Why Manhattan is cheap for Chinese investors - Wei Gu

+Wei Gu 

WSJ's wealth editor Wei Gu discusses why Chinese investors massively invest in the US and Europe, and why Manhattan looks cheap compared to Shanghai and Beijing, with Michael Klibaner, China head of Jones Lang LaSalle.


Wei Gu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.  

China Weekly Hangout

How successful can president Xi Jinping be in rooting out corruption, the +China Weekly Hangout is going to ask on Thursday 31 October. How committed is the Xi/Li team to real change? You can read our announcement here, or register for the event here. 

Is China going to collapse under the burden of its debts? Yes, if they do not play their cards rights, tells Sara Hsu, leading expert on shadow banking in China at the China Weekly Hangout on August 30. Questions are asked by +Fons Tuinstra of the China Speakers Bureau.

 

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Volatile trends in China's real estate - Wei Gu

Wei Gu

Real estate prices went up 5.7% in May, while the rest of the economy including shares is dropping. WSJ's wealth editor Wei Gu discusses real estate trends with Michael Klibaner of Jones Lang LaSalle. Project developers and buyers anticipate government intentions, concludes Wei Gu. "Damned if you do, damned if you don't."

Wei Gu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.



China Weekly Hangout

The upcoming cyber war is the subject of next week's +China Weekly Hangout . The revelations by Edward Snowden showed that the US is preparing a military shake-out, as both China, Russia and other countries are building up their cyber war capacities too. Joining us are former security consultant +Mathew Hoover and media en communication lecturer +Paul Fox of the Hong Kong University. Moderation by +Fons Tuinstra, president of the China Speakers Bureau.
You can read our announcement here, or register right away for participation at our event page.

Negotiating trade agreements the China Weekly Hangout discussed on June 6. A discussion on the way the EU and the US are dealing (of fail to deal) with China, with negotiation expert +Andrew Hupert from New York, Swiss lawyer +Nathan KAISER from Taipei and political analyst +Steve Barru  from Denver, Colorado. Moderated by Fons Tuinstra of the China Speakers Bureau.

New: second homes for Chinese - Wei Gu

Wei Gu

An emerging market for second homes, for holiday or retirement, is developing among rich Chinese, tells WSJ wealth editor Wei Gu. Zhuhai, Taiwan and Haikou are doing well, but the move goes also into English speaking countries like the US, UK, Canada, Australia.

Wei Gu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.



China Weekly Hangout

When Chinese buy a second house, they want access to good health care and schools for their children, tells +Wei Gu. Education is important, but does it pay off as an investment? The +China Weekly Hangout discussed in February whether education is a goldmine, or a black hole with +Andrew Hupert, formerly working for the NYU Shanghai campus and +Paul Fox, lecturer at the HKU School of Professional and Continuing Education. Moderation +Fons Tuinstra, president of the +China Speakers Bureau.



The China Weekly Hangout is holding on May 9 an open office, where you can discuss current affairs in China or suggest subjects for hangouts later this year. You can read our announcement here, or register for the hangout here.

Update:

A few potential subjects have already emerged ahead of the upcoming hangout:

1. What can you earn in China, focused on business executive

2. The Chinese influence on the Australian/New Zealand dairy industry

3. Chinese tourism in New Zealand and Australia.

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Housing, solid as a bank- Shaun Rein

Shaun Rein

Stories about the collapsing real estate market in China might often miss the point. Housing is often the only place for increasingly wealthy Chinese to invest their money, tells business analyst Shaun Rein in CNN.

CNN:

While the Western world has plenty of available options for investors to park their money, housing is considered one of the few relatively safe investments to most Chinese. As incomes rise and as more of the country's population is expected to move into urban areas  (in January, China's urban population surpassed that of its rural areas for the first time in the country's history), demand for housing is expected to remain robust, says Shaun Rein, managing director of China Market Research Group, a Shanghai-based market research firm. 

The demand, however, isn't just coming from the growing middle class but also the very rich. With tighter lending rules placed on Chinese buyers at home, many investors have gone abroad. Rein points to the formation of property bubbles in other parts of the world, as Chinese investors buy up homes in places such as Canada and California.

More about housing in China in CNN

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Shaun Rein is publishing soon his book The End of Cheap China: Economic and Cultural Trends that will Disrupt the World. More on Shaun Rein and his book at Storify.  

