Connect with us

World News

China Has a Plan for Its Housing Crisis. Here’s Why It’s Not Enough.

Published

on


China has a housing problem. A very big one. It has nearly four million apartments that no one wants to buy, a combined expanse of unwanted living space roughly the area of Philadelphia.

Xi Jinping, the country’s leader, and his deputies have called on the government to buy them.

The plan, announced last week, is the boldest move yet by Beijing to stop the tailspin of a housing crisis that threatens one of the world’s biggest economies. It was also not nearly enough.

China has a bigger problem lurking behind all those empty apartments: even more homes that developers already sold but have not finished building. By one conservative estimate, that figure is around 10 million apartments.

The scale of China’s real estate boom was breathtaking. The extent of its unrelenting bust, which began nearly four years ago, remains vast and unclear.

China’s leaders were already managing a slowdown after three decades of double-digit growth before the housing crisis created a downturn that is spiraling out of their control. Few experts believe that Beijing can transition to more sustainable growth without confronting all those empty apartments and the developers that overextended to build them. All told, trillions of dollars are owed to builders, painters, real estate agents, small companies and banks around the country.

After decades of promoting the biggest real estate boom the world has ever seen, and allowing it to become nearly one-third of China’s economic growth, Beijing stepped in suddenly in 2020 to cut off the easy money that fueled the expansion, setting off a chain of bankruptcies that shocked a nation of home buyers.

It was the first test of Beijing’s determination to wean China’s economy off its decades-long dependence on building and construction to sustain the economy.

Now the government is confronting another test of its resolve. To stop the excesses of the past, it signaled over the last few years that no real estate company was too big to fail. But as dozens of big developers have gone bust, they have obliterated any confidence that remained in the housing market. Officials have since tried everything to restore optimism among buyers. Nothing has worked.

With few buyers, developers that are still standing are also on the brink of default. And they are intricately connected to local banks and the financial system that underpins the government in every village, town and city. One recent estimate, from the research firm Rhodium Group, put the real estate sector’s entire domestic borrowings, including loans and bonds, at more than $10 trillion, of which only a tiny portion have been recognized.

“Right now, not being able to sell homes looks like a risk, but it isn’t. More developers going bankrupt is,” said Dan Wang, chief economist at Hang Seng Bank. The first big developers to default, like China Evergrande, were problems hiding in plain sight.

Evergrande’s initial default in December 2021 set off fears of China’s own “Lehman moment,” a reference to the 2008 collapse of Lehman Brothers, which set off a global financial meltdown. The fallout, however, was carefully and quietly managed through policy support that let Evergrande finish building many apartments. By the time a judge ordered the company to be liquidated five months ago, Evergrande had effectively ceased being a viable business.

But China has tens of thousands of smaller developers around the country. The only way for officials to stop the free fall in the market, Ms. Wang said, is to bail out some midsize developers in cities where the crisis is more acute.

China’s top leaders are instead refocusing the lens to address the millions of apartments that no one wants to buy, pledging to turn them into social housing at lower rents. They have committed $41.5 billion to help fund loans for state-owned companies to start buying unwanted property — altogether equivalent to eight billion square feet, of which a little more than four billion square feet is unsold apartments, according to the National Bureau of Statistics.

When Beijing’s response was announced last week, shares in developers initially rallied. But some critics said the initiative had come too late. And most speculated that it would take a lot more money. Estimates ranged from $280 billion to $560 billion.

Officials in Beijing began softening their approach last year. They directed banks to funnel loans and other financing to dozens of real estate companies they deemed good enough to be on a government “white list.”

The support was not enough to stop housing prices from crashing.

Policymakers pulled other levers. They made their biggest cut ever to mortgage rates. They tried pilot programs to get residents to trade in old apartments and buy new ones. They even offered cheap loans to some cities to test out the idea of buying unsold apartments.

In all, local authorities tried out more than 300 measures to increase sales and bolster real estate companies, according to Caixin, a Chinese economic news outlet.

Still, the number of unsold homes continued to reach new levels. Prices of new homes kept falling. So at the end of April, Mr. Xi and his 23 top policymakers began to discuss the idea of taking some of those unwanted apartments off the market in a program not unlike the Troubled Asset Relief Program, which the U.S. government set up in the wake of the American housing market crash.

Last week, China’s most senior official in charge of the economy, Vice Premier He Lifeng, convened an online gathering of officials from across the country and delivered the news: It was time to start buying apartments. Not long after, the central bank loosened rules for mortgages and the central bank promised to make billions of dollars available to help state-owned companies buy apartments.

The move underscored just how worried the government had become about the dysfunctions in the housing market.

Yet almost as soon as state media reported Mr. He’s call on local governments to buy unsold apartments, economists started asking questions.

