On Aug. 3, CK Asset Holdings Ltd, the property flagship of Hong Kong’s richest man, Li Ka-shing (李嘉誠), launched presales at 15 percent less than the market price for uncompleted condominiums in the Yau Tong area that were part of its project dubbed the Coast Line II. It caused a shock in the market and people wanted to know what was happening.
At that time, rumors spread that some Chinese real-estate companies might go bankrupt, but the Chinese government downplayed this as a sales tactic. It turned out that Country Garden Holdings Co, another giant Chinese real-estate developer, was in trouble. This shows how sharp Li’s business sense is.
The total number of construction projects under Country Garden, dubbed the universe’s largest privately run real-estate company, is about four times more than that of Evergrande Real Estate, which is also in trouble.
However, with Country Garden’s construction projects mostly in third and fourth-tier Chinese cities, the problem is even worse. Although it gained a great amount of profit last year, it made a huge loss in the first half of this year. Country Garden recently failed to pay the interest on its maturing bonds, so its bond trading has been suspended. Meanwhile, its share price in Hong Kong has dropped more than 70 percent to a penny stock.
The Chinese real-estate industry has a work population of more than 60 million. If we include the up, mid and downstream industrial chains closely related to the real-estate industry — such as the manufacturing, construction, financial and service sectors — they account for one quarter of China’s GDP. The Chinese government cannot ignore Country Garden’s bankruptcy, so it stated that the debts can be extended for up to 25 years, with no need to pay the interest. This is applicable to its debts to national banks, along with the company’s other debts.
Related to the real-estate industry, Zhongrong International Trust, an affiliate of Zhongzhi Enterprise Group, the largest Chinese asset management company, not long ago announced delayed payment of wealth products. Furthermore, three listed companies said that they have been hit by the delay. This series of events is just like the Lehman Brothers’ US case, which snowballed into a financial crisis in 2008.
The Chinese Communist Party (CCP) was holding the annual Beidaihe (北戴河) meeting to discuss economic and military reform, but torrential rain interrupted it, followed by the financial storms in the real-estate and financial industries. Now the economy has become the main issue. On Aug. 13, the Chinese State Council issued a 24-point guideline: Opinions on Further Optimizing the Foreign Investment Environment and Increasing Efforts to Attract Foreign Investment. The announcement released on Sunday last week — which should have been a day of rest — showed that the authorities were filled with anxiety.
Taiwan adheres to its ways. The Taiwanese financial industry’s connections with China are at an all-time low and the impact on the sector is less than NT$2 billion (US$62.61 million). As China keeps lowering its interest rates, the exchange rate of the Chinese yuan has fallen repeatedly and this would inevitably drag the New Taiwan dollar down while affecting the local stock market.
The sluggish Chinese economy is likely to hurt the nation’s exports to China, but all of these problems would adjust when the new cross-strait relations take shape.
Paul Lin is a political commentator.
Translated by Eddy Chang
Taiwan has lost Trump. Or so a former State Department official and lobbyist would have us believe. Writing for online outlet Domino Theory in an article titled “How Taiwan lost Trump,” Christian Whiton provides a litany of reasons that the William Lai (賴清德) and Donald Trump administrations have supposedly fallen out — and it’s all Lai’s fault. Although many of Whiton’s claims are misleading or ill-informed, the article is helpfully, if unintentionally, revealing of a key aspect of the MAGA worldview. Whiton complains of the ruling Democratic Progressive Party’s “inability to understand and relate to the New Right in America.” Many
US lobbyist Christian Whiton has published an update to his article, “How Taiwan Lost Trump,” discussed on the editorial page on Sunday. His new article, titled “What Taiwan Should Do” refers to the three articles published in the Taipei Times, saying that none had offered a solution to the problems he identified. That is fair. The articles pushed back on points Whiton made that were felt partisan, misdirected or uninformed; in this response, he offers solutions of his own. While many are on point and he would find no disagreement here, the nuances of the political and historical complexities in
Taiwan is to hold a referendum on Saturday next week to decide whether the Ma-anshan Nuclear Power Plant, which was shut down in May after 40 years of service, should restart operations for as long as another 20 years. The referendum was proposed by the opposition Taiwan People’s Party (TPP) and passed in the legislature with support from the opposition Chinese Nationalist Party (KMT). Its question reads: “Do you agree that the Ma-anshan Nuclear Power Plant should continue operations upon approval by the competent authority and confirmation that there are no safety concerns?” Supporters of the proposal argue that nuclear power
The Centers for Disease Control and Prevention (CDC) earlier this month raised its travel alert for China’s Guangdong Province to Level 2 “Alert,” advising travelers to take enhanced precautions amid a chikungunya outbreak in the region. More than 8,000 cases have been reported in the province since June. Chikungunya is caused by the chikungunya virus and transmitted to humans through bites from infected mosquitoes, most commonly Aedes aegypti and Aedes albopictus. These species thrive in warm, humid climates and are also major vectors for dengue, Zika and yellow fever. The disease is characterized by high fever and severe, often incapacitating joint pain.
RSS