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Pudong proves real-estate pundits wrong - Sam Crispin

Sam Crispin

Ten years ago real-estate expert Sam Crispin was seen by his peers as a contrarian, with a bullish report on the Shanghai mega district Pudong. Today Pudong has become a convincing success of what was erstwhile seen as state-engineered lunacy, Sam Crispin tells in the Wall Street Journal.

The Wall Street Journal:

Sam Crispin's bullish reports on Pudong a decade ago made the property analyst a contrarian. 

Now, as director of China real estate at PricewaterhouseCoopers LLC, Mr. Crispin says growing talk about China's unoccupied "ghost cities" reminds him of the doubts many had about Pudong. "A lot of the commentary frankly was quite similar to the ideas that are being bandied about for the property market today," he says. "The reasoning is quite similar—who's going to occupy all those buildings?" 

Mr. Crispin argues that the lesson of Pudong is how badly Chinese demand was underestimated. Real-estate development, he says, tends to produce "sensationalist" viewpoints. 

Within weeks of Mr. Deng's 1990 endorsement, the government unveiled a blueprint and earmarked billions of dollars to pay for it.

More in The Wall Street Journal.

Sam Crispin is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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A bumpy road ahead for real estate - Shaun Rein

Shaun Rein

Two years ago business analyst Shaun Rein set famous short seller Jim Chanos straight when he said China's real estate was worse than a thousand times worse than Dubai. Now Chanos has scaled down his prediction to 'a bumpy road', and this time Shaun Rein agrees, he writes in CNBC.

Shaun Rein:

However, there are far more serious problems emerging in the real estate sector, and in general in China’s overall economy, than two years ago. 

There has been a slowdown in manufacturing and housing prices. A closer look at the economy  actually shows that Chanos is correct this time – there is a serious speed bump in China’s economic future but that a soft landing is the likely scenario. 

Developers have been cutting prices on new homes because they have outstanding loans they need to pay. But prices for second hand units owned by individual investors have barely budged. Why? Homeowners are not panicking and their mortgages, if they have any, are not underwater. 

In interviews with dozens of homeowners my firm conducted in the past several weeks, the majority expected a 10 percent plus price drop, but only a minority said they would sell if prices dropped that much. Less than 5 percent said they were rushed to sell. Over 90 percent said they would hold on to the units no matter how long it took prices to rebound.

More in CNBC

More on Shaun Rein and his upcoming book "The End of Cheap China" in Storify

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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The property industry is booming like crazy - Bill Dodson

Bill Dodson

Many media report China's property industry is collapsing and heading for a rough landing. That is not what business analyst Bill Dodson sees on the ground. On his weblog he reports how construction actually went crazy over the past month.

Bill Dodson:

The past month here on the ground in the Yangtze River Delta has seen activity that runs counter to macroeconomic measures in the property development sector. By all accounts, construction sites are supposed to be grinding to a halt and new projects deferred indefinitely. Instead, what I and Western friends are seeing is an acceleration of construction activity. 

Where for the last two years we’ve only had to bear incessant noise, dirt and dust from sunrise to sunset, now we are hearing construction activity 24/7 the past three weeks (whenever I became conscious in the shift of pace of construction). And new development projects are continuing to sprout up around us in a region that theoretically is economically mature. It seems a near-impossibility to escape the din of construction machines punching the ground or stamping steel or crunching concrete... 

We’re not entirely sure of why construction activity has accelerated recently; however, we’re sure it has to do as much with uncertainty about what the government will do next with the property sector as much as uncertainty about the Chinese economy in general. Some of the questions likely at the forefront of the minds of developers include: will the government end bank loans to developers completely at the end of the year? will they end all construction projects for and indefinite period of time? and will they be able to find buyers for their residential projects and renters for their office property? 

One thing, however, is certain: the accelerated pace of construction does not fill me with any greater sense of security in the integrity of the finished structures.

More on Bill Dodson's weblog.

More links for Bill Dodson at Storify

Bill Dodson is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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China's rich prefer homes over stocks - Shaun Rein

Poor accounting standards in China make Chinese investors very weary of stocks in any Chinese company, business analyst Shaun Rein discovered in his research. In CNBC he explains why they prefer real estate, even though the government tries to cool down the industry.

