Writing Blog

September 8, 2010

The Chinese Housing Bubble

Filed under: Finance — Rafael Minuesa @ 2:41 PM
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This is one of a series of articles I posted at the Mortgage Girl Blog.
You can view the original version at: 

chinese skyscrappersAn estimated 64 million apartments and houses sit empty in China today. That number is almost two times the population of Canada, but if we consider that each of those properties is the average dwelling for a typical Chinese family of three (parents and one child), all those vacant apartments and houses could accommodate almost 200 million people, which is the equivalent of two-thirds of all U.S. souls or more than 15% of China’s 1.3 billion population.

Escalating prices in China have transformed the country within two decades from a landscape of modest houses and huts next to vegetable fields to modern houses and skyscrapers scattered all over the country, specially in major urban centers like Shanghai and Beijing. Statistics from Goldman Sachs showed that over the past six years, housing price hikes have outpaced income rises by 30 percentage points in Shanghai and 80 percentage points in Beijing. In Beijing, the housing price of per square meter is as much as a resident’s seven months’ salary on average.

The Chinese property market has set new record highs after the government unleashed $1.3 trillion in new bank lending to counter the global recession. The nation’s real estate and stock markets are a “bubble” that will burst when inflation accelerates in 2011, as described by former Morgan Stanley chief Asian economist Andy Xie:

“China’s asset markets are a Ponzi scheme,” said Xie, now a Shanghai-based independent economist. “Property is heading for one huge bust that will take a year and a half to unfold.”

Premier Wen Jiabao said late last year that property speculation must be suppressed, and the government proceeded to reinstate a sales tax on homes sold within five years of purchase after reducing the period to two years in January 2009. These new regulations are meant to address the escalating price trend, although many analysts doubt they will have any real effect. Take for example Gloria Gu, who paid $483,000 in mid-2009 for an apartment near Shanghai’s financial district so her 3-year-old son could attend one of the city’s best kindergartens. Six months later, a similar place in her building sold for $615,000.

Borrowers are maxing out all available lines of credit, fearing that they might miss out on this extraordinary opportunity. Luo Yan and her husband took out the maximum amount of money possible, a story reported by the China Daily: “Thirty-year-old Luo Yan and her husband raced to complete the purchase of a three-bedroom apartment in Shanghai with the help of an 800,000 yuan ($117,000) mortgage. The amount they borrowed was the maximum they qualified for.” As Luo put it, “I am afraid that if we don’t do something now, we will certainly miss the boat.”

But there are also demographic factors. Due to the shortage of women, men in China feel they need to buy a home in order to get married. And the harsh truth is that it certainly makes them look like better candidates.

The government is aware of the situation and is ostensibly trying hard to prevent a financial bubble, warning banks to increase their deposits and capital on hand in a bid to control lending. They’re also putting restrictions on property purchases. Any resident trying to purchase a second home in China will require a minimum 40% down payment, which is clearly aimed at preventing a situation similar to that of the U.S. in recent years.
On July it quashed rumors that real estate curbs will be loosened and that restrictions on banks granting mortgages for third homes could soon be relaxed. Rumors were swirling with China Daily headlines like, “Third-home mortgages back in some big cities.” The paper reported that, “After banks in Shanghai, Nanjing and Hangzhou started to give out loans, their counterparts in Beijing and Shenzhen also reopened the business to lend money to those who wish to buy a third home.” But the Chinese banking regulator insists there was never any break in the policy restricting the number of home purchases allowed, reporting that a statement from authorities said, “Commercial banks need to carry out current policies strictly.” The Ministry of Housing and Urban-Rural Development also reiterated that it will maintain curbs on speculative purchases and increase market supply, countering all those media reports.
Will the Chinese government succeed in curtailing this worrisome trend that has brought down to its knees the economies of other Western countries? Hard to tell yet. The Chinese have pulled off some extraordinary feats and have succeeded in some economic areas where many others have failed. If they do manage to pull through this one, the West would certainly have lots to gain by being willing to learn a lesson or two from the East.

Read more:

Also from the Wall Street Journal:
China’s Looming Real Estate Bubble

November 17, 2009

Songjiang Hotel

Filed under: Environment,LifeStyle,Travel — Rafael Minuesa @ 1:34 AM
Tags: , , , , , ,
This is one of a series of articles I posted for Guy.com.
You can view the original version at:
* http://www.guy.com/2009/11/12/songjiang-hotel-a-paradise-set-into-an-abandoned-quarry/

Songjiang Hotel

What can you do with an old quarry when it stops being productive, apart from being left with a huge hole in the earth that can’t be used for anything?.

That was actually the dilemma for the owners of that wasted real estate in Sonjiang, China, near Shanghai, who decided to set up a contest for ideas to develop some useful compound inside the abandoned quarry. The Songjiang district is a natural beauty spot close to Shanghai and an increasingly popular weekend and holiday destination for Shanghai residents and other visitors.

Atkins Architects came up with a brilliant idea complemented with a wonderful visual presentation shown here and won the contest to design a 5-star, 400-bed luxury resort hotel on those premises. Bristol-based Martin Jochman, who led the design team, said,

“We drew our inspiration from the quarry setting itself, adopting the image of a green hill cascading down the natural rock face as a series of terraced landscaped hanging gardens. In the center, we have created a transparent glass ‘waterfall’ from a central vertical circulation atrium connecting the quarry base with the ground level. This replicates the natural waterfalls on the existing quarry face.”

By having the quarry partially filled with water, the lower part of the hotel will be underwater, offering spectacular aquarium views to guests in the restaurants, fitness areas, and lower story guestrooms.  The hill will be transformed in roof-gardens with terraces with a waterfall at the center and at the top of the hotel, rising above the quarry, guests can enjoy an extreme sports center with activities like rock climbing and bungee jumping.

