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The Masked Tulip

China Is Orchestrating A 30% Crash In The Property Market

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Something curious was noted this morning on CNBC Europe: namely a reference to an article in the Shanghai Financial News, according to which China is quietly (or not so quietly) trying to orchestrate a 30% drop in real estate prices, in the form of a "Thunder attack" which combines increased purchase costs, property taxes as well as the rise in interest rates. If proven true, this is a major flashing red sign of just how out of control inflation, especially property and real estate, is in China, and that future CPI readings (not the official Politburo number, but that which people actually have to live with) will be getting progressively worse. Also, for the government to step in with such a drastic measure, it must mean that the discontent on the ground must be approaching a fever pitch.

From Shanghai Daily News (apologies for the Google translation from simplified Han - we ask any native readers to provide a better translation):

Full article at below link:

http://www.zerohedge.com/article/china-orchestrating-30-crash-property-market

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That's a high risk strategy from the CP. You can shoot student protesters all day long, but f*ck with people's house prices...

but f*ck with people's house prices in the UK and they may get up from watching X-Factor.

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but f*ck with people's house prices in the UK and they may get up from watching X-Factor.

I wish you lot would stop talking about butt f*cking!

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It looks like not only are China better than the UK at meeting their CPI inflation target (China 3.3% CPI against 3.0% target - UK 3.7% CPI against 2.0% target) but they are also more likely going to be more effective at controlling their housing crazies.

A small smile allowed at zerohedge's reference to Chinese inflation figures as "not the official Politburo number, but that which people actually have to live with" considering the level of manipulation in the UK figures.

Edited by billybong

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It looks like not only are China better than the UK at meeting their CPI inflation target (China 3.3% CPI against 3.0% target - UK 3.7% CPI against 2.0% target) but they are also more likely going to be more effective at controlling their housing crazies citizens.

;)

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;)

To be fair citizen control is a completely separate issue. They do seem to be making effective efforts to control their economy properly. More effectively than in the UK although maybe you're referring to the relative passivity of UK people to accept the rubbish dished out day in day out especially through the housing bubble and more recently growing levels of inflation in other sectors.

Edited by billybong

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To be fair citizen control is a completely separate issue.

Yes and no - some citizens in China have been evicted by the government out of the houses they own to make way for infrastructure projects. Compensation is rarely forthcoming.

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Yes and no - some citizens in China have been evicted by the government out of the houses they own to make way for infrastructure projects. Compensation is rarely forthcoming.

Perhaps you don't remember the widespread compulsory purchases of years gone by in the UK with derisory compensation- better than none of course. Even so no matter how unfair it evidently is in itself it's not very relevant or at best only very marginally relevant to their effectiveness on CPI or in controlling house prices etc.

It's a separate subject even if a serious subject.

Edited by billybong

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Perhaps you don't remember the widespread compulsory purchases of years gone by in the UK with derisory compensation. Even so no matter how unfair it evidently is in itself it's not very relevant or at best only very marginally relevant to CPI or controlling house prices etc.

It's a separate subject even if a serious subject.

Not old enough to remember that I guess.

There is a link in China when traditional one story homes ('hutongs' I think they're called) in the cities are bulldozed without giving the owners compensation and then a high-rise apartment block is built on that land.

I'd imagine that land taken from farmers to build the country's infamous ghost cities is an issue too.

Edited by rantnrave

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The Chinese know what dmage HPI does to any economy. It laid California's to waste three times and each time it got worse than the last.

Assett price inflation and hyper-debt that causes it is a disease to be eradicated. Not a thing to be worshipped as it is in this God-forsaken country.

The Chinese are probably wise--kill the beast stone dead, take the pain, and make sure it doesn't happen again.

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Yes and no - some citizens in China have been evicted by the government out of the houses they own to make way for infrastructure projects. Compensation is rarely forthcoming.

the UK made compulsory purchases in hulme manchester when they rebuilt it.

a lot of the villagers are actually getting 2 or 3 apartments for their existing home, to help house all of their family.

when the runway to expand heathrow is built what say do you think the village currently standing in its path is going to have? they will shout and scream and have several enquiries before concluding that they village needs to be bulldozed to the ground.

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Not old enough to remember that I guess.

Ok but it's not that long ago and apparently the powers are still available to be used in the UK. I'm not defending unfairness anywhere, far from it, I just think it's a different issue.

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Yes and no - some citizens in China have been evicted by the government out of the houses they own to make way for infrastructure projects. Compensation is rarely forthcoming.

Erm not anymore. The old days of lets move for the good of the nation are long gone. Even building the 3 gorges dam the people demanded equal or better homes than the ones they had to give up. The CCP today is not the CCP of the past. I'm not saying they are compasionate like the Conservative PR machine plays out to be. But instead they cannot act as unilaterally as before. They have to take in PR considerations much of the time these days.

For instance Li Gang. His son went drink driving and ended up killing 2 girls. Guanxi was used to use the CCTV propaganda department. The news initially said they were at fault for running into the road on roller skates. Photos proved otherwise. Ten years ago it would be covered up. In fact they tried to do this as all references to Li Gang vanished off ALL Chinese media, news, print TV radio everything even online. It didn't work people demanded justice and the CCP propaganda machine failed. So they hauled him before a court where he was sentenced to 4 years hard labour.

