Kaohsiung Mayor Han Kuo-yu (韓國瑜) has suggested that he wants to open up the city’s property market to Chinese investors and would resist objections, saying that the central government would be foolish not to approve it.
The government responded by saying that Chinese have actually been allowed, with certain limitations, to buy property since 2002, while certain commentators have questioned the wisdom of Han’s idea and its potential for achieving his stated ends.
There is reason to question not only his methods, but also his intentions.
The Ministry of the Interior has said that Chinese investors are welcome to buy property in Taiwan, subject to approval based on certain criteria. Chinese buyers are ineligible to mortgage at least half of the value of the property, must have lived in Taiwan for four months and cannot sell the property within three years of their initial purchase. There is also an annual quota on properties that can be approved for Chinese investors and approved sales cannot be concentrated in any location. These measures are meant to prevent property speculation.
After these regulations were passed, only 20 percent of the properties in which Chinese buyers have expressed interest have been in Kaohsiung, the ministry added.
Still, property speculation is a potentially serious consequence of Han’s proposed deregulation.
Overseas property investments are attractive for affluent Chinese looking to expand their portfolios due to uncertainties surrounding the renewal of long-term land leases in their own country. Rampant property speculation has been blamed for the distorted property market in Hong Kong since Chinese buyers were allowed in following the territory’s handover to China in 1997, pricing many Hong Kongers out of the market and exacerbating wealth disparity.
During his election campaign, Han promised that “people will flood in, goods will flow out, Kaohsiung will reap the benefits.”
Perhaps Han had Chinese investors in mind when he came up with his campaign promise of seeing Kaohsiung’s population rise to 5 million within the next 10 years, although voters were likely not thinking this would be achieved through a large influx of Chinese.
When Han campaigned on improving the city’s economy, voters were probably assuming they would be seeing some of the benefits of this renewed prosperity, and that it would not all be going to overseas investors or the real-estate industry.
Property speculation will lead to inflated prices, as has happened in Taipei. This would make it more difficult for locals to buy property and nearly impossible for young couples trying to get on the first rung of the property ladder.
Finally, he promised to reverse the tide of Kaohsiung residents moving to Taipei in search of jobs, but property speculation would make it doubly difficult to attract workers, as they would be faced with high housing prices.
Increased costs of living and housing prices resulting from unchecked property speculation would further dissuade young couples from having a family for fear of financial instability at a time when the government is looking for ways to increase the birthrate.
Is Han being naive? Is he showing his lack of governing experience? It appears that he has not really thought this policy through.
Another interpretation is that his proposal is just one early example of the consequences of the November elections rewriting the political map, with most local governments now under Chinese Nationalist Party (KMT) control.
Is this an example of how the KMT might allow backdoor Chinese infiltration of Taiwan and facilitate Beijing’s “united front” efforts to unify with Taiwan through economic and social — as opposed to predominantly political — means?
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