The Executive Council has conditionally approved a proposal by the cash-strapped West Kowloon Cultural District to revamp its finances by selling residential property rights as the revenue raised is expected to support the district’s operations for another decade.
Under the relaxed arrangement, the sale of residential developments in Zone 2 of the district is allowed and the district is no longer required to develop the area under the “Build, Operate and Transfer” (BOT) model.
The total floor area of 170,280 square meters for residential development previously permitted remains unchanged.
“The incomes received from the tenders awarded to private developers will enable West Kowloon Cultural District Authority to meet its operational deficit and capital expenses for about 10 years,” according to an official statement.
Speaking to reporters on Wednesday, Secretary for Culture, Sports and Tourism Kevin Yeung Yun-hung said the district must comply to a number of conditions, such as setting up a separate bank account to store the revenue and interest generated from the sale.
The district must also stringently follow multiple key performance indicators designed by the government, including the ceiling of financial deficit every three years and the ratio of staff costs to the overall operational costs.
Yeung hopes the relaxation this time can help the district tackle its cash liquidity issues and said his bureau will maintain close communication with the district and support the district to realize long-term fiscal sustainability.
The district’s board chair Henry Tang Ying-yen extended gratitude to the ExCo and the Chief Executive for providing West Kowloon with financial conditions for future operations without further burdening the treasury.
Tang noted that the plans made in 2016 were all theories, such as opening the Art Park for free in 2018. The district also loaned part of the land to the MTR Corp for seven years to dispose of the soil from the construction of the High Speed Rail, during which not one profit-making cultural project was completed, leading the capital chain to break.
Tang expects the district will only call for tenders for the residential development in two years at minimum, hoping the city’s economic environment will have improved in the meantime. Otherwise the district will face grave difficulties, Tang noted.
BEIJING (Reuters) -China’s new home prices fell at the fastest pace in nine years in June, official data showed on Monday, with the battered sector struggling to find a bottom despite government support measures to control oversupply and bolster confidence.
New home prices were down 4.5% from a year earlier, hitting the lowest since June 2015, deeper than a 3.9% slide in May, according to Reuters calculations based on National Bureau of Statistics (NBS) data.
Prices were down 0.7% month-on-month in June after a 0.7% dip in May.
Since 2021, the property market’s steep downturn has led to a series of developers defaulting, leaving numerous construction sites idle. This has eroded confidence in the sector, traditionally favoured by Chinese households as a safe haven for their savings.
The property sector which at its peak accounted for a quarter of GDP, remains a major drag on the $18 trillion economy.
Authorities have rolled out a flurry of support measures, including cutting home buying costs in major cities and allowing local governments to buy some unsold apartments and turn them into affordable housing.
“The structure of supply and demand in the property sector has been fundamentally reversed. (The market) does not need to have excessively high expectations of the effects of the policies,” said Zhang Dawei, analyst at Centaline Property Agency Ltd.
“It is unlikely that there will be a rise across the board in the sector in the future,” Zhang said.
Property investment fell 10.1% in the first half of 2024 from a year earlier, and home sales by floor area fell 19.0%, deeper than a 20.3% slump in the first five months of the year, separate NBS figures showed.
Markets will closely scrutinise directives from the Communist Party leadership meeting starting on Monday where key economic issues will be discussed. Measures that redistribute income from central authorities to local municipalities and curbing an addiction to land sales laid bare by China’s property crisis will top the agenda, policy advisers say.
(Reporting by Liangping Gao, Ella Cao and Ryan Woo; Editing by Jacqueline Wong)
BEIJING (Reuters) – Growth in property investment in China cooled to the second slowest pace in 2018 in December, adding to signs of a further slackening in the real estate market in a blow to a key driver economic growth.
Real estate investment, which mainly focuses on the residential sector but includes commercial and office space, rose 8.2 percent in December from a year earlier, down from 9.3 percent in November, according to Reuters calculations based on data released by National Bureau of Statistics (NBS) on Monday.
That was just ahead of the slowest pace of growth last year at 7.7 percent recorded for October.
For the full year, property investment increased 9.5 percent from the year-earlier period, down from 9.7 percent in January-November.
