "gift" area is not recorded as the owner's property, so when they sell or if there is a tear down, they will not receive compensation on this area.

买房送空间是馅饼还是陷阱 购房者需擦亮眼睛
"A room change two rooms, two rooms to three-bedroom", "variable space, free life." Now in Neijiang, this real estate advertising language everywhere, many developers have played in the propaganda of the send space, sending area gimmick, some people think that the fall in your lap. However, whether it is to buy a house to send space pie or a trap it? Response, authorities said, giving the space protected by law, are not included in the area of ​​property rights.

Promotional gift area into the mainstream of real estate

It is understood that a city of many real estate currently under construction, have played a promotional gift area, and an area of ​​real estate is more prominent. Area with the real estate market, according to a Ministry of Mr.Huang introduced Mini housing area for buyers who can increase the actual use of the area after the arrival, and for developers to improve competitiveness, it is best of both worlds. Another real estate property consultant, said Lin Lang, a district in the sale of real estate is usually the main gift home garden, terrace, bay window; among these gift area typically 17 square meters to more than 40 square meters range. According to a real estate home buyers Miss Gu Wenliao said that the reason a lot of flats rooms to multi-room promotions, mainly because many buyers think, presented a more cost housing area, and this part of the area does not need extra owners bear property management fees; Secondly, because now a lot of real estate have adopted this approach, therefore, it becomes a mainstream means developers promotion.

Authoritative statement variable space is not property area

Developers gift area is cost-effective, whether included in the area of ​​property rights is the key. In this regard, Neijiang City Housing Authority Real Estate Exchange Liao Bin, deputy director, said: gift area during the time of registration of property rights will not be included in the area of ​​property rights. Liu Bin said that this behavior is not actually present developers recognized. The gift area of ​​housing, existing home buyers to get in after that if the area does not match the publicity area with developers, buyers can not protect their own interests. Meanwhile, the higher the room rate the higher the volume rate affect the comfort of housing. Liu Bin, also said that although many developers in prices to consumers when calculating the area of ​​property rights and the gift area will do comparison basis, so that buyers feel to purchase gift area housing a good deal, but because this part of the property can not be recorded in the area in , is not protected by law, in the future if they are resold or house demolition, nor will count the gift area in which this part of the area will not get appropriate benefits and compensation, so that is not so cost-effective.

Shanghai Developer in Financial Trouble

A developer building a project in Shanghai's Jiading district has stopped work due to financial difficulties. Several banks are involved and the courts have already taken action against the firm.

This firm is also involved with projects in Hangzhou that are in trouble, and one of those projects owes money to the Apocalypse 308 trust, which comes due on October 30. (Not the first Apocalypse to run into trouble.) The stories closes with an informed source saying when that day comes, we'll get a glimpse at who is swimming naked.

上海一开发商资金链断裂 浦发等多家银行“深陷其中”
Property sustained cold shock waves have spread to most firm's first-tier cities housing prices.

"We have this project can be described as troubled, and now the company has broken capital chain, the boss is going all out to shareholders to raise funds in order to ride out the storm." Recently, faced with dozens of emotional owners, Shanghai Jiading Wyatt United International Plaza [ News Price apartment review ] on behalf of the project developer to make a case statement.

Developers of the project is Shanghai Yue Hop Investment Limited ("Yue Hop Investment"). These developers representative acknowledged that the project was forced to shut down this year on June 1 and delayed submitted six months. Another evidence, including Shanghai Pudong Development Bank, including a number of financial institutions "trapped."

Crisis or more than that. Informed sources, the legal representative for the Wyatt home together with Dillon, the actual control of up to more than a dozen affiliated companies, a large number of mutual guarantees exist between these companies, mutual lending relationship. In addition, because "lawsuits," Wyatt with international plaza construction in Shanghai Minhang District People's Court has been, Xuhui District People's Court, etc. have been seized.

Been a number of court seized assets

"Safe haven; world transformation, only I lose money." This is the combined sales of advertising Wyatt International Plaza played. The project is located in Shanghai's Jiading District, Cao district by a Class A office , three LOFT apartments , an integrated commercial building, with a total construction area of 220,000 square meters.

Owners told reporters that its purchase of the listings were supposed to be submitted at the end of last year, but with the submitted date approached, he did not wait for the long-awaited house, but it was postponed received notification submitted to the developer sent.

