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Actually, before the trade gone bad, many local governments in China already installed some limits on the housing bubble. For example, in some place, you can on

by rqs 8y ago

Actually, before the trade gone bad, many local governments in China already installed some limits on the housing bubble. For example, in some place, you can only buy house, but unable to sell it. This will limit how many money can flood back to the economy. So far, that policy is effective. After all, nobody want to play the Japanese character during what's after the "Japanese economic miracle"[0]. And the housing bubble thing is like textbook example of "How not do your economy". [0] https://en.wikipedia.org/wiki/Japanese_economic_miracle https://en.wikipedia.org/wiki/Japanese_economic_miracle

seanmcdirmid 8y ago
This has always been true though. The government basically controls the real estate companies, and they won’t list/show your house beneath a certain price. When prices weaken, volume simply plummets as no one can sell because the real estate companies won’t allow for discounting. That isn’t a really a new thing, it has been going on for at least a decade. In many cases, what we have in China is much worse than japan since artificial intervention is much deeper and prolonged.
- rqs 8y ago
  > what we have in China is much worse than japan since artificial intervention is much deeper and prolonged I think it's the question of whether or not it's going to pop. If the housing bubble did popped, then we are screwed a big time, worse than what Japanese once had. But if it didn't, then the leverage is still there and economy maybe low at worse, but stable. I don't think everything is concluded at this point, because SSE 000001[0] is showing sign of very slow recover. And the censorship on economic news in my opinion is rather one effort to preventing domino effect. [0] https://www.google.com/search?ei=P3KzW_6LF4fUwQKM77uYAg&btnG=Search&q=SSE+000001 https://www.google.com/search?ei=P3KzW_6LF4fUwQKM77uYAg&btnG...
  - seanmcdirmid 8y ago
    If the property bubble doesn’t pop, you are more screwed as the asset and real economies further diverge. China can’t be world competitive if a 70sqm apartment goes for a million bucks, people/companies will start relocating to cheaper places like say San Francisco. A lot of economic potential is directed toward real estate and away from more productive endeavors. I remember the shops outside of my old office in zhongguancun all concerting to real estate offices. Cafes, restaurants, stores can’t compete. If China wants to take the next step in their economic development, they have to give up on this bubble. It will suppress a lot more economic activity than it stimulates, even if capital is preserved it isn’t doing anything useful.
    - mistermann 8y ago
      > China can’t be world competitive if a 70sqm apartment goes for a million bucks, people/companies will start relocating to cheaper places like say San Francisco. "China is Now More Expensive than the USA": https://www.youtube.com/watch?v=32t8d2eQJAA https://www.youtube.com/watch?v=32t8d2eQJAA Almost everyone laughs when I say they should get some of their news from people who actually live in China rather than thinking something needs to be printed in the newspaper before it is true.
      - seanmcdirmid 8y ago
        Note that was a hypothetical: a 70 sqm apartment in Beijing ATM is around $500k, but if the prices keep rising. That is still more expensive than most places in the states, but not more than SF (if you could find such a thing). Beijing isn’t even the most expensive market in China.
      - rqs 8y ago
        From the comment section of that very video, I quote: > Freda Du: are you guys comparing one of the most expensive chinese cities with the average american (suburban/rural) rent? And comparing fine western dining (cuz apparently you think the $2 chinese meals will kill westerners..) with dollar menu? I lived in Shanghai, LA and NYC, let's make a major city to major city comparison here.. a single metro ride is $0.5 in shanghai vs. $2.75 in NY and $1.75 in LA (which goes nowhere); cellphone bill costs $10 in China and $40+ in the US; you can get food as cheap as $2 in a sit-down restaurant in China, but at least $10+tax&tips in America; have you guys just been living in China for too long and forgot how damn expensive america can be? the small Chinese cities can be dirt cheap too but you guys think it's too inconvenient for people who refuse to speak Chinese. so there you go. For your reference, I'm living in a small city in China, where ￥15 can supply my diet-mode food for a week, for better diet, that's ￥22 ($3.2 dollar) (Just to clarify, If however I don't want to diet, then that's ￥50~80 or $12 a week). That's even when I buy most of my foods from supermarket[0]. The key point is, you CAN live an expensive life in China if you want to, but you don't HAVE to. [0] https://i.imgur.com/X9Gm4Zl.jpg https://i.imgur.com/X9Gm4Zl.jpg