In December, property sales by floor area, a major indicator of demand, rose a touch by 0.9 percent from a year earlier, the first gain in four months and compared with November’s 5.1 percent drop.
For 2018, property sales by area rose a modest 1.3 percent from a year earlier, official data showed.
Analysts say a continued downturn in sales on the back of tight government controls to curb speculation could add to the growing pressure on the world’s second-largest economy.
The real estate sector is a key pillar of the economy, so any further weakness in sales could influence the pace and scope of fresh stimulus measures expected from Beijing this year.
Analysts predict the softer sales will constrain price growth in coming months, dampening developers’ appetite for front-loading construction.
Funds raised by China’s property developers grew 6.4 percent in 2018 on an annual basis. That was slower from the pace of 7.6 percent in the first eleven months, according to the statistics bureau.
Measured by floor area, construction starts surged 20.5 percent from a year earlier, down from 21.7 percent in November, according to Reuters calculations.
(Reporting by Yawen Chen, Stella Qiu and Ryan Woo; Editing by Shri Navaratnam)
(Bloomberg) — President Joe Biden said European allies are prepared to cut investment to China if it keeps up its support for Russia, offering a warning after NATO accused Beijing of enabling the invasion of Ukraine.
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Biden reiterated that China was not directly supplying weapons to Russian President Vladimir Putin’s forces but also underscored it wouldn’t benefit financially “if they are supplying Russia with information and capacity.”
Chinese President Xi Jinping “believes that China is a large enough market that they can entice any country, including European countries to invest there, in return for commitments from Europe,” Biden said at a press conference on Thursday. “Some of our European friends are going to be curtailing their involved investment” if China continues its help, he added.
The press conference was overshadowed by persistent questions about Biden’s age and fitness for office after he stumbled repeatedly in a debate against Donald Trump two weeks ago. He sought to use the press conference to demonstrate his strong leadership, saying “there isn’t any world leader I’m not ready to deal with” — including Xi.
“I’m dealing with Xi right now — I have direct contact with him,” Biden said, without detailing what that entailed.
Biden’s comments marked the latest broadside against China over Xi’s deepening relationship with Putin, something that has been an increasing focus as allies look to choke off Russia’s war machine in Ukraine and force it to cede territory. Russia has turned to Iran and North Korea for drones and ammunition, and to China for parts that western officials say can be used for the campaign.
In its summit communique this week, NATO described China as a “decisive enabler” of Russia’s war against Ukraine. The communique detailed China’s supply of dual-use materials such as weapons components, equipment and raw materials that serve as inputs for Russia’s defense sector.
China has said repeatedly it doesn’t provide weapons to Russia or Ukraine, and “strictly controls” the export of dual-use articles. It has blamed the US and its allies for fueling the war and imposing “illegal unilateral sanctions.”
European capitals were alarmed by reports this month that Chinese and Russian companies were developing an attack drone similar to an Iranian model deployed in Ukraine, Bloomberg reported earlier.
A survey by the European Union Chamber of Commerce in China released in May found that companies from the bloc were losing their appetite to investment in the world’s-second biggest economy. Only 42% said they plan to expand their operations in China this year, the lowest since records began in 2012.
Foreign investment more broadly into China has been slowing. A measure of foreign direct investment into the nation declined for the 12 months in a row, according to data released by the Chinese Ministry of Commerce in late June, underscoring Beijing’s struggle to improve its appeal to overseas investors to boost growth.
The push from NATO shows a growing consensus between the US and its partners that Beijing represents a threat not just in Asia, but also to European security through its support for Russia. In recent years, European capitals from Berlin to London, Prague and Vilnius have hardened their stance on China.
–With assistance from Colum Murphy and Lucille Liu.
(Updates with investment statistics)
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In response to the senators’ criticisms, McKinsey attempted a Clintonian dodge. “[T]he Urban China Initiative,” read an official statement, “is not McKinsey, and it did not perform work on McKinsey’s behalf” — using the technical meaning of the word “behalf” to distract from the two organisations’ deep connection. As Rubio and Hawley go on to highlight, McKinsey co-founded the Urban China Initiative with Columbia and Tsinghua Universities, and the think tank was based at the same address as McKinsey’s Beijing office. McKinsey’s top China hand, Lola Woetzel, wrote the foreword to the report — acknowledging the role her company played in the research — and then hand-delivered it to China’s second-highest-ranking official at the time, Premier Li Keqiang.