As we sat in his enormous living room, Zhou continued to tell me why he preferred to buy homes rather than put money into the stock market, "There are no annual property taxes, so I just buy homes and leave them empty to resell at some point. At the end of the day, if things go wrong, you still have tangible assets if you buy property." Many Chinese investors hold similar views: they deem real estate as the safest investment in a country ravaged by accounting fraud. After all, even famed investors like billionaire John Paulson lost USD 340 million according to Fortune Magazineinvesting in companies hit by accounting scandals like Sino-Forest. Zhou`s investment strategies indicate the Chinese real estate sector is being driven as much by a belief in the sector as a fear of other sectors. Zhou explained why he shies from stocks, "Chinese stocks are political plays as much as business ones. State-owned oil giants Petrochina or Sinopec might do poorly because the government forces them to cap prices. Or Baidu,  Netease or Sina might get hit by Internet regulation campaigns. You need to analyze political winds as well as business ones.  It is simpler to buy homes.

More in CNBC Shaun Rein is a speaker in the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

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On phantom facts and China bears - Shaun Rein

Shaun Rein

The China bears should get their facts straight, writes business analyst Shaun Rein in CNBC. He takes aim at economist Nouriel Roubini and MIT professor Huang Yasheng.

Shaun Rein's arguments against Huang Yasheng:

Huang ..., in a July 6, 2011 blog post in the New York Times says, “Beijing and Shanghai have some of the lowest population densities among the world’s big metropolises.” From this Huang concludes that Shanghai’s infrastructure buildup is not needed.

In fact, Shanghai has the highest density of urban populations in the world at official population numbers, which does even include millions of unregistered workers in the city. It is not uncommon for Shanghai families of three or more to live in less than an area of 200 square feet per person, while the average home in America is 10 times that size.

Most workers in the restaurant and construction industries live in sub-human dormitories, where eight people or more share a room. Infrastructure spending is badly needed to relieve living congestion by allowing for cheaper land sales farther from the city center just to get basic living space for people.

Huang also underestimates the middle class’s purchasing power, but he does bring up important issues. Namely, China needs to avoid falling into the middle-income trap that many developing countries do when per capita GDP hits $6,000 a year and stagnate. If it does not, China will be more like a Mexico, with huge income disparity between the rich and poor, rather than the world’s leading economic superpower.

More in CNCB

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

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Roubini's phantom facts on China - Shaun Rein

Nouriel Roubini via Wikipedia

Famous economist Nouriel Roubini took a fast train from Shanghai to Hangzhou and saw it was almost empty. Shaun Rein explains him in Forbes why one train ride is not enough to predict a bubble in China that will pop in 2013.

Shaun Rein:

He has been quoted by Reuters as saying, "'I was recently in Shanghai and I took their high-speed train to Hangzhou,' referring to the new Maglev line that has cut traveling time between the two cities from four hours to less than one. 'The brand new high-speed train is half-empty and the brand new station is three-quarters empty. Parallel to that train line, there is also a new highway that looked three-quarters empty. Next to the train station is also the new local airport of Shanghai and you can fly to Hangzhou,' he said. 'There is no rationale for a country at that level of economic development to have not just duplication but triplication of those infrastructure projects.'"...

However, most of Roubini's conclusions are based on phantom facts, as is his evidence for why China will have economic problems. There is no direct flight between Shanghai and Hangzhou, nor is there a maglev train system connecting the two cities. Shanghai has two, not three, airports, and the last new one opened a dozen years ago, in 1999. Both the Hongqiao and Pudong airports have been adding runways and terminals because the airports are too crowded, contrary to Roubini's suggestions of emptiness. Pudong's passenger and cargo traffic grew 27% in 2010, to 40.6 million passengers. It is now the third busiest airport in the world in terms of freight traffic, with 3,227,914 metric tons handled every year...

China is not immune to economic cycles. It will definitely go through rough patches in the coming years, and housing prices may in fact fall. Despite a relatively efficient bureaucracy, no government can stave off market forces forever, and problems are starting to arise. However, the headwinds are coming from raging inflation, a shrinking labor pool and a weak education system, not from over-construction in infrastructure spending, as Roubini argues. It is important that analysts use real, not phantom, data points to draw conclusions about China.