After that, the developers promise to pay a certain percentage of owners of late fees, and will be able to verbally submitted by the end of 2014, home owners and Wyatt together for the first time "conflict" barely come to an end. However, with the project on June 1 sudden stoppage, the crisis finally broke.

Online real estate, Hyatt International Plaza get together in October 2012 debut sale permit, total units to 1177 units, 1077 units for units sold, has registered a total of 60 sets of copy number, the total number of contracts for the 261 revoked. But " First Financial Daily "reporter found in the survey, the data behind the full strange.

On a weekend meeting of owners and developers to communicate, a person in charge of the project sales company owners, said: "online real estate data really is not accurate salable area of ​​the project is 156,000 square meters. , 50,000 square meters of LOFT left unsold 24,000 square meters, 25,000 square meters office building as well as unsold; business a total of over 80,000 square meters, and has sold a part of the 22,000 square meters leased to Wal-Mart intends to Now there are about 46,000 square meters unsold. "

Obviously, this basically sold out on the surface of the items actually still a lot of unsold listings. The informed sources, there is a lot in this project "false true net signed financing" phenomenon, the data show that online real estate listings has been signed, but in fact these houses are mortgaged to the creditor in disguise, the developer is obliged at the appointed time Redemption listings.

Another data does not meet the common sense is that this project has been registered only 60 sets of copy number, accounting for only 5.57% of the number of sets sold. A buyers said early last year he bought a set of Hyatt Plaza with international listings, but his property is still not a "pre-sale registration."

The project sales company official said, because all have done in the construction mortgage, the mortgagee only mortgages are removed, in order to apply for pre-sale registration listings. "It is indeed very embarrassing, was closed because of construction in progress, so no way to pre-sale registration and can not withdraw from the contract."

Data "First Financial Daily" reporters obtained shows Wyatt with international plaza under construction in Minhang District People's Court has been the name of the official seal to the preservation of property, while also being Xuhui District People's Court in the name of waiting to perform the desired seal . This means that, before the developers will fill the hole in funding, the project has been allowed to continue to sell.

The source said, in the construction of the project was closed down mainly due to debt disputes Wyatt fit between home and led to a number of banks.

A deputy general manager of Hyatt together buyers admitted: "payment of the loan for the project is the development of Shanghai Pudong Development Bank, Shanghai Pudong Development Bank and now the company is still owed more than two million." Jiading District Real Estate information issued by the Registrar, International Plaza, part of a total Wyatt In the mortgage artificial construction Minhang Branch of Shanghai Pudong Development Bank, the amount of debt of 2.4 billion. Another data showed that China Construction Bank (quotes, interrogation), there are different forms of debtor-creditor relationship between the Bank of Ningbo (quotes, interrogation) and Wyatt together buyers.

"This project can be described as troubled." The deputy general manager, said, "About 300 million needed to 4 billion of funds, the project can be completed, if we can have money coming in, it can be submitted is expected to end."

Arm to survive

Banyan together in adversity helpless four home help, but the property market downturn coupled with the creditors 'chase', let this self-salvation seemed quite difficult.

"After the company capital chain broke, and we're talking about a central enterprise mergers and acquisitions, Hongkou District has two projects ready to transfer, Hangzhou project will promptly if there is support for the back section of the project." Yue, deputy general manager for the above together buyers owners said, "We are doing everything possible to finance the project hopes to continue, but to be honest, now Hangzhou property market is very sluggish, and the central enterprises mergers and acquisitions, transfer and other matters Hongkou project there is a big variable."

The mouth of the Hangzhou project developers Yuan Hao Jiang era center [ News Price apartment review ], this project build by Hangzhou Hao Yuan Property Co., Ltd. (hereinafter referred to as "Hao Yuan Properties"). According to information obtained by reporters, the shareholder structure Hao Yuan Tang from home for Shanghai Industrial Development Co., Ltd. ("Shanghai from Tang") accounted for 50% of the shares, the Haining Bai Investment Management Limited (hereinafter referred to as "the Haining Bai") accounted for 25% of the shares, Jiaxing long beads Investment Management Limited (hereinafter referred to as "long Jiaxing Pearl") accounted for 25% of the shares.