- panarky 8y ago
  Not only in China. In 2010, the US Securities and Exchange Commission restricted the ability to sell shares short if the share price has declined more than 10%. https://www.sec.gov/news/press/2010/2010-26.htm https://www.sec.gov/news/press/2010/2010-26.htm Curious how there is no equivalent restriction on purchases if the share price has increased by 10%.
  - slededit 8y ago
    It’s a very temporary restriction not at all comparable. It applies only until the next uptick and is essentially a strengthening of the circuit breaker rules. These rules are designed to slow trading down on the order of minutes to hours so market participants can catch up and make rational decisions. This is completely different than broad market distortions pervasive in both Japan and China - both in intent and effect.
    - panarky 8y ago
      > These rules are designed to slow trading down If this were true, then there would be a symmetric rule to restrict purchases when prices increase. Since the rule only restricts sales and not purchases, its purpose must be to prevent price declines, not to regulate the velocity of trading.
      - slededit 8y ago
        Unlike with upswings, down swings come with margin calls which can cause downward spirals. The market can certainly get irrational on the upswing as well but the feedback mechanisms are more muted and slower.
  - seanmcdirmid 8y ago
    China also has a circuit breaker against movements of 10% (they can't grow/shrink more than 10% a day). China also doesn't really allow for shorting of shares so I'm not sure what you are trying to show here?
  - triviatise 8y ago
tvanantwerp 8y ago
I hadn't heard about that, but it clarifies something. I've got in-laws in China, and many of them own older condos that they no longer live in. When I asked my wife why they don't sell, she just said there's zero resale value, which made no sense to me. But a law preventing the sale could explain it.
- rqs 8y ago
  It's rather a regulation, not law. And I don't think it's apply to your case, because the regulation I mentioned above only limit recent transactions. That is, if you brought a house, from the time of the purchase, you can't re-sell it within 2~5 years. After that, you're free to go. If that old condos is not within the limited time, then maybe it is real that the house have no resale value. In that case, as far as I know, the only option is to wait until local government re-sell (re-develop) the land. But don't take my word, I don't know every policy of every local government. If you really curious, ask the question on a Chinese website like zhihu.com, then maybe you can get some information that is more useful.
  - justtopost 8y ago
    Please explain the nuance between a regulation and a law. I understand them to be different terms for government enforced actions. Is there a distinction in China I am not groking with my americentric bias?
nradov 8y ago
Can Chinese citizens actually buy a house, or is the market still limited to long-term leases?
- taobility 8y ago
  In a strict definition, yes, what Chinese called buy a property actually is buy the ownership for 70 years or lease it for 70 years. But if the whole market is in that way, there is no difference either call it lease or buy.
  - nradov 8y ago
    It makes a huge difference when comparing Chinese real estate valuation and affordability with other countries that do allow purchases.
  - chii 8y ago
    What happens after the 70 years is up? How does one pass the property to one's children if it's a "lease"?
    - schuke 8y ago
      The property is yours but the land on which the property is built is leased for 70 years. After 70 years according to exiting Chinese law the lease is automatically renewed. There’s no limit on the total number of renewals.