Would local governments be expected to buy all the unsold apartments? What if they, in turn, could not find buyers? And there was the price tag: Economists calculated that such a program should be in the hundreds of billions of dollars, not tens of billions.

More worryingly, to some, the central bank had already quietly started an apartment buyback program for eight hard-hit cities, committing $14 billion in cheap loans, of which only $280 million had been used. Those governments did not appear to be interested in using the loans for the same reason that consumers did not want to buy houses in smaller cities.

One big difference now, said John Lam, the head of China property research at UBS, the Swiss bank, is political will. The country’s most powerful leaders have said they stand behind a buyback plan. That will put political pressure on officials to act.

“The local government can acquire the apartments at a loss,” Mr. Lam said.

Yet in places where the population is shrinking, which are some of the same cities and towns where developers expanded most aggressively, there will be little need for social housing projects.

The optimistic view is that Beijing has more planned.

“Beijing is headed in the right direction with regard to ending the epic housing crisis,” Ting Lu, chief China economist at the Japanese bank Nomura, wrote in an email to clients.

The task, he added, was a daunting one that required “more patience when awaiting more draconian measures.”



Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

World News

For sale: A piece of California’s country music history

Published

on



The famed Buck Owens Crystal Palace, where music legends including Willie Nelson, Dwight Yoakam, Garth Brooks and a young Taylor Swift have played, is up for sale, with the foundation that runs the Bakersfield venue planning to list it for $7 million on Monday.

The nightclub, museum and steakhouse was owned by its namesake Buck Owens, the country music trailblazer who bucked the slick commercial melodies of Nashville for a distinctly West Coast twang. Owens opened the Crystal Palace in 1996, watching it become a premier venue for the biggest names in country music, including himself. Buck and the Buckaroos played there every Friday and Saturday night until his death in 2006.

Jim Shaw, a member of the Buckaroos and a director of the Buck Owens Private Foundation, said that after 28 years of running the famed venue, the Owens family plans to step back and find new owners amid a challenging business climate. The foundation said in a statement that “since Buck’s passing in 2006, we’ve tried to maintain the excellence that he expected, even as it became more and more difficult during these challenging times of increasing food and labor costs.”

The venue is not closing and scheduled events will continue as planned, Shaw said.

“It’s business as usual for now,” Shaw said. “Ideally, someone who wants to keep it exactly as it is will come forward.”

Owens’ youngest son, Johnny Owens, wrote on Facebook that the family’s hope “is that a buyer steps forward with a vision for the future and a reverence” for his father and the Bakersfield Sound.

The Crystal Palace, located on Buck Owens Boulevard, is a major tourism staple for Bakersfield. The 18,000-square-foot venue is next to the city’s downtown entrance.

“It’s the No. 1 tourist attraction in Bakersfield,” Shaw said. “There are people stepping forward and we are waiting to see what happens. I am getting a lot of phone calls. I’m anxious to see what happens.”



Source link

Continue Reading

World News

2nd local radio host says they were given questions ahead of Biden interview

Published

on


A second local radio host on Saturday told ABC News that he was provided a list of questions in advance of his interview with President Joe Biden this week.

“Yes, I was given some questions for Biden,” Earl Ingram of CivicMedia told ABC News. Ingram, a prominent host of a Wisconsin radio station, interviewed Biden this week in the wake of his debate performance.

Ingram said he was given five questions and ended up asking four of them.

“I didn’t get a chance to ask him all the things I wanted to ask,” he said.

Ingram is the second interviewer who now says they were provided questions by Biden aides to ask the president this week. Earlier today, another local radio host who interviewed Biden this week told CNN she was given questions to ask Biden before the interview.

PHOTO: President Joe Biden speaks to supporters during a campaign rally at Sherman Middle School, on July 5, 2024, in Madison, Wisconsin.  (Scott Olson/Getty Images)PHOTO: President Joe Biden speaks to supporters during a campaign rally at Sherman Middle School, on July 5, 2024, in Madison, Wisconsin.  (Scott Olson/Getty Images)

PHOTO: President Joe Biden speaks to supporters during a campaign rally at Sherman Middle School, on July 5, 2024, in Madison, Wisconsin. (Scott Olson/Getty Images)

“We do not condition interviews on acceptance of these questions, and hosts are always free to ask the questions they think will best inform their listeners,” the Biden campaign told ABC News on Saturday.

Ingram told ABC he didn’t see anything necessarily wrong with the practice. “To think that I was gonna get an opportunity to ask any question to the President of the United States, I think, is a bit more than anybody should expect,” he said.

He continued that he was grateful for the opportunity to interview Biden at all.

“Certainly the fact that they gave me this opportunity … meant a lot to me,” Ingram said.

