Analysis: China has multiple choices to avoid hard landing risk

Comments (2)
DrGoose wrote:

Since the world isn’t sure of withstanding
A slowdown in China’s expanding,
The brightest and best
Are correctly obsessed
With predicting a hard or soft landing.

The “Hard” guys are finding it troubling
That the property market is bubbling,
And China’s growth race,
To equal the pace
Of construction, would have to be doubling.

Say the “Softies”: there isn’t just one way
Of averting a slump the yuan way;
While liquidity’s free,
One can easily see
There’s a gentle descent to the runway.

Jan 19, 2012 1:06am EST  --  Report as abuse
godfree wrote:

Policy flexibility? Oh yes.  ”Laws” that govern our finances don’t govern China’s, for many reasons.  To list a few:

1.   China’s currency is entirely under its own control.
2. Reserves of foreign currencies are plentiful and growing.
3.  Its sovereign debt, at 40% of GDP, is one of the lowest on earth.
4. Their slowdown, unlike ours, was intended and planned.
5. China’s government doesn’t just control the strategic heights of its economy, it OWNS them: banks, insurance companies, media, etc.
6. Chinese home ownership is 90%.  Most homes were purchased for cash, the rest with a minimum 30% deposit.  Second and third homes require 60% and 100% cash.
7.  Hong Kong has been through many similar real-estate booms and busts.  Hong Kong, along with its gifted administrators and their years of experience, is part of China.  They are numerate. They talk to Beijing daily.
8.  The Chinese economy is growing 7-9% annually.  We have no idea of what that is like, or what that momentum can do in a nation of 1.3 billion people. That rising tide will lift most stranded boats.  Ships, even.  Developers and lenders know this.  The Chinese are patient.  
9.  China is a unified, coherent nation and civilisation.  Its government is trusted (Edelman) and admired (Pew) by 86% of the people.  They’ll cooperate, willingly, with government policies.  They’ll grumble because they’re human but they’ll cooperate because they’re Chinese who, as Kissinger pointed out, “are smarter than us.”
10.  If the government says to the banks, “We’ve run some numbers and we think you should extend your CRE loans for another 18 months at interest only”, the banks will extend the CRE loans for another 18 months at interest only.  Not just because the government owns controlling interests in the banks, but also because they know that the guys in the CCPCC are really, really smart and honest, and usually get things right.

Aaah!  A Capitalist Paradise on earth.

Jan 21, 2012 7:36am EST  --  Report as abuse
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