Prior to this, local banks have already started to adjust mortgage interest rates. The CCP’s press conference on financial statistics in the first quarter of 2022 stated that since March, banks in more than 100 cities have voluntarily lowered mortgage interest rates, with an average decrease of 20 to 20 60 basis points.
From local governments to the top leaders of the CCP, the interest rate of mortgages has been lowered frequently, and it is expected that the temperature of the real estate will rise.
According to this interest rate reduction, with a loan principal of 1 million and a 30-year term, the average monthly payment can be reduced by about 89 yuan per month, and the total interest to be repaid is reduced by about 32,000 yuan.
However, the feedback from the people was indifferent, and many netizens said: “Am I the one who is short of 30,000 yuan? I am short of 3 million yuan.”
In the comments on the report related to the interest rate cut, there is a sentence that was swiped by netizens: “If you don’t buy it, I won’t buy it, and it will drop by several hundred tomorrow; if you don’t look at it, I will not look at it, and it will drop by tens of thousands next month.”
Mainland media reported that within this month alone, 40 cities have proposed policies to save the property market. From the beginning of the year to the present, 130 cities have proposed policies to rescue the property market, including Hangzhou, which has just liberalized the policy of purchasing houses for families with three children.
Lu Ting, chief China economist at Nomura Securities, told Reuters that the CCP’s epidemic control measures directly shrouded China’s real estate industry, and “the outlook is still bleak.” “Uncertainty, lack of confidence, rising unemployment, lower incomes, etc. have all contributed to the decline in new home sales,” he said.
In addition to the epidemic control, the underlying reason is that the debt ratio of ordinary households in China has reached an unprecedented high limit, and the “six pockets” have almost been emptied. There are such people in Shenzhen, known as the “moonlight people”, who have houses and cars, but it is not easy to set aside 500 or 600 yuan on their mobile phones, because buying a house and buying a car is a loan from the bank, and they are repaying the debt. Apart from necessary household expenses, they have no money left for a cup of coffee with friends.
“Phoenix” becomes “bird that cannot be supported”
Reuters reported on May 16 that real estate investment in China fell 10.1% year-on-year in April, higher than the 2.4% drop in March. National real estate investment in the January-April period fell 2.7% year-on-year, while the first three months saw a slight increase of 0.7% year-on-year.
According to official data released by the Chinese Communist Party on the 16th, real estate sales fell by 29.5% year-on-year from January to April. The decline in the first three months was 22.7%. In April, it fell by 46.6% compared with the same period last year, which was a big step down from the 26.17% decline in March.
A more intuitive performance is the number of excavators – industry statistics from China Construction Machinery Industry Association show that according to the statistics of 26 excavator manufacturing companies, a total of 24,500 excavator products were sold in April, down 47.3% year-on-year. The month-on-month decrease was 12,500 units, or about 33.8%. So far, excavator sales have declined year-on-year for the twelfth consecutive month. This is a direct manifestation of the depression of the real estate site.
“The Wall Street Journal” pointed out that “China’s economic slowdown is different from the past”.
What if the above-mentioned mortgage interest rate cuts have been successively reduced, and the measures to ease purchase restrictions in 130 cities have not worked?
With the CCP’s economy facing extreme challenges, if the real estate does not recover, relaxation policies will be introduced one after another. However, let the water go quietly, don’t make a sound, and let it go too far. After all, “housing is not for speculation” has been shouted for many years, and you can’t suddenly sweep the floor.
On May 20, Nanjing announced the “cancellation of second-hand housing purchase restrictions”, which is not a big step. The Nanjing Housing Association issued a document saying that when buying a second-hand house, buyers do not need to provide proof of purchase. In addition, a number of real estate agents also stated that Nanjing has no restrictions on the purchase area and the number of houses; the purchasers are not limited to locals and foreigners, and they can buy houses at will.
However, just two hours later, the real estate agency told the media “China Times” that “it has been stopped.” At the same time, the Nanjing Housing Association also deleted the relevant article. Is it really impossible to execute? According to the unspoken rules of the CCP, it can be done, but it cannot be said. Second-hand housing in Nanjing, it can be said with certainty that it has been released, and through the various tricks of the intermediary, you can definitely find the qualification to buy.
If there is no replacement of second-hand houses, no one will buy new commercial houses, and no one will buy new commercial houses, and the land will not be sold. Land finance ultimately relies on real estate recovery.
If the mortgage interest rate is lowered and the city’s liberalization of purchase restrictions is still useless, what will be the next step?
CCP experts look for countermeasures
On May 14, 2022, the 2022 Tsinghua Wudaokou Chief Economist Forum will be held at the PBC School of Finance, which is affiliated to the Central Bank of the Communist Party of China. China’s economy has encountered difficulties, what are the countermeasures? What else can be done?
How much room is there for RRR cuts and interest rate cuts?
Lu Ting, chief economist of Nomura Securities, said at the forum that after more than 8 years of RRR cuts in monetary policy, the average reserve ratio of China’s National Commercial Bank is only 8.1%, and the reserves of many banks are close to 5%, so the RRR cut The space is indeed getting smaller and smaller. There is not much room for interest rate cuts. From an external point of view, the United States will definitely raise interest rates significantly this year. There will be a certain degree of inversion of interest rates between China and the United States. Some funds will be withdrawn from our country’s bond market and stock market. Facing a certain degree of depreciation pressure.
