The World Bank warned yesterday thatmeasures to cool China’s red-hot real-estate sector could trigger a sudden downturn in the market, posing risks for the world’s second-largest economy.
However, the Washington-based lender said it was “too early” for authorities to halt monetary tightening because inflation expectations remained high and much of the impact of soaring global commodity prices was “still in the pipeline.”
“Shocks to the property sector that would slow down construction significantly could have a large impact on the economy and on bank balance sheets,” the World Bank said in its China quarterly update.
“Moreover, a property downturn could affect the finances of local governments, which do a lot of the infrastructure investment and are important clients of the banking system,” the report said.
Beijing has introduced a range of measures to cool the property market since late 2009 after a flood of bank lending sent real-estate prices soaring and fuelled fears of a dangerous bubble in the key sector.
Authorities — worried high prices could spark social unrest — have banned purchases of second homes in some cities and increased minimum down-payments. Cities such as Shanghai and Chongqing have introduced trial property taxes.
The central bank has also repeatedly raised the amount of money banks must keep in reserve, effectively restricting lending, and hiked interest rates to fight inflation, which last month hit its highest level since July 2008.
Data released earlier this month suggested the measures could be having an impact, with a small but growing number of Chinese cities seeing the cost of new homes falling in last month.
However, the World Bank warned that “interaction between the market and policy measures could lead to a more abrupt than planned downturn in the real estate market. In the medium term the widespread use of property as [an] investment vehicle and the role of local governments add to the risks,” it said.
While the World Bank said its inflation projections were “not particularly worrying” — 5 percent for this year compared with 3.3 percent for last year — the risks from further global commodity price rises called for “vigilance.”
“Macroeconomic policy remains key in limiting the spill-over of higher prices of food and other raw commodities into other prices and wages and containing other risks, including in the property market,” the report said.
The World Bank also forecast that economic growth in China would slow to 9.3 percent this year compared with 10.3 percent last year. That was higher than its previous forecast in January of 8.7 percent growth, and the upgrade follows stronger than expected growth in the last two quarters.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has appointed Rose Castanares, executive vice president of TSMC Arizona, as president of the subsidiary, which is responsible for carrying out massive investments by the Taiwanese tech giant in the US state, the company said in a statement yesterday. Castanares will succeed Brian Harrison as president of the Arizona subsidiary on Oct. 1 after the incumbent president steps down from the position with a transfer to the Arizona CEO office to serve as an advisor to TSMC Arizona’s chairman, the statement said. According to TSMC, Harrison is scheduled to retire on Dec. 31. Castanares joined TSMC in
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the