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Thread: Can property tax ease the high housing prices?

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[quote=BOBERT,419192]CARLOS; This extract is well worth reading and considering:
According to the Chinese zodiac, the Year of the Rabbit is now underway, a time when investors will be hoping to see increased tranquility in share markets, in place of the wild swings of recent years.

But many prominent investors are warning of upcoming instability in the Chinese economy, which holds the potential to roil global markets.

Prominent New York fund manager Jim Chanos, who made a massive fortune by predicting the collapse of Enron and other debt-laden US corporates, continues to warn that the country is in the grip of a major property bubble. As a result, he’s built up short positions on Chinese property and financial stocks.

Meanwhile, Niels Jensen, from London-based Absolute Return Partners, argues that the 'actual' Chinese economy is in worse shape than many assume, with economic growth lower, and inflation higher, than official Chinese data suggests.

Scepticism about the accuracy of Chinese figures has been increasing ever since Wikileaks published leaked US diplomatic cables from 2007 in which Li Keqiang – who is tipped to become China’s next premier – referred to some Chinese economic figures as “man made” and “for reference only”. Instead, he preferred to use figures on bank lending, rail freight volumes and energy consumption to give a more accurate reading of the economy.

Jensen has decided to follow this approach, and has uncovered an interesting pattern. Over the past 15 years, whenever Chinese economic activity weakened – such as during the Asian crisis, and the global credit crisis in 2008-9 – Chinese GDP growth was much faster than the increase in electricity output. On the other hand, whenever Chinese growth was strong (such as 2002-7 and 2010), GDP growth was lower than the power output. “Clearly the GDP numbers are massaged”, he concludes.

But his investigation points to an even more alarming trend – the growth in Chinese power output slowed rapidly over the course of 2010.

Total power consumption (measured year on year) grew at an astounding 22.7 per cent in the first quarter of 2010, but this slowed to a mere 5.5 per cent in the fourth quarter. In fact, the slowdown in the final three months of the year was so drastic that power output was 6.3 per cent below the previous quarter.

So while official Chinese stats show China’s growth rate dropping from 11.9 per cent in the first quarter to 9.8 per cent by the fourth quarter, Chinese electricity output showed a much more pronounced slowdown – from 22.7 per cent to 5.5 per cent.

Now, part of the reason for this drop could be the restrictions on electricity use that Chinese authorities imposed last year. But since these were dropped in November, it cannot be the only explanation.

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