MORE: Wealthy Democratic donors sound alarm over Biden staying in race

On CNN earlier today, Andrea Lawful-Sanders, the host of WURD’s “The Source,” said Biden officials provided her with a list of eight questions ahead of their interview with Biden.

“The questions were sent to me for approval; I approved of them,” she said.

“I got several questions — eight of them,” she continued. “And the four that were chosen were the ones that I approved.”

Responding to Lawful-Sanders, Biden campaign spokesperson Lauren Hitt said in a statement that it’s not “uncommon” for interviewees to share topics they would prefer. She noted that Lawful-Sanders was “free” to ask any questions she saw fit. She also noted that it was the campaign who sent over the questions and not the White House as other reports claim.

Lawful-Sanders did note in her interview with CNN that she ultimately “approved” the questions provided.

“It’s not at all an uncommon practice for interviewees to share topics they would prefer. These questions were relevant to news of the day – the president was asked about this debate performance as well as what he’d delivered for black Americans,” the statement said.

“We do not condition interviews on acceptance of these questions, and hosts are always free to ask the questions they think will best inform their listeners. In addition to these interviews, the President also participated in a press gaggle yesterday as well as an interview with ABC. Americans have had several opportunities to see him unscripted since the debate.”

A source familiar with the Biden booking operation told ABC News that moving forward they will “refrain” from offering suggested questions to interviewers.

“While interview hosts have always been free to ask whatever questions they please, moving forward we will refrain from offering suggested questions.”

2nd local radio host says they were given questions ahead of Biden interview originally appeared on abcnews.go.com



Source link

Continue Reading

World News

President George W. Bush turns 78 years old

Published

on



George W. Bush, born on July 6, 1946, in New Haven, Connecticut, was the 43rd President of the United States.

Bush was born to parents Barbara Bush and former President George H. W. Bush. He has five siblings; Jeb Bush, Marvin Bush, Neil Bush, Dorothy Bush Koch and Pauline Robinson Bush. Pauline was diagnosed with leukemia and passed away at age three.

He was formerly the Republican Governor of Texas from 1995 to 2000.

WHY FORMER PRESIDENT GEORGE W. BUSH IS WINNING … THE POST-PRESIDENCY

Bush was first elected to the White House in November 2000, and officially began his first term as president in January 2001, after he defeated Democrat Al Gore during the presidential election. Bush was reelected to his second term as the incumbent in November 2004, when he prevailed over Democrat John Kerry, and led the United States until January 2009 before handing over his torch to former President Barack Obama.

Bush married Laura Bush on November 5, 1977, the day after her 31st birthday, in her hometown of Midland, Texas. The couple were engaged in September 1977, and married less than two months later in a Methodist church. Bush and Laura met at a barbecue, and he took her to play mini-golf on their first date. 

The Bush’s share twin daughters, Barbara Pierce Bush and Jenna Bush Hager, born on November 25, 1981. Today, the couple also share four grandchildren; Mila, Poppy, Hal and Cora.

GEORGE BUSH, FORMER FIRST LADY ISSUE STATEMENT ON AFGHANISTAN WITH MESSAGE TO US TROOPS, VETERANS

During his presidency, Bush cared for his English springer spaniel, Spot Fetcher, who accompanied him to meetings in the Oval Office and on adventures throughout the White House. The dog was born to his parent’s dog, Millie.

On September 11, 2001, less than one year into Bush’s presidency, the Twin Towers in New York City were attacked by terrorists when airplanes hit both buildings, causing a collapse and thousands of lives lost. At the time, Bush was reading to elementary-aged children at a school in Sarasota, Florida. He was calmly and quietly advised of the attacks and quickly returned to Washington, where he was briefed alongside Vice President Dick Cheney.

Bush was regarded highly for his poise while learning of the attacks and for his demonstration of patriotism and leadership in the uncertain days and weeks following the hijackings of multiple planes on the day that shook America to her core.

SADDAM CAPTURED ‘LIKE A RAT’ IN RAID

On December 30, 2003, during Bush’s first term as POTUS, Saddam Hussein, the Iraqi leader and executor of the 9/11 attacks on the U.S., was captured by the American military

In the early morning of December 30, 2006, during Bush’s presidency, Hussein was hanged and executed for his crimes against humanity. Americans across the nation celebrated the death of Hussein and applauded Bush for promising the country he would take him out and following through.

While Bush was regarded for his dealings with the terrorist attacks, the signing of No Child Left Behind Act and the Patriot Act and the creation of the United States Department of Homeland Security, many Americans were unhappy with the sanctions of interrogation techniques, the war in Iraq and taxes while he was president.

CLICK HERE TO GET THE FOX NEWS APP



Source link

Continue Reading
Advertisement

Trending

Copyright © 2024 World Daily Info. Powered by Columba Ventures Co. Ltd.