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Realty faces real disaster
(China Daily)
Updated: 2010-03-25 08:47
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Without the support of homebuyers, huge amounts of capital will be needed to prevent the real estate bubble from bursting. And that is a daunting task, says an article on 21cbh.com. Excerpts:
China's dependence on foreign trade has weakened domestic demand and channeled national wealth to governments and State-owned enterprises (SOEs) in current income distribution system. The central government's $586-billion stimulus package has refueled the SOEs, which have jumped into the real estate market with the huge profits they have made from their monopoly businesses.
Giant SOEs are squeezing out private capital from land auctions and turning the housing market into another speculative area that offers exorbitant profits. The number of vacant houses is rising with the rocketing housing prices. Speculators are buying homes to make money by cashing on the rising prices. With housing prices becoming unaffordable for the common people, the real estate market has become a virtual game of wealth, rather than an important public welfare sector.
(China Daily 03/25/2010 page9)
