Real estate mystery under inflation expectations

Lin Yu According to the data released by China Index Institute November 29, last week, 35 monitored cities in 17 cities in the real estate turnover rose, and in 10 key cities, Beijing's biggest increase, up to 62.39%, whether it is commodity or second-hand housing are obviously rising,　　It seems that China's industry, with its stagnant prices, is looking up. House prices do not fall in China has become a stubborn belief, this religious concept is rooted in historical experience and the Government's economic policy to stabilize the objectives of the GRASP, but also mixed with inflation, hot money and other fluctuations brought about by the expectations. The Chinese Government's regulation of property has never stopped since the beginning of the century, but after each regulation there will be a bigger rise.　　This has fostered the Chinese people's unique understanding of regulation, that is, to press the moratorium on the process of rising house prices, because in order to pursue economic growth and as a result of growth, real estate has become the backbone of the country's industry, by the government's care. For an economy in the midst of urbanisation, the housing boom is a fitting reflection.　　However, when it is the pillar industry, it distorts its price system, under the condition that the land is monopolized by the government, the government pursues the short-term income of the extra-budgetary land to become the important reason that the land exceeds demand and pushes the house price higher. Now, a new kind of panic is strengthening the myth that house prices are not falling, that is inflationary expectations. When are talking about America's QE2 (a second round of quantitative easing) and being deprived of inflation, it is believed that the world's currency has been printed too much, and that while most of China's assets are monopolized by the government, a house with only 70 ownership is the only reliable private investment. Although China's real estate industry has suffered from a chain of regulatory repression since April, prices are still yiran.　　It also relies on a powerful real estate interest group, where property companies can gain capital through various financial instruments to fight regulation, and local governments do not want the fall in land prices to affect their earnings, and it is clear that the central government is not willing to cause trouble with falling house prices. Thus, in a delicate period of high inflationary pressure and a tightening trend, the repression of more than half a year of house prices seems to be the start of a new cycle of price hikes. Even the deputy prime minister, who presides over property controls, admits it is hard to let house prices fall, and if they can't afford to rent first.　　This further encouraged property interests and shaken potential buyers on the sidelines. The myth that the house price does not fall has been in Japan in the 80 's, but it turned out to be a fantasy, and Americans hold the same mentality, which is the source of the subprime crisis and led to a global depression.　　In Beijing's Beijing suburb of Tongzhou, 2 million just enough to buy 100 square meters of the house, and last year, the annual average wage of the city's workers only 48444 yuan, China's big cities in the house prices were fired too much, but the market can always find a variety of reasons to explain. The past rise in China's property market, despite the deformity caused by administrative intervention, is basically consistent with the Chinese economic cycle, as China is in a week of high urbanization and sustained economic growthPeriod。　　But, unfortunately, the 30-year growth cycle, which has been artificially stimulated by the executive hand, is coming to an end, which means that house prices will not continue to be underpinned by a rapid increase in national and personal wealth, even if it does not fall soon, but prices do go to the top. The secret of the Chinese economic miracle is that the government-controlled currency can be put into economic activities cheaply and continuously, in which the Government, through its five-year plan, continues to build advanced infrastructure to become an important force for China's economy, and on the other hand, in order to attract foreign investment and to obtain price competitiveness internationally,　　The low price of government-controlled resources in China has spurred a shift in global manufacturing to China. Now, this growth, led by government Keynes policy, has come to a head, with China's manufacturing capacity already in excess and the pressure on the currency to appreciate (even if it does not appreciate, the cost of rising domestic inflation), China's infrastructure is also largely surplus, and it is hard for the government to repair more inefficient roads or airports.　　It is because of overcapacity that has put too much money into the crisis, and so there is a flood of money pouring into various areas of speculation, such as stockpiling garlic, apples, cotton and so on, including Zhejiang's former manufacturing bosses. Although the Chinese government may be the most experienced and most regulated government in the world, it cannot beat the law. Because China will have stagflation if it continues to loose monetary policy, so China will have to tighten that troublesome currency, which could lead to a bursting of the capacity bubble and a sharp rise in the cost of housing mortgages. Whether it's a stagflation or a bust, there is a problem of productivity and rising unemployment, which means that the growth cycle of China's economy is at an end. Now, while the market is less confident about the future, it is still deluded by illusion, such as inflation, which, in fact, means deflation when inflation has erupted.　　It goes without saying that those who believe that house prices will continue to rise have the same confidence that their wages and incomes will continue to rise. The author is a well-known economic commentator