According to archives Shanghai Industry and Commerce Bureau issued, the shareholder structure of Shanghai Yue Hop Investment Whales Investment Management Limited holds 76% stake in Haining Bai holds the remaining 24% stake. This means that the common shareholders Haining Bai Hao Yuan Yue together buyers and home ownership. In addition, business data also show that the Haining Bai Yue together with the legal representative of the same home, the same as with Dillon.

Obviously, the shareholder structure has indicated the existence of countless ties between Shanghai and Jiading River Project Project Hangzhou. Informed sources told reporters: "At present, the project developer tried Days sales outstanding for Shanghai, Hangzhou Jiading project 'blood', but in fact, sales of Hangzhou project is not ideal."

Hangzhou transparent network, as of yesterday, the center of the river into the Internet era of 1134 total units pre-sold units have been pre-sold units for 328 units. Informed sources, the project also exists "false true net signed financing" situation. Wyatt together buyers above the deputy general manager also admitted that the real sales Hangzhou project than online data reflected worse.

Reporters also noted that the River Center and Times Square are happy together closely with the International Aviation Trust. October 30, 2012, Jiang era center project [ News Price apartment Review ] introduced in the Air Trust, AVIC Trust - Apocalypse 308 Hao Yuan Properties Structured Capital Trust scheme was officially established (issued in three phases), Wyatt Hop Investment , Shanghai guarantees from the Tang, Bai Haining, Jiaxing long beads for the project.

Aviation Trust Fund Management recently released report shows that the trust plans Paid trust funds 690 million yuan, 180 million yuan will be used to acquire the trustee from Shanghai Tang Hao held a 50% stake Yuan Properties; 10 million yuan for the Shanghai Tang released from working capital loans; 500 million yuan Hao Yuan Properties for payment to the trust loans, Hao Yuan Jiang era for the subsequent development of the project funding; addition, business information, AVIC Trust Corporation has also invested 130 million million, about 54% stake held by the Haining Bai.

Informed sources told reporters: "Apocalypse No. 308, the first phase of the Trust Scheme will expire October 30, 2014, when the 'who is swimming naked' or a glance."

Does China Need to Rebalance?

Rebalancing China’s Economy? Fuhgeddaboudit
“We believe the obsession with rebalancing China’s economy is leading to misguided policy recommendations that are too blunt and may carry unintended consequences,” including, perhaps, reducing savings, write HSBC economists Qu Hongbin and John Zhu in a new report.

Sure, China’s investment rate is ultra-high at around 48% of GDP, they acknowledge. Sure the household consumption rate is ultra-low at roughly 34%–about half the level of the U.S. ( Some economists think that China’s consumption rate is lower than U.S.’s ever was, in its entire history.)

But Messrs. Qu and Zhu argue that China is a poor country and investment is still necessary. “There are still more useful infrastructure projects to be built before the country gets overrun by bridges to nowhere,” they write.

And, they argue, who says a consumer-based economy is so great, especially one powered by debt? The U.S. hasn’t exactly been a beacon to the rest of the world in the last couple of years when it comes to the economy.
They go on to argue that China does need to invest more wisely, but that's really the heart of the debate.

Housing is consumption, so China already has a consumption rate well over 40%. What needs to happen is a move away from housing consumption towards other forms of consumption. The high investment rate also isn't a problem. What needs to happen is more efficient capital allocation, which can be helped along by market interest rates. If there aren't profitable investments when market forces shape investment decisions, then consumption will rise. In other words, market reforms will reveal the malinvestment and this will lead to a natural decline in investment. That doesn't mean investment must fall in theory. If there are lots of profitable projects out there, investment might rise. However, the evidence favors the argument that some of the "over" investment is going into marginally productive or even capital destructive investments.

In sum, I don't think China needs more consumption or needs to rebalance in the abstract sense. They don't need social security and free healthcare in order to boost consumption, this is complete nonsense from the standpoint of the economy and growth rates. People do not need to be forced into consumption or told what to consume (unless control is your aim); everyone is a natural consumer. Market based pensions and healthcare are superior because they match costs with needs. Look at the pension disasters in the developed world to see what happens when the market signals are distorted and the link between individual action and consequence is broken.

What China does need is a greater role for market forces in allocating capital and labor. It practical terms, it will rebalance because it must. If there is no rebalancing, malinvestments will continue and bad debts will mount until the whole system collapses. That is why Tan Yaling has said that China's entire forex reserves will be gone in 5 years if China cannot change the current growth model.