China’s announcement on Tuesday that inflation in May hit a three-year high of 5.5 per cent and industrial expansion exceeded expectations will buttress those who see an inevitable economic crash coming. But even those who think a soft landing is possible seem to agree that China’s economic growth is unbalanced, with these imbalances widely blamed for trade surpluses with the west. This view, however, is much exaggerated.
Compared with other countries, China’s consumption to gross domestic product ratio of 35 per cent is low, suggesting consumption is not being repressed. China’s investment to GDP ratio of more than 45 per cent is also exceptionally high. This leads many to propose a standard solution to “rebalancing”: China must increase consumption and dampen investment.
The problem is that this view is static, while growth is unbalanced. What matters is the direction of change. It is true that China’s private consumption to GDP ratio has declined by 15 percentage points over the past 15 years. But this mirrors many east Asian economies and also that of the US during its own industrialisation in the 20th century. Despite all the admonitions, this ratio will not begin to increase until savings decline or labour’s share of income increases.
Savings rates will not fall, however, until there is a credible social welfare system. Increasing labour’s share of income is also not a viable solution: paradoxically, as more workers move from agriculture to industry – which is a good thing – labour’s share of income will fall. Contrary to expectations, labour’s share of income within industry is also declining because of the expanding role of the private sector relative to the state – but this is to be welcomed, too.
Behind today’s figures and more talk of unbalanced growth, the truth is that China’s economy will change – in time. As the availability of rural labour falls and the relative shares of state and private enterprises stabilise, the ratio of consumption to GDP will begin to increase. Meanwhile, the perception that China has invested too much is also misleading. Much of the surge in investment over the past decade is due to housing construction, where the country is still making up for the shortfalls from the Mao era.
The bottom line is that China’s growth is not unbalanced. Even so its trade surplus continues to be a major irritant with the west. In principle the problem is not hard to solve but the solution runs counter to conventional wisdom. China’s trade surplus is now running at two-three per cent of GDP, so if consumption, investment and government expenditures all rose less than one percentage point of GDP each, the problem would evaporate. But in which order should this happen? The best near-term solution rests in higher public expenditure, paid for by increasing dividend payments from state enterprises to the government. Since pre-tax profits of state enterprises have surged to more than 7 per cent of GDP, channelling just a fraction of these surpluses into public social services would make a big difference.
If China acted in this way, its already high investment rates may not need to decline in the short term, while these actions would help to eliminate China’s trade surplus sooner rather than later. Such actions would prevent trade surpluses from re-emerging when the pace of investment is likely to fall by the second half of this decade. They can be achieved without compromising China’s growth or restraining global demand. And perhaps most importantly, they would allow China to dispel the myth of its unbalanced economy once and for all.
Real estate development today, high prices have been very clear that the existence of the real estate bubble become a topic of discussion. High prices on people's lives had a significant impact. How should we look at the current high prices, what the Government should take measures to protect the people's basic living. With housing prices is a potential housing bubble, many scholars have expressed concerns about the real estate bubble. Which a scholar said: "People can not see the bubble burst conclude that it is not a bubble." However, urbanization can not decide people's demand for real estate, a serious gap between rich and poor in today's China's basic national conditions, the majority of the farmers living in rural low income, the city can not afford to buy housing, while the middle class because the price will be loss of purchasing power of soaring, which will cause no one wants to built a house to buy, which resulted in rising house prices and property market in China is relatively high vacancy rate. Even if the bubble will not burst, high prices will bring the community and the people great harm, high prices will widen the wealth gap, intensified social conflicts, increased pressure on young people, is not conducive to social harmony. Therefore the Government should identify the opportunity, time to give the property market cool down. Now, however, the formation of high prices are not formed overnight. But the reason is mainly the following three points: First, the state's policy on real estate laws and regulations are incomplete, the legitimate rights and interests of small property can not be guaranteed, the people in front of the government seem so powerless, which largely causing a rural town and rural housing can not afford to sell the house but also the situation; second, land prices soared, despite an increase in land prices to increase government revenue, but real estate developers will appreciate some of these transferred to the buyers who will no doubt result in price growth, and finally pay for the property market growth or the average consumer; third group of real estate speculation.
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Our calculations suggest nationwide prices are still rising—by 4% in the year to April—but only slowly. The pace of increase has eased steadily for 12 months in a row
感觉这个统计数据还是比较可信的，中国的楼市像是在经济危机下的困境应运而生的，经济周期转好，自然泡沫破裂，而泡沫破裂对于经济的损害时很大的，中国高层自然希望泡沫慢慢被消化掉，应该会逐步放慢脚步
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