More in Forbes.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? D

Shaun Rein

o get in touch.

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Urbanization needs building spree - Andrew Leung

 Andrew Leung

China keeps on building like crazy, and there is good reason for that, Andrew Leung explains in his weblog. To deal with the rapid and unprecedented urbanization, cities need to expand at an feverish speed.

According to a recent McKinsey research report, China will be adding 350 million more urbanites by 2025, more than the existing population of the United States. The total urban population will reach 1 billion by 2030. There will be 221 cities with a population over one million, compared with 35 such cites in Europe today. In the process, 5 million square meters of roads will have been paved, 170 mass transit systems built, 40 billion square meters of floor space created in 5 million buildings, of which 50,000 will be skyscrapers, equivalent to 10 New York Cities (Preparing for China’s Urban Billion, McKinsey Global Institute, March 2009)....

As for the housing bubble, private mortgage lending in China is extremely conservative. You would be extremely lucky if you could manage to get a mortgage loan approaching 70%. Moreover, China’s banks are much better capitalized in comparison with their Western counterparts and most are supported by the state’s massive currency reserve.

China is decisively switching course with the latest 12^th Five Year Plan (2011-15), channeling the country towards higher-quality, if slower, growth, with more domestic consumption and a more balanced, equitable, innovative and sustainable economy.

More in Andrew Leung's weblog.

Andrew Leung is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

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Why China keeps on building -Shaun Rein

Shaun Rein

Shaun Rein takes on China-bull James Chanos in CNBC and explains why China keeps on investing in infrastructure and why he is underestimating the current growth of wages.

A fragment of his arguments:

It is common for families of 3-5 people to live in 350 square foot homes; the average house in America is 2,330 square feet according to the National Association of Home Builders. Many workers live 8 people to a room. Workers are moving to urban areas in search of better pay. This year, for the first time, more than 50 percent of the country lives in urban areas, up from 30 percent just a decade ago. As the country continues to urbanize and incomes rise, people need more comfortable living conditions.

Chanos also makes the mistake of underestimating rising incomes. Per capita GDP more than tripled to $3,400 at the end of 2010 from $949 in 2000. The trend is continuing as foreign direct investment (FDI) is rising 25 percent a year, causing a fight for both white collar talent and manufacturing jobs.

Factory salaries at companies like Toyota [TM  79.54   -0.42  (-0.53%)   ], Foxconn are rising 20 percent year on year.  The number of US dollar millionaires has risen to nearly 1 million, when just dozens had that wealth two decades ago. In other words, rising incomes and urbanization are creating demand for empty units.

More in CNBC.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

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No property bubble is bursting - Shaun Rein

Image via Wikipedia

China's economy is not under threat of a bursting property bubble, says Shaun Rein in CNBC. Property is being sold to people who can afford those assets, and can even stand a severe drop in value, unlike home owners in the US.

What has happened in the 8 months ...? Housing prices have risen 30 percent while sales volumes have dropped 70 percent. In other words, people buying homes can afford them. There is no panic selling like in the US or Dubai because rules in place for years have prevented the kind of speculation that was rampant in America, where people bought multiple homes with zero down.
Restrictions have actually gotten stricter and have kept buyers on the sidelines. In Shanghai, third home purchases are no longer allowed, and non-Beijing residents cannot easily buy homes in the capital now. There are reports of an annual property tax being implemented throughout the country.

Shaun Rein by Fantake via Flickr

Even if prices drop 20 percent (as they might) that won't cause the panic that hit the US because mortgages won’t be underwater. Loans were not sliced up and packaged to be sold off as CDOs in a massive exercise in leveraging.

More in CNBC.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

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Property remains a major wealth creator - Rupert Hoogewerf

Rupert Hoogewerf

Despite government measures to curb housing speculation, property kept on creating wealth for China's millionaires, says Rupert Hoogewerf or Hurun in the Shanghai Daily, as he publishes his latest report on the country's rich. One in 1,400 Chinese owns over 10 million RMB (1.5 million US dollars) in assets.

"There was speculation on the growth enterprise market but generally the stock markets in both Shanghai and Hong Kong closed almost unchanged at the end of 2010 from a year earlier," he said.
China's gross domestic product rose 10.3 percent in 2010 and new home prices in 70 cities were up 13.7 percent on average from a year earlier, according to official figures. A report by Knight Frank, a London-based property service company, said high-end property prices rose 21 percent in China last year.

