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Why China's Property Sector Could Be Worthless, One Day
Photo Credit: Forbes Business

Why China's Property Sector Could Be Worthless, One Day

Jan 1 2014, 7:24pm CST | by

Some believe that China’s property sector is a bubble ready to be burst, citing scores of empty construction structures built for the sake of stimulating economic growth. Others believe that there...

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29 weeks ago

Why China's Property Sector Could Be Worthless, One Day

Jan 1 2014, 7:24pm CST | by

Some believe that China’s property sector is a bubble ready to be burst, citing scores of empty construction structures built for the sake of stimulating economic growth. Others believe that there is no bubble in China’s property sector, saying the country’s huge population and large flow of people from the countryside to cities will help demand catch up with supply.

Irrespective of which side one is on in this debate, China’s property sector may be worthless one day, if pollution continues at the same rate. Younger generations will opt to leave the country rather than move into polluted cities, depressing demand for real estate, and aggravating the problem of excess capacity in the sector.

China is the world’s top  producer of carbon dioxide, the chief greenhouse gas- a status that isn’t expected to change any time soon, as China’s government is part of the problem rather than part of the solution.

To be fair, China’s pollution is, in part, the result of the country’s rapid industrialization, a problem every industrialized country faced at one point or another. This means that the problem could go away as the country eventually transitions from an industrial to a service-based economy.

In the meantime, the Chinese government has placed the fight against pollution on the top of its agenda. “Energy  conservation  and environmental protection is a long-term strategy as well as an urgent practical option for China, ” stated China’s Vice-Premier Li Keqiang at the climate change summit in DurbanSouth Africa.

Indeed, China has developed a comprehensive environmental policy similar to that of the world’s second producer of carbon dioxide, the US; and it was the host of last UN’s conference on climate change.

The trouble is, however, that in contrast to the US and other advanced economies– where the polluters are private companies — in China, by and large the polluters are government companies—State Owned Enterprises (SOEs) and Town Village Enterprises (TVEs).

This means that the government, as owner and manager of these enterprises, is part of the problem it is called upon to address.

Furthermore, SOEs and TVEs are “units” rather than true enterprises. They provide employment for unionized workers and financial support for local schools and hospitals. This makes any government action against these corporations too costly for the communities they serve — and eventually non-enforceable.

Compounding the situation is the country’s one party system, which places all three constitutional powers in the hands of the same group, turning the government into both the regulator and the regulated. This unusual and conflicting role makes it very unlikely for a polluter to be prosecuted, be afforded a just and fair trial, or be sanctioned.

The bottom line: Bubble or no bubble, China’s property sector is at risk of turning worthless, if pollution continues at the current rates — and if young people opt to leave the country rather than to live in polluted cities.

Source: Forbes Business

 
Update
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat wa ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was b ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the De ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minis ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the southern states last mon ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 million in ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Mustapa Mohamed ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocation of RM20 millio ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Scheme 20 ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

7 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Skyway (Kidex) today. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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