As the Financial Times and New York Times reported, the Urban China Initiative is only one product of a fruitful decades-long collaboration between McKinsey and the CCP. In 2019, the company’s China website touted a series of Chinese government projects: “McKinsey’s impact in China goes well beyond our work in the corporate sector. In the past decade alone, we’ve served over 20 different central, provincial and municipal government agencies on a wide range of economic planning, urban redevelopment and social sector issues.”
Over the 2010s, McKinsey was also retained by 22 of China’s 100 largest state-owned enterprises (SOEs). One of these companies aided the Chinese government in the construction of an archipelago of artificial islands in the South China Sea — a vital tool in China’s quest for naval domination in Asia. On the topic of Chinese military aggression, it should not escape our notice that even McKinsey’s current “Greater China” website, sanitised in response to recent scrutiny, includes the firm’s Taiwan office. While diplomatic realities have forced the US government into its farcical “One China Policy” that refuses to acknowledge Taiwan as an independent nation, McKinsey is under no obligation to make the same declaration. It is one indication among many that American international businesses fear offending the Chinese government more than their own.
“American international businesses fear offending the government of China far more than that of their home country.”
In part, this is because democracies tend to be more sympathetic than autocracies to the idea that businesses must sometimes make decisions that don’t benefit “the home team”. But it also evinces a deeper truth: that given the blurry distinction between Chinese government authority and all Chinese businesses (not just officially state-owned ones), it is difficult for a consulting company to trust that if they run afoul of the CCP, any of their Chinese business will be left unscathed. As Curtis Milhaupt and Wentong Zheng have convincingly argued in the Georgetown Law Journal, China is “a state in which no firm — irrespective of ownership — is truly autonomous from the government”.
Admittedly, it is virtually impossible in a globalised world to ensure that no American resources — economic, human, or intellectual — are harnessed for the benefit of our geopolitical adversaries. We are a democracy after all, and projecting a totally unified front to the world isn’t one of democracy’s strong suits. But that doesn’t mean that there isn’t any low-hanging fruit for us to address — management consulting being within particularly easy reach.
As US-China geopolitical competition has heated up, a group of legislators has begun to take notice. In May, the Senate Homeland Security and Government Affairs Committee passed the Time to Choose Act of 2024 by a 10-1 bipartisan vote, referring the bill to the broader Senate. The Act, which calls out both McKinsey and Deloitte by name, would prevent the US government from doing business with consulting firms that also work for the governments of China, Russia, identified state sponsors of terrorism, or SOEs in those countries, among certain other entities.
It’s a good start, but far from a complete solution. It fails to account for the fact that outside the West, the boundary between public and private is often murky, if not downright illusory. In China, for example, the government has the right to requisition data or information from any company or citizen in the name of national security. For that reason, no law that targets only governments and SOEs can ever be entirely airtight when it comes to keeping valuable American data or ideas out of the hands of our adversaries. For that reason, the law should be passed as written, but only if bolstered by two other initiatives.
“Fast EV adoption has put international marques in jeopardy,” Stephen Dyer, the firm’s Greater China co-leader and head of its Asia automotive practice, said in a media briefing on Wednesday. “The EV penetration rate will surge to 75 per cent, tipping the balance in favour of Chinese companies.”
He did not name any of the international brands that could be forced to exit the world’s largest automotive and EV market.
At present, four out of every 10 new vehicles sold in China are powered by electricity.
Twenty years ago, international carmakers held 80 per cent of the market, according to the China Association of Automobile Manufacturers, as they reaped the benefits of the rising affluence among local consumers.
Their combined share fell to 48 per cent last year, as EVs built by domestic companies increasingly replaced petrol vehicles on the mainland’s roads.
Chinese carmakers have a huge cost advantage over overseas competitors in building EVs, buoyed by their complete supply chains and strong manufacturing heft, Dyer said.
A Chinese-made EV costs 35 per cent less to produce than a similar foreign counterpart, he added.
China’s EV sector is expected to see sales growth of 20 per cent this year, compared with 37 per cent in 2023, according to a forecast by Fitch Ratings in November.
