Dec. 31 (Bloomberg) -- Li Nan has real estate fever. A 27- year-old steel trader at China Minmetals, a state-owned commodities company, Li lives with his parents in a cramped 700- square-foot apartment in west Beijing. Li originally planned to buy his own place when he got married, but after watching Beijing real estate prices soar, he has been spending all his free time searching for an apartment. If he finds the right place -- preferably a two-bedroom in the historic Dongcheng quarter, near the city center -- he hopes to buy immediately. Act now, he figures, or live with Mom and Dad forever. In the last 12 months such apartments have doubled or tripled in price, to about $400 per square foot. "This year they'll be even higher," says Li in the Jan. 11 issue of Bloomberg BusinessWeek. Millions of Chinese are pursuing property with a zeal once typical of house-happy Americans. Some Chinese are plunking down wads of cash for homes. Others are taking out mortgages at record levels. Developers are snapping up land for luxury high- rises and villas, and the banks are eagerly funding them. Some local officials are even building towns from scratch in the desert, certain that demand won't flag. And if families can swing it, they buy two apartments: one to live in, one to flip when prices jump further. And jump they have. In Shanghai, prices for high-end real estate were up 54 percent through September, to $500 per square foot. In November alone, housing prices in 70 major cities rose 5.7 percent, while housing starts nationwide rose a staggering 194 percent. The real estate rush is fueling fears of a bubble that could burst later in 2010, devastating homeowners, banks, developers, stock markets, and local governments. High-End Bubble "Once the bubble pops, our economic growth will stop," warns Yi Xianrong, a researcher at the Chinese Academy of Social Sciences' Finance Research Center. On Dec. 27, China Premier Wen Jiabao told news agency Xinhua that "property prices have risen too quickly." He pledged a crackdown on speculators. Although parallels with other bubble markets, the China bubble is not quite so easy to understand. In some places, demand for upper middle class housing is so hot it can't be satisfied. In others, speculators keep driving up prices for land, luxury apartments, and villas even though local rents are actually dropping because tenants are scarce. What's clear is that the bubble is inflating at the rich end, while little low- cost housing gets built for middle and low-income Chinese.
Dec. 31 (Bloomberg) -- Li Nan has real estate fever. A 27- year-old steel trader at China Minmetals, a state-owned commodities company, Li lives with his parents in a cramped 700- square-foot apartment in west Beijing.
Li originally planned to buy his own place when he got married, but after watching Beijing real estate prices soar, he has been spending all his free time searching for an apartment. If he finds the right place -- preferably a two-bedroom in the historic Dongcheng quarter, near the city center -- he hopes to buy immediately. Act now, he figures, or live with Mom and Dad forever. In the last 12 months such apartments have doubled or tripled in price, to about $400 per square foot.
"This year they'll be even higher," says Li in the Jan. 11 issue of Bloomberg BusinessWeek.
Millions of Chinese are pursuing property with a zeal once typical of house-happy Americans. Some Chinese are plunking down wads of cash for homes. Others are taking out mortgages at record levels. Developers are snapping up land for luxury high- rises and villas, and the banks are eagerly funding them. Some local officials are even building towns from scratch in the desert, certain that demand won't flag. And if families can swing it, they buy two apartments: one to live in, one to flip when prices jump further.
And jump they have. In Shanghai, prices for high-end real estate were up 54 percent through September, to $500 per square foot. In November alone, housing prices in 70 major cities rose 5.7 percent, while housing starts nationwide rose a staggering 194 percent. The real estate rush is fueling fears of a bubble that could burst later in 2010, devastating homeowners, banks, developers, stock markets, and local governments.
High-End Bubble
"Once the bubble pops, our economic growth will stop," warns Yi Xianrong, a researcher at the Chinese Academy of Social Sciences' Finance Research Center. On Dec. 27, China Premier Wen Jiabao told news agency Xinhua that "property prices have risen too quickly." He pledged a crackdown on speculators.
Although parallels with other bubble markets, the China bubble is not quite so easy to understand. In some places, demand for upper middle class housing is so hot it can't be satisfied. In others, speculators keep driving up prices for land, luxury apartments, and villas even though local rents are actually dropping because tenants are scarce. What's clear is that the bubble is inflating at the rich end, while little low- cost housing gets built for middle and low-income Chinese.
HEZHOU, China, Dec 29 (IPS) - As more and more rural Chinese bid farewell to their impoverished home villages in their pursuit of a better life in bigger cities, leaving behind their young children in the care of relatives or aging parents seems only a small price to pay, especially in times of financial crisis.But for some, the price is simply too high. When a three-story brick building in Yanghui Village in Hezhou, in south China's Guangxi Autonomous Region, was gutted by fire in November, the majority of the victims turned out to be children. Yang Chunfeng still vividly recalls what happened on that fateful morning. Awakened by the sound of a blast, he rushed out of his house and saw a huge chunk of the building next door had been blown off while flames were raging high. Villagers coming to the rescue were soon carrying out soot-blackened children while others were screaming and running for their lives. "All the children being taken out of the building were burned bare, with no hair or clothes left," recalled Yang, who is in his 50s. An explosion at an illegal firecracker workshop (employing children) inside the building triggered the massive fire. Thirteen of the 14 victims, all students of Zhiyang Primary School, were aged 7 and 15. Two of them died of severe burns. All of them either had one or two parents working in cities away from home. Yanghui Village is about two hours' drive from Hezhou City, located east of the picturesque city of Guilin and bordering Hunan and Guangdong provinces. With a population of 3,000, half of them children under 14, the village is home to only 4,000 mu (231 acres) of arable land for tobacco and paddy rice. Per capita annual income from farming is a pitiable 600 yuan (about 85 U.S. dollars), hardly enough to feed a family. Unable to make ends meet, villagers choose to work in other cities in Guangxi, including Guilin, Wuzhou and Liuzhou, or the neighbouring Guangdong Province, where labor-intensive jobs from export-oriented factories had propped up the local economy.
Zhang Xin, chief executive of Soho China, one of the country's most successful privately owned property developers, told the Financial Times the asset bubble was leading to rampant wasteful investment in the sector, undermining the country's long-term growth prospects. <...> "If you look at GDP growth, then China looks like a new engine driving the global economy, but if you look at how growth is being created here by so much wasteful investment you wouldn't be so optimistic."
<...>
"If you look at GDP growth, then China looks like a new engine driving the global economy, but if you look at how growth is being created here by so much wasteful investment you wouldn't be so optimistic."
