A looming correction in the Chinese property market poses the biggest threat to China’s economic growth, which may show more evident signs of slowdown next quarter due to an imbalanced supply and demand, Hong Kong-based UBS chief economist Wang Tao (王濤) said yesterday.
“The imminent corrections would have more to do with an overestimated demand from urbanization rather than a volley of tightening measures,” Wang told a teleconference.
The urbanization trend has fostered a real demand of 3 million apartment units, whereas the builders and developers have put 11 million on the market, steeply raising inventory in cities across the country, she said.
This surplus supply is pushing down home transactions and prices, but Wang refrained from speculating on the pace, saying China’s relatively low household debt ratio may help avert an outbreak similar to that of the US subprime crisis prior to the global financial storm in 2008.
However, if new construction volumes contract by 20 percent or more, China’s economy may shed 2.5 percentage points, Wang said.
She predicted a 7.3 percent GDP growth for China this year, lower than the government’s estimate at 7.5 percent.
The growth forecast suggests a 7 percent increase next quarter, slowing from an estimate of 7.2 percent this quarter and 7.5 percent last quarter, as downside risks grow more evident, she said.
An increase of asset allocation tools will contribute to the corrections, as Chinese investors seek to diversify their portfolio and lower investment risks, Wang said.
Beijing is likely to address the downside risks by strengthening construction on infrastructure facilities spanning transport, environmental protection, health care and pension fund issues, she said.
The People’s Bank of China could lend a helping hand by cutting interest rates and the required reserve ratio, she said.
“Big companies and local governments can issue bonds to meet cash demand, thereby sparing credit for small and medium enterprises,” Wang said.
China has room, though limited, to weaken yuan to support exports that may pick up in the second half with the advent of high season for technology devices in the West, she said.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last