Huang Qifan, Distinguished Professor of Fudan University and former Mayor of Chongqing City, has dominated the real estate industry in the past few years. High housing prices have hijacked China’s economy. A large amount of capital has flowed into the real estate industry in disorder with bank loans. Think about what kind of financial system is needed behind the “housing, not speculation”? For another example, the current average income level of the financial industry is several times that of the manufacturing industry, and the profits of financial listed companies account for half of all listed companies’ profits. How to develop the manufacturing industry is the problem.
However, other CCP experts at the forum said their own words, arguing that the importance of real estate to the economy cannot be underestimated, and various restrictions should continue to be lifted, otherwise social stability will be endangered.
A super factory with thousands of “pixiu”
“Pixiu” (sound: Pixiu) is a souvenir that must be displayed at major tourist attractions in China. This animal has a characteristic that it only eats, but never excretes, so it is called a wealth-gathering thing. This is precisely what has become a symbol of the CCP economy for decades.
On Weibo, people commented: There is a factory, obviously the products can’t be sold, but there are still so many people, no one is reduced, no treatment is reduced…
The CCP power group is a super sweatshop with thousands of “pixiu”. Only to extract the blood and sweat of the people, but to pay no attention to the life and death of the people. This is not only the reality exposed by the epidemic in Shanghai, but also the invisible oppression of the people in daily life. It is clear that the people’s pockets have no money, but the official ratio of the CCP’s 1:18 cannot be reduced. , while the ratio of officials in the Han Dynasty was 1:2000.
In 2016, a research report published by McKinsey estimated that the economic profits of China’s financial industry accounted for more than 80% of the overall economic profits of the Chinese economy, while the proportion in the United States was only more than 20%.
As for the profits of the financial industry, real estate loans have been the most powerful support in the past two decades. The “six pockets” have exerted their efforts to support the “brilliant” profits of China’s financial industry.
Lou Jiwei, the former finance minister of the Communist Party of China, published an article in the “Fiscal Research” in May, saying, “The profit of the financial industry is more than that of all other industries combined. Where does it serve the real economy.”
If there is no truth from the former finance minister, how can the outside world know that there is such an “internal circulation” within the CCP. Money comes out of the bank and then goes back to the banking and financial industries. How can this be fair and efficient?
“First Finance and Economics” once published a report saying that according to the analysis of China’s top 100 enterprises, the financial industry’s profitability is the No. 1 industry. According to 2019 data, there are 6 industries with a profit margin greater than the overall average of 8.82% of the top 100, including 21.01% in finance and 21.01% in the Internet. Services accounted for 14.77% and building materials (real estate) accounted for 10.91%.
The financial industry represents the vertical power system’s control and exploitation of the Chinese economy; while the local government is the horizontal power base. In the real estate price, land cost accounts for about 40% of the total house price, and various taxes account for about 13%. And close to 60%, all turned over to the CCP governments at all levels, which is a veritable “land finance”.
This vertical and horizontal network of power has become a three-dimensional structure of the CCP’s possession of the Chinese economy and sucking blood frantically.
The five-year average growth rate of real estate investment from 2016 to 2020 is 6.9%-9.9%, 4.8% in 2021, 0.7% in January-March 2022, and about 2.4% in March, that is to say, real estate investment has been showing “negative growth”. Real estate, run out.
At the Wudaokou Chief Economist Forum, Zhang Bin, deputy director of the Institute of World Economics and Political Science of the Chinese Academy of Social Sciences, said that if the real estate market goes down excessively, even if your financial market looks stable, it will bring about a collapse in credit. , What did the credit collapse bring? The social needs are unstable.
Zhang Bin believes that the real estate market has been easy to heat and hard to cool in the past, but it may be easy to cool and hard to heat for a long time in the future.
Not relying on real estate, relying on what?？
The business model of Western real estate developers is basically that private developers take loans from private banks, from the purchase of land to the sale of the developed products (houses) to private individuals. The whole process basically has nothing to do with the government. It is the operation mode of private economic development under the market economic system.
And what about Chinese real estate developers? They borrowed from CCP-controlled banks, then bought land from the CCP, then planned, designed, and then continued to borrow the project costs from the CCP’s state-owned banks. After the houses are built, most buyers, whether from state-owned enterprises, private enterprises or private households, take out loans from banks controlled by the CCP to buy houses.
In this whole process, the CCP controls all the key links. When the entire industry collapsed, the CCP was the first winner before the crash, while private companies such as Evergrande and buyers who bought houses were caught up.
The problem the CCP has to face is just: What if Evergrande cannot continue to promote the economy? In other words, the CCP was out before the housing market collapsed, so it didn’t lose much. Now we just need to change the direction of investment and find a new engine to drive economic growth.
Luo Zhiheng, chief economist of Yuekai Securities, said that in the past, everyone thought that the development of real estate and infrastructure was the development of the old economy, but now it is necessary to develop high-tech, develop new infrastructure, and drive the economy through consumption. However, consumption is a slow variable, and spending power is income. At present, the surveyed unemployment rate in China is 6.1%, and the youth unemployment rate is 18.2%. In this case, it has experienced several months of consumption of past deposits, and at the same time, it is faced with a high degree of uncertainty in future expectations. sex.
From a black swan flying to Tiananmen Square at the beginning of the year, to Evergrande turning into a “grey rhinoceros”, and now Shanghai’s “hard isolation”, the “economic development” that the CCP relies on to maintain its regime has become confusing. One thing is certain. Yes, as long as the CCP exists, it will only get worse. What keeps the CCP awake all night is that from the events of the Iron Chain Girl, Shanghai’s reset, and Xi’an’s closure of the city, the common people have understood the true face of the CCP’s disregard for people and life. This is the fact that the CCP is most worried about.
(The article only represents the personal position and opinion of the special commentator)
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Responsible editor: He Jingtian