Thus the raze the town to the ground still happens but there are HUGE PR problems from this occuring. For instance when a gang used a bulldozer on a man's home( he was a Chinese civil war hero) in the middle of the night he fought them off and it spread all over the Chinese internet like wildfire before they could shut it down. People knew about it and became angry. This is extremely bad PR for saving a couple of quid on an old man's home. Thus it is cheaper to simply give them some RMBs (with the ink still wet) than to damage their PR.

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It looks like not only are China better than the UK at meeting their CPI inflation target (China 3.3% CPI against 3.0% target - UK 3.7% CPI against 2.0% target) but they are also more likely going to be more effective at controlling their housing crazies.

A small smile allowed at zerohedge's reference to Chinese inflation figures as "not the official Politburo number, but that which people actually have to live with" considering the level of manipulation in the UK figures.

http://www.shadowstats.com/article/consumer_price_index

How Can So Many Financial Pundits Live Without Consuming Food and Energy?

The Pollyannas on Wall Street like to play games with the CPI, too. The concept of looking at the "core" rate of inflation-net of food and energy-was developed as a way of removing short-term (as in a month or two) volatility from inflation when energy and/or food prices turned volatile. Since food and energy account for about 23% of consumer spending (as weighted in the CPI), however, related inflation cannot be ignored for long. Nonetheless, it is common to hear financial pundits cite annual "core" inflation as a way of showing how contained inflation is. Such comments are moronic and such commentators are due the appropriate respect.

Too-Low Inflation Reporting Yields Too-High GDP Growth

As is discussed in the final installment on GDP, part of the problem with GDP reporting is the way inflation is handled. Although the CPI is not used in the GDP calculation, there are relationships with the price deflators used in converting GDP data and growth to inflation-adjusted numbers. The more inflation is understated, the higher the inflation-adjusted rate of GDP growth that gets reported.

Quite interesting about how the US CPI figures have been manipulated over the years. There's not much reason to suppose that the UK's CPI figures have been any differently manipulated and if the UK's GDP growth is actually being over reported then nuff said.

Edited by billybong

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Erm not anymore. The old days of lets move for the good of the nation are long gone. Even building the 3 gorges dam the people demanded equal or better homes than the ones they had to give up. The CCP today is not the CCP of the past. I'm not saying they are compasionate like the Conservative PR machine plays out to be. But instead they cannot act as unilaterally as before. They have to take in PR considerations much of the time these days.

For instance Li Gang. His son went drink driving and ended up killing 2 girls. Guanxi was used to use the CCTV propaganda department. The news initially said they were at fault for running into the road on roller skates. Photos proved otherwise. Ten years ago it would be covered up. In fact they tried to do this as all references to Li Gang vanished off ALL Chinese media, news, print TV radio everything even online. It didn't work people demanded justice and the CCP propaganda machine failed. So they hauled him before a court where he was sentenced to 4 years hard labour.

Thus the raze the town to the ground still happens but there are HUGE PR problems from this occuring. For instance when a gang used a bulldozer on a man's home( he was a Chinese civil war hero) in the middle of the night he fought them off and it spread all over the Chinese internet like wildfire before they could shut it down. People knew about it and became angry. This is extremely bad PR for saving a couple of quid on an old man's home. Thus it is cheaper to simply give them some RMBs (with the ink still wet) than to damage their PR.

a case in point....

26china.600.jpg

chongqing_yangjiaping_20073.jpg

this stand off lasted 3 years!

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this ones pretty funny.

they maybe autocratic but theyre not the dictatorship people make them out to be.

A lot of British expats are finding freedom in what allegedly are brutal dictatorships. While in most democracies people increasingly feel the boot of the nanny state on their throat.

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3613717904_fd239b6b3e_o.jpg

this ones pretty funny.

they maybe autocratic but theyre not the dictatorship people make them out to be.

Every province is different. I know for a fact in Zhejiang if the government want to buy your land off you, you get what your given. And it's very common in China (at least I've seen it happening in Zhejiang) that the government will buy a big area of land in the countryside and the compensation given to the farmers who have now lost their means to make a living is a bunch of 'pretty' houses in the middle of nowhere so aren't worth shit anyway. Oh and ofcourse they can't farm the land anymore.

The reason there is pressure to create a property crash is because China has the lower and upper middle class. The lower middle class are those in 'good' jobs who typically earn 5,000-10,000 rmb per month and definitely want to expect to be able to afford to buy a house. The problem is they can't, or if they do they end up getting a mortgage (so paying twice as much if you include the interest) and spend most of their income servicing the debt.

The upper middle class are the businessmen (not the small shop owners), typically earning 50,000- 000,000s rmb per month and using their immense wealth to buy up vast empires of property, and literally take ownership of the prettiest girls in China- dozens of girlfriends each. Outside of the big internationalized cities like Shanghai, Shenzhen, Guangzhou and some southern cities, girls see wealth as a more attractive asset than being handsome or charming and would rather share a rich guy than have a normal 'poor' boyfriend.

The businessman class in China have everything in a culture which is obsessed with wealth, stability of life (ie owning house,car),status, power. But rather than revolting against this system, almost everyone wants to BE the people with status and money and ****** everything else. Rich people are just idolized in China and there is a two tier society where you are either successful and respected or just another clown, though as I said this isn't the case in the more international cities where some of the people are more cultured. In fact I think the south is probably much better than north China.

Edited by Saberu

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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