According to China Central Television (CCTV) China’s central government will promote the healthy development of the nation’s capital market and maintain the stability of the country’s property sector to prevent possible financial risks.

At a central government meeting attended by President Hu Jintao, Premier Wen Jiabao, the central government vowed to take all possible measures to curb the country’s excessive inflation.

It allowed the country needs to improve its macro-economic controls and boost the production of necessities including grain, edible oil and meat.

Chiming in, the central bank said the country is to take effective measures to prevent prices from rising too rapidly and guard against big fluctuations in asset prices.

Now a slight internal contradiction.

The consumer price index climbed 7.7% year-on-year in May. While that was down from the 8.5% rise in April, it was still well above the government’s target.

This has affected the stock market. The Shanghai stock index fell 14% in a week as investors focused on rising global oil prices and tighter domestic monetary policy by the central bank.
Source: Forbes

Xinyuan Real Estate, a foreign-funded real estate firm based in Henan Province, central China, is now listed on the New York Stock Exchange, becoming the first Chinese real estate firm to be offered on an American exchange.

According to its prospectus Xinyuan raised US$299.5 million from its initial offering.

An analyst said the biggest attraction of Xinyuan for foreign investors is that they are optimistic on the emerging estate markets in China.

The real estate business of Xinyuan is mainly in medium-sized Chinese cities. The company has nine wholly owned subsidiaries and two related companies. It has developed a total area of 939,000 square meters over the past decade and more than one million square meters are still under construction.

It maintains a compound annual growth of 86% in sales contracts.

Xinyuan was jointly started by Equity International and Blue Ridge China in cooperation with Henan Xinyuan Real Estate in August 2006.

So far, there are 38 Chinese companies listing on NYSE.
Source: Trading Markets

The National Development and Reform Commission, the government’s main economic planning agency, reports that housing prices in 70 major Chinese cities jumped by 10.5% in November over a year earlier.

NDRC’s pricing director, Cao Changqing said the increase was the biggest monthly rise since the government began keeping track of that data in July 2005.

He said from January to November, housing price grew by 7.3% year-on-year, with price of new homes jumping 7.9%.

Meanwhile, the National Bureau of Statistics reports that despite government curbs meant to prevent runaway spending China’s investments in factories, real estate and other urban assets rose 26.8% in the first 11 months of this year.

Total investment in such fixed urban assets during the period was RMB10.1 trillion ($1.4 trillion).

The worry at government levels is that rising spending on factories, real estate and other projects could start a debt crisis if a glut of unneeded projects leads to widespread defaults on bank loans.

The January-November increase compares with a 26.9% increase in the first 10 months of the year, which is a very minor change despite the fact the government had enforced repeated interest rate hikes, reserve ratio increases and administrative decrees against increased lending for such projects.

Cao Changqing said, ‘Despite falling sales, housing prices in parts of Beijing, Shanghai, Guangzhou, and Shenzhen still remain high.’ But housing price is expected to remain stable as the macro-control policies are starting to yield results.
Source: People’s Daily Online

Chinese urban fixed asset investment gained pace in the first 10 months of 2007, raising expectations of an interest rate hike.

The National Bureau of Statistics said fixed asset investment — a key measure of spending on infrastructure, plants and other major projects — rose 26.9% to RMB8.9 trillion (US$1.2 trillion).

Li Huiyong, an economist with Shenyin Wanguo Securities based in Shanghai said, ‘We think the government will hike interest rates… to curb inflation.’

Other bullish data this week included a record high trade surplus of US$27.1 billion. But the inflation figures, which included a 17.6% jump in food prices in October, are causing the most official concern.

The central government in Beijing has already raised interest rates five times this year in a bid to prevent overheating, but the economy has continued to surge, expanding by 11.5% in the third quarter.

Qiu Qingdong, a Beijing-based analyst with Guodu Securities said, ‘It seems previous interest rate hikes have not had any major impact on money supply. Macroeconomic policies so far have not been very effective.’

JP Morgan Chase Bank said in a note to clients, ‘Solid growth momentum in the real economy has shown limited slowing amid excess liquidity conditions in the financial system’.

According to The Research Report on the Competitiveness of China Real Estate Enterprises issued by the Development Research Center of the State Council real estate enterprises are constantly developing new funding channels. Their capital has expanded rapidly and, by extension, their land purchases are becoming larger and larger.

Currently, the largest real estate developer has 45 square kilometers of land reserves. In many second or third tier cities, it has become increasingly difficult for more and more real estate enterprises to acquire land.

Country Garden, one of the leading property developers in China, is the largest ‘landlord’ in the country. By the end of this July, the company’s total land reserve had reached an astounding 45 million square meters. Its land reserves nearly doubles that of the second largest landholder. Country Garden real estate primarily focuses on suburban areas of the first, second and third tier cities; therefore their asset prices are relatively low.
Vanke owns assets of nearly RMB50 billion. Vanke’s land reserves exceeded 15 million square meters in the first half of 2007.
New World China Land’s land reserves have reached 17.53 million square meters.
Yuexiu has made investments in the real estate industry for 5 years and has maintained assets of RMB30 billion and a land reserve of 6 million square meters.
China Resources Land has land reserves of8.199 million square meters.
R&F Properties has land reserves of 20.92 million square meters.

Source: China.org.cn