4 June 2010
It’s interesting to note the latest policy tone in China
1) "Taxes on holding of residential properties is impossible at least for another 3 years," Huang Hanquan, assistant director at NDRC toldChina Times;
2) Chongqing's new property rule didn't say no to 3rd home mortgage, this is easier than that introduced in Beijing;
3) "China should be cautious in introducing new tightening measures as the global economic environment is complex", Xu Lianzhong, an NDRC official told China Securities Journal.
It looks like the govt is well aware of the double dip risks and is softening its tone, but a reversal of existing tightening measures might not come that quickly.
Chinese local governments are reluctant to tighten heavily the property market
After the Chinese central government issued tough tightening guidelines to cool down the property market, local governments including Beijing, Shenzhen, Zhejiang (province) Guangzhou and Chongqing issued local level measures. Surprisingly, few followed Beijing's tough stance. The most recent announcement in Guangzhou and Chongqing even did not have the controlling measures regarding the third mortgage.
This shows the disagreement among policy makers regarding the evaluation of property market's situation. Officials from Chongqing, China's western gate city, said very clearly that the city should not take medicines for others' diseases. Indeed, the property markets in the inner regions did not have a tier 1 city style bubble.
This could give the market a new expectation that the policy stance in the property sector would ease somewhat and trigger a share price rebound. However, NDRC dismissed the rumor of easing housing policies as untrue, according to the Xinhua news agency, NDRC confirmed that the quoted 'NDRC official' cannot reflect the official position of the ministry on housing policy
According to NDRC price monitoring center, average national wholesale prices for 24 vegetable categories fell 10.8% by May 12 vs. May 5, and Min. of Agri. data shows agri product and vegetable prices rose 1.7% and 1.2% YoY by May 14, well below the 4.4% and
4.5% in Apr.
According to CICC, thanks to easing food prices, May CPI might fall below current expectation of 3%, meaning that rate hikes are not in sight yet.
A number of issues strike us;
i) The discord among regional Chinese policy makers.
ii) The awareness of double dip’ risks
The protectionist in application that while there is realization of a needed to act, NIMBY (not-in-my-back-yard) is starting to define Chinese policy as well as European austerity. Thus is protectionism born.
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