But the mainland will maintain its status as the key growth driver for the global EV industry, Dyer said.
“Time is against international marques,” said Chen Jinzhu, CEO of consultancy Shanghai Mingliang Auto Service. “Even if they mobilise all of their resources to develop and build EVs for Chinese customers, it will take them at least two years to narrow the gap in terms of production efficiency and vehicle performance.”
High tariffs slapped on Chinese-made EVs by the US and the European Union will have a minimal impact on mainland players’ go-global strategy, because their cars could still be attractive to global customers even after those penalties, Dyer said.
The company, which established its first joint venture in mainland China in 1984, sold 3.2 million cars – the vast majority petrol-powered – to Chinese drivers last year, up 1.6 per cent from 2022.
Shenzhen-based BYD, which stopped making petrol-powered cars in 2022, almost matched that total, selling nearly 3 million battery-powered and hybrid EVs to Chinese buyers last year.
LANZHOU, July 6 (Xinhua) — More than 2,200 domestic and foreign enterprises are seeking business opportunities at the 30th China Lanzhou Investment and Trade Fair, which opened on Saturday in Lanzhou, capital of northwest China’s Gansu Province.
Representatives from the governments, embassies, consulates, business councils and companies of 23 countries, including Belarus, Uzbekistan and Uruguay, have been invited to attend the five-day event ending on Wednesday.
So far, a total of 1,325 investment and cooperation deals have been reached, covering areas such as digital information, new energy, equipment manufacturing, the petrochemical industry, and specialty agricultural products, with the total value close to 604 billion yuan (about 84.7 billion U.S. dollars).
The fair will also feature business promotions and exchange activities. More than 40,000 visitors are expected to attend.
First held in 1993, the fair serves as a window for the opening of northwestern China and has become a major event for Belt and Road economic and trade cooperation.
Last year it attracted more than 1,600 enterprises from home and abroad. A total of 1,172 contracts were inked during the five-day fair. ■
(Bloomberg) — Chinese developers are facing headwinds offloading new home inventory, despite a rebound in second-hand transactions in mega cities.
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In Shenzhen, new home sales fell 4% in June compared with last year, even after the government relaxed measures to stimulate the market. Midland Realty said developer inventory remains high, adding to the polarizing results between new and existing apartment sales. In the capital of Beijing, new property sales underperformed existing ones in June, said Centaline Group analyst Zhang Dawei.
Buyers remain cautious toward new apartments in China’s so-called first-tier cities, as the units are often offered at relative higher prices or located in suburban districts. That’s causing a divergence in recovery, underscoring the challenges for cash-strapped developers, many of which are counting on a sales revival to relieve their liquidity pressure.
“Homebuyers prefer cheaper used dwellings in urban zones with plenty of shops, schools and hospitals nearby,” said Zhang Hongwei, founder of Jingjian Consulting, which advises real estate companies. New property sales may weaken further in late July, he added.
The weakness in new-home sales is hindering China’s economic recovery, which is expected to undershoot the government’s 5% growth target for this year, Bloomberg Economics estimated last week. While the slump in sales from China’s 100 biggest developers narrowed last month, June transactions remained at a low level, China Real Estate Information Corp. said.
“Dim outlooks for home prices and employment remain barriers to a sustainable, broad-based recovery,” Bloomberg Intelligence analysts led by Kristy Hung wrote in a Tuesday note.
Economists are predicting that the central government will push out new measures to shore up the market, after top policymakers urged officials to be more “creative and bold” in rolling out supportive measures. That’s in addition to China unleashing 300 billion ($41 billion) of central bank funding to help government-backed firms buy excess inventory from real estate companies.
The recovery in second-hand homes however is providing some relief for owners seeking to cash out.
In June, the number of existing residential properties sold in Shenzhen soared to the highest monthly level in more than three years, beating expectations, according to Midland Realty. Similarly, they jumped to the highest in almost three years in Shanghai, and the most in 15 months in Beijing, according to official and Centaline data.
In Shanghai, about 70% of used properties sold are urban, rundown residences below 4.5 million yuan, according to Jingjian’s Zhang.
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Themis Qi and Reuters
China overall unemployment rate remained unchanged at 5 percent in May, as retail sales beat market estimates in a bit of good news for the economy.