by rqs 8y ago

seanmcdirmid 8y ago

This has always been true though. The government basically controls the real estate companies, and they won’t list/show your house beneath a certain price. When prices weaken, volume simply plummets as no one can sell because the real estate companies won’t allow for discounting. That isn’t a really a new thing, it has been going on for at least a decade. In many cases, what we have in China is much worse than japan since artificial intervention is much deeper and prolonged.

rqs 8y ago
> what we have in China is much worse than japan since artificial intervention is much deeper and prolonged I think it's the question of whether or not it's going to pop. If the housing bubble did popped, then we are screwed a big time, worse than what Japanese once had. But if it didn't, then the leverage is still there and economy maybe low at worse, but stable. I don't think everything is concluded at this point, because SSE 000001[0] is showing sign of very slow recover. And the censorship on economic news in my opinion is rather one effort to preventing domino effect. [0] https://www.google.com/search?ei=P3KzW_6LF4fUwQKM77uYAg&btnG=Search&q=SSE+000001 https://www.google.com/search?ei=P3KzW_6LF4fUwQKM77uYAg&btnG...
- seanmcdirmid 8y ago
  If the property bubble doesn’t pop, you are more screwed as the asset and real economies further diverge. China can’t be world competitive if a 70sqm apartment goes for a million bucks, people/companies will start relocating to cheaper places like say San Francisco. A lot of economic potential is directed toward real estate and away from more productive endeavors. I remember the shops outside of my old office in zhongguancun all concerting to real estate offices. Cafes, restaurants, stores can’t compete. If China wants to take the next step in their economic development, they have to give up on this bubble. It will suppress a lot more economic activity than it stimulates, even if capital is preserved it isn’t doing anything useful.
  - mistermann 8y ago
    > China can’t be world competitive if a 70sqm apartment goes for a million bucks, people/companies will start relocating to cheaper places like say San Francisco. "China is Now More Expensive than the USA": https://www.youtube.com/watch?v=32t8d2eQJAA https://www.youtube.com/watch?v=32t8d2eQJAA Almost everyone laughs when I say they should get some of their news from people who actually live in China rather than thinking something needs to be printed in the newspaper before it is true.
    - seanmcdirmid 8y ago
      Note that was a hypothetical: a 70 sqm apartment in Beijing ATM is around $500k, but if the prices keep rising. That is still more expensive than most places in the states, but not more than SF (if you could find such a thing). Beijing isn’t even the most expensive market in China.
    - rqs 8y ago
      From the comment section of that very video, I quote: > Freda Du: are you guys comparing one of the most expensive chinese cities with the average american (suburban/rural) rent? And comparing fine western dining (cuz apparently you think the $2 chinese meals will kill westerners..) with dollar menu? I lived in Shanghai, LA and NYC, let's make a major city to major city comparison here.. a single metro ride is $0.5 in shanghai vs. $2.75 in NY and $1.75 in LA (which goes nowhere); cellphone bill costs $10 in China and $40+ in the US; you can get food as cheap as $2 in a sit-down restaurant in China, but at least $10+tax&tips in America; have you guys just been living in China for too long and forgot how damn expensive america can be? the small Chinese cities can be dirt cheap too but you guys think it's too inconvenient for people who refuse to speak Chinese. so there you go. For your reference, I'm living in a small city in China, where ￥15 can supply my diet-mode food for a week, for better diet, that's ￥22 ($3.2 dollar) (Just to clarify, If however I don't want to diet, then that's ￥50~80 or $12 a week). That's even when I buy most of my foods from supermarket[0]. The key point is, you CAN live an expensive life in China if you want to, but you don't HAVE to. [0] https://i.imgur.com/X9Gm4Zl.jpg https://i.imgur.com/X9Gm4Zl.jpg
panarky 8y ago
Not only in China. In 2010, the US Securities and Exchange Commission restricted the ability to sell shares short if the share price has declined more than 10%. https://www.sec.gov/news/press/2010/2010-26.htm https://www.sec.gov/news/press/2010/2010-26.htm Curious how there is no equivalent restriction on purchases if the share price has increased by 10%.
- slededit 8y ago
  It’s a very temporary restriction not at all comparable. It applies only until the next uptick and is essentially a strengthening of the circuit breaker rules. These rules are designed to slow trading down on the order of minutes to hours so market participants can catch up and make rational decisions. This is completely different than broad market distortions pervasive in both Japan and China - both in intent and effect.
  - panarky 8y ago
    > These rules are designed to slow trading down If this were true, then there would be a symmetric rule to restrict purchases when prices increase. Since the rule only restricts sales and not purchases, its purpose must be to prevent price declines, not to regulate the velocity of trading.
    - slededit 8y ago
      Unlike with upswings, down swings come with margin calls which can cause downward spirals. The market can certainly get irrational on the upswing as well but the feedback mechanisms are more muted and slower.
- seanmcdirmid 8y ago
  China also has a circuit breaker against movements of 10% (they can't grow/shrink more than 10% a day). China also doesn't really allow for shorting of shares so I'm not sure what you are trying to show here?
- triviatise 8y ago

tvanantwerp 8y ago

I hadn't heard about that, but it clarifies something. I've got in-laws in China, and many of them own older condos that they no longer live in. When I asked my wife why they don't sell, she just said there's zero resale value, which made no sense to me. But a law preventing the sale could explain it.

rqs 8y ago
It's rather a regulation, not law. And I don't think it's apply to your case, because the regulation I mentioned above only limit recent transactions. That is, if you brought a house, from the time of the purchase, you can't re-sell it within 2~5 years. After that, you're free to go. If that old condos is not within the limited time, then maybe it is real that the house have no resale value. In that case, as far as I know, the only option is to wait until local government re-sell (re-develop) the land. But don't take my word, I don't know every policy of every local government. If you really curious, ask the question on a Chinese website like zhihu.com, then maybe you can get some information that is more useful.
- justtopost 8y ago
  Please explain the nuance between a regulation and a law. I understand them to be different terms for government enforced actions. Is there a distinction in China I am not groking with my americentric bias?

nradov 8y ago

Can Chinese citizens actually buy a house, or is the market still limited to long-term leases?

taobility 8y ago
In a strict definition, yes, what Chinese called buy a property actually is buy the ownership for 70 years or lease it for 70 years. But if the whole market is in that way, there is no difference either call it lease or buy.
- nradov 8y ago
  It makes a huge difference when comparing Chinese real estate valuation and affordability with other countries that do allow purchases.
- chii 8y ago
  What happens after the 70 years is up? How does one pass the property to one's children if it's a "lease"?
  - schuke 8y ago
    The property is yours but the land on which the property is built is leased for 70 years. After 70 years according to exiting Chinese law the lease is automatically renewed. There’s no limit on the total number of renewals.