Water World

And to top it off, the hotel will be totally eco-friendly.  Not only by the fact that is being built in an abandoned quarry, but the Songjiang Hotel will feature green roofing, natural lighting, and geothermal energy, making sustainability an important feature in the design of the Hotel.

August 8, 2008

Project 119

This is one of a series of articles I posted for Gambling News.
You can view the original version at:
* http://newsgamblingnews.blogspot.com/2008/08/project-119.html

During the XXVII Olympics in Sydney, the Chinese team won only one gold in traditionally Western dominated sports such as athletics, track and field, and water events such as swimming, canoeing and sailing.

The Chinese State General Sports Bureau introduced shortly thereafter “Project 199”, aimed at getting more medals in those sports, which combined account for 119 (updated to 122 in Beijing) of the 302 gold medals available . During the following 2004 Athens Olympics, the Chinese team won four gold medals on sports covered by “Project 119”.

The government has also pumped money into other not-so-popular sports such as archery and shooting, in an effort to overtake the USA (Russia doesn’t seem to have much of a chance these days) as the country that will win the most Gold Medals in the 2008 Olympic Games in Beijing.

On a personal level, large cash bonuses, access to university and generous sponsorship deals await those athletes that make it to the podium.

Everyone is betting nowadays on who will win the win the most Gold Medals in Beijing.
The Wall Street Journal, for example, is predicting that the U.S. will likely continue its Olympic winning streak, both in golds (47 to 38 over second-place China) and total medals (110 to 93, with China second and Russia third on both counts).

PriceWaterhouseCoopers has concluded that China will win 88 medals overall, compared with 87 for the US, a close call that nonetheless would make Chinese very happy due to their belief on number 8 being a lucky number. It’s not a coincidence that these Games have started on the 8th day of the 8th month of the 8th year.

In any case, there’s no doubt that these Olympic Games are going to have an added spirit of competition not seen since the Cold War period, when the Soviet Union topped the medals board on eight occasions.

Darryl Seibel, spokesman for the US Olympic Committee, recently said that:

“We expect this to be one of the most competitive Olympics in recent history. That is down to a combination of China’s investment in its Olympic programme, Russia’s decision to do the same and the policy of some nations like Britain, which are targeting specific medals in sports that are important to them. China has to be considered the favorite. Every host nation receives a huge boost.”

Ant that’s the key to predict who will win the win the most Gold Medals in the 2008 Olympic Games, a variable that many forecasters seem to have failed to include in their formulas.
Remember Australia, Spain or Korea? Those countries received a lot more medals that they are used to when hosting the Games.

My prediction on who will win the win the most Gold Medals in Beijing? China, of course.
And all bookmakers seem to agree.


January 23, 2008

BioGas Digesters

Filed under: Environment,Gadgets — Rafael Minuesa @ 1:35 AM
Tags: , , , , ,
This is one of a series of articles I posted for the Green Gadget Inspector’s Blog.
You can view the original version at:
* http://gadgetgreeninspector.blogspot.com/2008/01/biogas-digesters.html

Biogas is an incredibly simple technology. It works by turning human or animal waste accumulated into closed chambers into gas that is produced by absence of oxygen, a mixture of mainly methane with some carbon dioxide. This resulting gas can then be used for cooking and lighting or even for generating electrical power, and the solid residue can be used as organic compost.

The power of biogas has been known to Mankind as far back as 10 BC, when it was used in Assyria to heat bath water.
Marco Polo did mention the use of covered sewage tanks in China that are believed to date back to 2,000-3,000 years ago in ancient China.

China is also one of countries in the world that have adopted modern biogas technology earlier in its history. Since the end of the nineteenth century, simple biogas digesters had appeared in the coastal areas of southern China.
Half a century later, in 1958, a campaign was launched in Wuchang to exploit the multiple functions of biogas production, which simultaneously solved the problems of the disposal of manure and improvement of hygiene.
Between the late 1970s and early 1980s when the Chinese government fomented biogas production not only as a way of providing energy, but also as environmental protection and improvement of hygiene, as well as modernization of agriculture. Some 6 million digesters were set up in China at that time, attracting many from the developing countries to learn from it.

The “China dome” digester became the standard construction to the present day, specially for small-scale domestic use.

diagram of biogas production
A biogas tank can produce about 400 cubic meters of biogas. Just 1 cubic metre of biogas can meet the daily energy needs of rural households, mainly for cooking three meals.

Today, farmers in the Chinese province of Guangxi Province are the flagship of Chinese biogas technology. The central government pays half the price of building a $260 biogas “digester” in their backyards. It’s an example of what the Chinese government, in its 11th five-year economic plan, refers to as a new socialist village – environmentally sustainable, socially harmonious and prosperous.

The vast majority of farmers who live in Guangxi don’t earn enough to pay for fuel or electricity. That is if they’re lucky enough to be connected to the power grid in the first place.
All that has changed now and Guanxi is becoming a prosperous place, as well as restoring its natural surroundings. No more cutting wood for cooking and the precious time spent looking for and cutting down trees is now spent in business activities, many of them environmentally friendly.

The Chinese government has launched the “Environment-friendly Homeland” project to develop renewable energy, especially biogas, that aims at having 15 per cent of the country’s energy consumption to come from renewable sources like biogas by 2020.
In Guangxi, there are now 3 million biogas tanks in operation, according to the government, making the province the largest producer of biogas in China if not the world. As each one routes animal and human waste into biogas digesters, they not only prevent vast amounts of methane from escaping into the atmosphere but an estimated 8 million tons of standard coal and 13 million tons of firewood from being burned each year, according to IFAD, the International Fund for Agricultural Development.

More Info:

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