However, the mainland’s property investment slump worsened.
The jobless rate was the same compared with April but down by 0.2 percentage points from a year ago, data from the National Bureau of Statistics showed.
For the first five months of the year, the unemployed population accounted for 5.1 percent on average of the total labor force, down by 0.3 percentage points from a year ago.
Meanwhile, retail sales in May rose 3.7 percent year-on-year last month, hitting a three-month high due to May Day and Dragon Boat Festival holidays during the month.
The growth in May was also faster than April’s 2.3 percent growth, beating market estimates.
NBS spokesperson Liu Aihua said China’s increasingly strong economic recovery is helping stabilize employment.
However, Liu cautioned that there are still several challenges as the labor market is huge and faces structural conflicts.
Other May data revealed weaker-than-expected industrial output and a weakening real estate market.
Factory output in May grew only 5.6 percent, dragging industrial output expansion down to 6.2 percent for the first five months of the year.
And property investment fell 10.1 percent in the first five months of 2024 from a year earlier, after dropping 9.8 percent in January-April, even as policymakers doubled down on efforts to support the ailing sector and shore up consumer confidence.
Also, the gross floor area of new projects that started construction contracted by 24.2 percent.
Property sales by floor area in January-May fell 20.3 percent from a year earlier, compared with a 20.2 percent slump in January-April while sales volume slid by 20.3 percent and by 27.9 percent.
Liu said that Beijing’s supportive policies still need time to be effective, after a historic 300 billion yuan (HK$322.9 billion) housing rescue plan was announced in late May.
She said that the decline in new home sales and new constructions has narrowed.
Commenting on the mixed data, ING economist Hugo Lin said there’s a higher possibility that the People’s Bank of China will cut rates in the coming months to support the economy, after the central bank held a key one-year rate unchanged yesterday.
Goldman Sachs also anticipates that the PBOC will cut the reserve requirement ratio by 25 basis points in the third quarter and the policy rate by 10 bps in the fourth quarter.
Investors claim that the central bank’s investment may not be sufficient. The implementation of policies in a number of cities that permit local governments to purchase surplus real estate from developers has moved slowly Image Courtesy AP
Despite intensified government attempts to support the industry, China’s house prices fell in May at the sharpest rate in nearly a decade due to an excess supply of houses on the market that depressed demand.
With the exception of housing that is subsidized, the cost of new residences decreased by 0.7% in 70 cities in April. According to data released on Monday by the National Bureau of Statistics (NBS), this decline was the steepest since October 2014. Existing property values decreased by 1%, marking the biggest decline since China began utilizing the present data collection technique in 2011.
The report is disheartening even though the government has made its most concerted effort to boost China’s housing market. The People’s Bank of China eliminated the minimum interest rate and lowered the down payment requirements to 15% for first-time homebuyers and 25% for second-home purchasers in May. A 300 billion yuan (£32.8 billion) facility was also established to assist regional state-owned businesses in purchasing homes at fair prices.
Investors claim that the central bank’s investment may not be sufficient. The implementation of policies in a number of cities that permit local governments to purchase surplus real estate from developers has moved slowly. People are less likely to invest because of the overabundance of homes on the market, which has lowered prices.
Investors claim that the central bank’s investment may not be sufficient. The implementation of policies in a number of cities that permit local governments to purchase surplus real estate from developers has moved slowly. People are less likely to invest because of the overabundance of homes on the market, which has lowered prices.
Additionally, prices decreased from a year ago. Reuters reports a 3.9% decline in new home prices.
At a media briefing on Monday, Liu Aihua, an NBS spokesperson, stated that the property market was going through adjustment and that it would take some time for policy measures to take effect.
With the market collapsing in 2020 due to the pandemic and an abrupt regulatory crackdown on heavily indebted lenders, policymakers have been trying to control the excess supply of houses while also providing help to developers facing mounting debt.
China’s failing real estate market is a reflection of broader economic difficulties. May’s industrial output growth was 5.6%, down from 6.7% in the same month last year. Economists had projected growth of roughly 6%.
In May, however, retail sales exceeded forecasts, increasing 3.7%. Compared to analyst growth projections of 3%, this was better.
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