Potential buyers inspect models of a real estate project in Qionghai, Hainan Province, on December 19. The property industry attracted 2.7 billion yuan in the first 11 months of this year, up 118.8 percent over the same period last year. (CFP)
Premier Wen Jiabao has reassured the nation’s homebuyers that the authorities will flex their muscles to rein in property speculation and offer more affordable housing, amid increasingly audible public discontent over soaring prices.
Wen’s remarks appear to be a rare reiteration of the government’s determination to contain hiking land prices, the second such announcement in a month following the Central Economic Work Conference, which put cooling the country’s property market top of the agenda.
The premier said Sunday the government would maintain order in the real estate market through taxes, interest rates and land policies, among other measures, as house prices in some cities have risen "too fast."
"We will crack down on illegal activities, including the hoarding of land, driving up housing prices and delaying sales for bigger profits," he told the Xinhua News Agency in an interview broadcast live online, in which he elaborated on the country’s current economic situation and gave a glimpse of his administration’s economic planning for 2010.
The State Council earlier this month pledged to increase the supply of smaller houses at medium-and-low prices, continue to support residential consumption for improved housing while curbing speculation. It was announced that homeowners must retain property for five years before reselling it, a change from the previous minimum of two years.
Seven months of average salary in Beijing could cover the price of a square meter of residential property in the city, according to official calculations. The housing-price hikes outpaced the growth in earnings by 30 percent in Shanghai and 80 percent in Beijing over the past six years, according to Goldman Sachs. The sharp increase in residential property prices has prompted fears that a property bubble was forming.
In the Webcast Sunday, Wen also pledged not to bow to pressure to allow the yuan to appreciate and lashed out at foreign trade protectionism.
Wen said he would continue to implement macroeconomic policies next year aimed at stimulating growth and fighting the global financial crisis, but would also rein in credit.
Some countries demanded the yuan’s appreciation while practicing trade protectionism against China, Wen said, adding this in essence was aimed at checking China’s development.
The value of the Chinese currency has been at the center of recent spats between Beijing and its trading partners, who claimed the yuan was kept low to boost exports.
As major currencies around the world devaluated, a stable Chinese currency is good for the international community, Wen said, claiming that Beijing’s efforts to maintain a stable yuan-dollar exchange rate during the 1998 Asian financial crisis helped the world.
In July 2005, China adopted a more controlled management of the yuan’s exchange-rate mechanism based on market supply and demand, adjusting it in relation to a basket of major foreign currencies, including the US dollar.
The yuan has since gained more than 21 percent against the greenback.
Wen also lambasted a series of World Trade Organization disputes filed against China this year, saying there were more such actions taken in 2009 than ever before and the amount of money involved was a record high.
By November, 19 countries and regions had launched 103 trade-related investigations against Chinese products, the Ministry of Commerce said.
From January to November, China’s imports and exports totaled $1.96 trillion, down 17.5 percent compared with the same period last year.
"They (some countries) create trade barriers in various ways, putting great pressure on Chinese export-led enterprises," Wen said.
Chinese exporters need to upgrade their export systems and improve product quality in order to keep their global market share amid an unfavorable trade climate, Wen said.
He said China would maintain its pro-active fiscal policy and moderately loose monetary policy in 2010 in the face of many uncertainties.
"To withdraw macroeconomic policies too early will likely ruin the efforts made before and reverse the economic development," Wen said.
Wen acknowledged the role of easy bank credit to ward off the global financial crisis, but said the scope of banking loans was too large and needed to be slowed.
"It would be good if our bank lending was more balanced, better structured and not on such a large scale," he said.
China’s economy grew by 8.9 percent in the third quarter after expanding by 7.9 per-cent in the second quarter and 6.1 percent in the first three months, the slowest pace in more than a decade.
Wen said it was too early to grade the country’s performance in tackling the crisis because it was far from over and much work was yet to be completed.
Last month, the World Bank upgraded its 2009 growth forecast for China to 8.4 per-cent on the back of the huge public spending of last year’s 4-trillion-yuan (586-billion-dollar) stimulus package, but said stronger domestic demand was needed to ensure a sustainable recovery.
Wen’s words
Inflation
Prevention of inflation will be an important task next year.
There is no sign of inflation at present ... but we should foresee such possibility and maintain consumer prices at a reasonable level, especially in a country with imbalanced income distribution and a widening income gap.？
Overcapacity The problem of overcapacity in China has no relation with the central governments 4-trillion-yuan (585.6 billion US dollars) stimulus package.
I can guarantee that the 1.18-trillion-yuan investment the central government planned for 2009-2010 has not been and will not be spent on any industrial project.
Household registration system
China will advance the reform of its decades-old household registration system in a steady manner,
Those policies, in a bid to ensure migrant workers have equal rights to city dwellers, are key to speeding up urbanization and boosting domestic consumption.
Private investment
The key is to expand market access for private enterprises and maintain continuity and the stability of relevant policies.
Private investment should be allowed to enter any sector that government policies and regulations do not forbid.
Emerging strategic industries The development plan for emerging strategic industries is under discussion and would be combined with the 12th Five-Year Plan.
Efforts should be made to develop the Internet, the green economy, the low-carbon economy, environmental-protection technology and biomedicine
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