"Owning two or three apartments in Shanghai would qualify an individual to be listed," Hoogewerf said.China's measures to curb property speculation may affect wealth, he said, but a small portion of the millionaires still predicted prices to rise 50 percent in the next three years.

Millionaires are more interested in investing in art works and old, traditional villas than the stock market.

More in the Shanghai Daily.

Rupert Hoogewerf is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

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Real estate tycoons see wealth drop - Rupert Hoogewerf

Hurun by Fantake via Flickr

Chinese women and retailers might we doing well on the Hurun rich list, compiled by Rupert Hoogewerf, but real estates tycoon saw their wealth shrink by 25 percent, writes the People's Daily and attributes this to successful government efforts to cool down the industry. The People's Daily is the national newspaper of China's communist party.

The Hurun Research Institute's China Property Rich List reported on Tuesday that the 50 richest Chinese property developers have 11.6 billion yuan ($1.7 billion) this year, on average. That's down from the record high of 15.5 billion in 2007, and 12 billion last year...
"The declining wealth shows that China's real estate market is undergoing a major adjustment (through the government's tightening and property price curbs)," it went on.
Wang Jianlin, 56, chairman of the Wanda Group, came in as the property king of kings with a personal worth of 28 billion yuan, at seventh place on the list.
Trailing him is Wu Yajun, 46, of Longfor Property, with a mere 27 billion yuan, making her China's property queen.
So, only two tycoons dealing only in property managed to make it to Hurun's top 10 this year, compared with six last year.
"This year is the first time in 10 years that a property tycoon has not made the top five," said Rupert Hoogewerf, founder and compiler of the Hurun Report

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Rupert Hoogewerf is a speaker at the China Speakers Bureau. Do you need him at your conference or meeting? Do get in touch.

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All is not rosy in China's real estate - Shaun Rein

Shaun Rein by Fantake via Flickr

Although an acknowledged bull when it comes to the real estate in China, Shaun Rein admits in his latest Forbes column the industry faces huge dangers too. Three to be precise:

First, there simply is not enough low- and middle-income housing, because developers build luxury apartments where the fattest margins are...

Second, building quality homes in the middle of nowhere does no good without cheap and convenient transportation, so China actually needs to invest more, not less, as many argue, in infrastructure. Many bears like Prof. Michael Pettis of Peking University fret that China is relying too heavily on infrastructure investment for its growth gains and is becoming like Japan in the 1990s. Such analysis surprisingly fails to take into account the differences between China's and Japan's spending and the fact that many Chinese are still heartbreakingly poor while Japan's quality of life is arguable higher than America's...

Also, while no economy is bubble-free

China's economy is still starting from a low point, and its market remains inefficient overall. More than 400 million people are shifting from agricultural lives to urban ones, and they will need more homes and a change in economic structuring. Companies are investing in all that... China has very real economic challenges to face. However, these challenges do not threaten a systemic collapse.

Much more at Forbes.

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Shaun Rein is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.

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Why the bears are wrong on China - Arthur Kroeber

Arthur Kroeber Fantake via Flickr

Negative sentiments are out on China in the West again, but economic analyst Arthur Kroeber explains in the Sinica Podcast, lead by Kaiser Kuo, why those bears are wrong. "China is still different."
Most of th€e bears are Western critics, who have no clue about China, Kroeber argues. It is a complex, closed system, where efficiency does not have the same value as in developed nations, he says. "The country still has enough tailwind, as it still have to move 400, 500 million people into the economy. When China can compare to any country, it would be Japan in the 1960.
Many more interesting observations in the Sinica Podcast.

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Bull Shaun Rein takes on bear Andy Xie at CNBC

Image by Getty Images via @daylife

Is there a bubble in China waiting to burst, for example in real estate? No, says Shaun Rein to Andy Xie in a debate at CNBC. Xie argued that real estate prices in China were overvalued 100 percent. Wrong says Rein.
"Our research show that 60 percent of the people in second and third tier cities are willing to buy property, up from 30 percent not so long ago," tell Shaun Rein. "There is a lot of liquidity in the market."



Introductory opening exchanges can be found here

Shaun Rein by Fantake via Flickr

Concluding remarks here.


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