Strict Purchasing Limits Curb Home Sales in Beijing

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Summary: On February 16, the Chinese government enacted a series of purchase limit policies driven at capping the formerly soaring home prices. However, it seems that this policy has turned out to be more harmful than beneficial for the Chinese real estate sector, as home sales in almost all areas are being drastically reduced. In the first quarter of this year, more than 20,700 homes have changed hands, which represents a decrease of nearly 40% from this time last year. According to Beijing Home-Like House, only 5,500 new homes, or 25% of the new home purchases in the first quarter, were traded from mid-February to the end of March. Lin Lei, who is in charge of marketing with 21 Century Real Estate, said that home prices in China have not really changed since the government enacted purchase limit policies. However, he says, if the government were to really crack down on the housing market, prices could plummet. These new purchase limits prohibit new home purchases by Beijing families who own two or more apartments and non-Beijing families who own at least one apartment. The previously soaring home prices had the people of major cities in uprage. This is considered to be the most ambitious housing price control in any of the 40 major cities in China. Industry leaders say that Beijing is the first city that has actually caused a strict price decline.

Significance:

The way the government manipulates the housing market in China is very reminiscent of the manner in which the government takes on all facets of politics, economics, and business. The idea of a very "strong government" is very pronounced here because of China's ability to do whatever it wants with the housing prices. No real outside force or economic mogul can have much say in what the government does. The article also mentions the idea of how people have been speaking out against the soaring home prices. I thought this was an interesting display of political culture because it is odd that in a country of such totalitarianism like China, most forms of protest are outlawed. However, as we mentioned in class, protest that does not directly hurt the government is pretty much dealt with. Also, the mediums through which protests take place are important because the government will only allow protests through safe and secure methods.

Unexpected Trade Gap in China

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Summary:

Two weeks ago, China reported a $7.3 billion trade deficit in February as imports rose sharply and exports declined slowly. Chinese officials, looking for a way to surmise what happened, said that much of the impact came from the Chinese New Year, which significantly reduces the export market for China annually. This was the first monthly trade deficit in China since March of 2010. Last month, imports totaled $104 billion, which was a whopping 19% higher than average. Chinese officials have reported that they are trying to improve this issue by promoting more domestic consumption, which is currently growing at a 20% year-over-year rate. Unfortunately for China, the New Year there accounted for a widespread work shortage. The fact that China traditionally exports far more than it imports has been a sore point in Washington, D.C. as the U.S. does just the opposite. As the U.S. tries to double its exports by 2015, experts strongly agree that China should allow its currency to appreciate. Americans also claim that China continues to undervalue its currency, allowing for more overseas trade.

Significance:

This article strongly pertains to what we talked about in terms of the international economy and how China purposely manipulates it. As the article states, China has allegedly tried to undervalue its currency so that it can be more attractive to foreign markets. This also ties into the fact that China is far less concerned about human rights issues and the like, which is why the U.S. is not pleased with the way they do business around the globe. They often overlook genocides and other harmful government acts and only look at prices. This article is also pertinent to our classroom discussions because of China's connection between the economy and the state. I was surprised that, since China's government is so concerned about the economic well-being of the country, it would still allow for export levels to drop. The government is extremely focused on maintaining a slow but steady growth rate, but it was able to overlook its economic goals for such a special occasion as the Chinese New Year.

China to send trade delegations US and EU

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Summary:

Over the course of the next year, China will be sending out four trade delegations, two to the United States and two various members of the EU. The focus of the delegations is increasing imports from these countries inorder to help bring down their trade surpluses with these nations. It is part of a larger effort by the Chinese government to increase imports and stabilize exports to obtain a more balanced economy. A particular focus of the efforts is to obtain high-tech, energy-saving, and environmentally friendly products. China is already planning to order a slew of these products from Japan at the upcoming China-Japan Green Economy Forum. Also, as part of the efforts, China is planning to reduce import tariffs to increase trade. Smaller delegations are also planned to be sent to other nations. Although economist wonder what real the world impact will be, the efforts do represent a new direction for the Chinese.

Significance:

The efforts show a concerted effort by China to prevent it's economy from overheating. Their awareness that an economy based so heavily on exports isn't such a could thing show progress from China. It will interesting to see if their efforts bear fruit. Also, their efforts to obtain green technology shows a novel concern about the environment, or at very least, a new effort to look good to the international community. Regardless of the intentions, the work China is putting towards a more balanced economy is going to be an interesting development for the future.

China's development benefits Southeast Asia

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Summary:

Experts want Southeast Asian countries to consider the benefits that peaceful Chinese development brings to the region. Concerns exist from ASEAN countries (Association of Southeast Asian Nations) that China can put many local businesses at a disadvantage. But experts argue that competition will do more to complement the existing business as opposed to putting them out of business. The China-ASEAN Free Trade Area Investment Agreement came into effect on Jan 1, 2010 and as a result many Chinese businesses have built plants in ASEAN countries. That's right, China is outsourcing! But that will create many jobs and in turn more tax revenue for the governments, with which they can use to improve infrastructure. The real concern comes from the fear that "a stronger China could push the United States out of regional affairs." As a sign of good faith, and to quell fears, experts suggest that China could help with things like disaster relief and epidemics that occur in Southeast Asia. A more unlikely suggestion is that China also increases military exchanges with Southeast Asian countries.

Significance:

This new development is a great step in opening up all of East Asia, not just China, with the rest of the world. If all goes according to plan, China and the ASEAN countries will see a new trend of globalization that will make them a lot more powerful economically on the global scale, not to mention the local level. But this will also mean that international factors will have more influence in the region which has equal potential for harm as it does good. In its current state though, China only stands to gain from this free trade agreement and the only way that it could be hurt by it is if the countries China invests in collapse due to China investing in them. The potential for irony is killing me. But again, the intended purpose of the free trade agreement has the ability to decrease regionalism in Southeast Asia, or maybe do away with it altogether in the more distant future.

Beijing farmers to become shareholders of firms

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Summary:
There are currently 2.73 million rural residents in Beijing and they are all set to become shareholders of the city's rural collective farming enterprises by 2013. This is done in an effort to end confusion from villagers and to stop the corruption of village chiefs. Currently, 1.81 million residents have already recieved shares in Beijing, making up about 62% of the city's collective rural economy. This is stated as being worth $45.5 billion. This plan is meant to increase the average farmer's income by 8% in the next 5 years, marking the start of the 12th five year plan. The annual income almost doubled in the last five years so this goal is more than doable.

Significance:

Here we see an economic change that most Americans would regard as contrary to democracy because it's greaty reducing privatization. But the goal of such an edeavor is to make millions of people more wealthy and so far it's working. We've discussed how the exact same form of democracy can't exist everywhere and I think wealthier citizens will naturally start to demand more liberties as more money yields better living conditions. So although many would see this new course of action as a bane to democratization, we must remember that there are many ways to define a democracy. This may not lead to the democracy portion of a liberal democracy right away, but it will most likely lead to the stepping stone that is more liberties. When that happens, the people will gain more power in the government as a reflex.