June 25, 2019

China Releases New Measures to Restrict Housing Sales

SHANGHAI — Trying to cool down the resurgent property market, two of China’s biggest cities announced over the weekend that they would put in place a series of restrictions and penalties on housing sales.

In the nation’s capital, the Beijing municipal government said unmarried individuals would now be allowed to purchase only one residence. The city also increased the minimum down payment for buyers of a second home and imposed a 20 percent capital gains tax on owners’ selling a residence.

In Shanghai, an identical capital gains tax was announced and took effect immediately, and city officials pledged to implement and enforce other measures aimed at stabilizing housing prices. The stiffer capital gains taxes take the place of a 1 percent to 2 percent transaction tax previously assessed on the final price of the property being sold.

The announcements came a few weeks after China’s State Council, or cabinet, said the government would take stronger action to ensure that property prices do not continue to soar, fueling what many analysts believe is a real estate bubble that could seriously damage the economy and exacerbate social tensions between the rich and the poor.

“The curbing policies are designed to optimize the allocation of housing resources,” Chen Zhiwu, the secretary general of the Beijing Real Estate Association, was quoted by the official Xinhua news agency as saying. He said the goal was to reduce speculation in the property market so that more of the existing housing supply could be taken up by end users.

Property prices in China have been soaring in last year, with housing prices up an average of 3.1 percent in 66 cities in the month of February alone, according to a government survey.

Most of the new measures had been anticipated after the State Council’s announcement in early March. The threat of tougher rules had set off a nationwide rush to sell properties before city governments detailed the specific measures they would take, as well as their starting dates.

Shanghai and other big cities had even had a surge in the number of divorce filings at marriage bureaus, with many couples openly admitting that they were filing for divorce simply to get around property rules and that they would later remarry.

In the announcements, it was clear the city governments were trying to close that loophole.

The new rules are China’s latest effort to cool real estate prices in a country where investment options can be limited and property is considered a good store of value.

Michael Pettis, who teaches finance at Peking University and is a senior associate at the Carnegie Endowment for International Peace, said China was facing challenges that many other emerging markets are struggling with: It is awash in too much cash and credit.

“China has a liquidity problem, and so it’s not clear to me changing the tax structure or fiddling around the edges addresses the real problem,” he said. “Raising interest rates would be the single biggest thing they could do. But they also need to stop credit and monetary growth.”

Although Chinese cities do not impose annual taxes on holding residential properties, the government has rolled out detailed measures virtually every year for the last decade in an effort to penalize speculation in the housing market.

The efforts have often been effective at temporarily holding down prices, but the market usually tends to roar back as investors, home owners — and even banks and property agents — identify loopholes in the restrictions, analysts say.

Because China’s booming economy is tied so closely to the property market — and because it is a major source of income for banks, who issue mortgages and local governments, who profit from land sales — any strong government measures to rein-in the sector have the potential to impact the larger economy.

In Shanghai, a city of about 22 million residents, banks are no longer allowed to offer loans to local residents buying a third home; those seeking a second mortgage are now expected to make larger down payments and to pay higher mortgage rates. Shanghai officials also said they will make it tougher for foreigners, people from other cities in China, and divorced individuals to buy homes, a clear hint that they intend to counter attempts by local residents to seek divorces in order to circumvent some restrictions.

The authorities in Beijing and Shanghai also promised to build more affordable residences. This year, Beijing said it planned to build 70,000 units of affordable housing; Shanghai said it expected to build 10,000 units.

China’s state-run media also said over the weekend that the central government is planning to introduce a unified national property registration system by the end of 2014, which could eventually make it possible to impose an annual property tax on households — yet another way the authorities expect to fight housing speculation and fend off bubbles.

“The central government is feeling the heat and not just for social reasons,” Joe Zhou, a property analyst at Societe Generale, said in a report released last week. He said a push by prime minister Li Keqiang, who took office in March, to promote urbanization as a new key growth driver “only adds to the urgency to cap property prices, as the strategy implicitly requires housing prices to be within the reach of future migrants whose purchasing power is likely to be more limited than those who have already earned their way into the urban area.”

Article source: http://www.nytimes.com/2013/04/01/business/global/china-releases-new-measures-to-restrict-housing-sales.html?partner=rss&emc=rss

Greece Tax Scandal Shifts Focus From Collection Problem

Mr. Papaconstantinou, in turn, hinted darkly that he was the victim of a plot masking malfeasance at higher levels.

While the firestorm may have made for political theater of a sort, it has diverted attention from a much bigger problem: Greece, its foreign lenders say, has fallen woefully short of its tax collection targets and is still not moving hard enough to tackle widespread tax evasion — long tolerated, particularly among the country’s richest citizens.

Greek officials agreed to the targets as part of an international lending pact last year, but there is no penalty for missing them. In recent weeks, however, two reports by Greece’s foreign lenders have found that Athens pulled in less than half of the additional tax income that it expected last year and performed fewer than half of the expected audits.

One report said that Athens had brought in a little less than $1.3 billion in additional taxes of the $2.6 billion it had hoped to collect in 2012. Only 88 major taxpayers, including corporations, were the subject of full-scope audits, well below a target of 300, the report said, while just 467 audits of high-wealth individuals were completed, compared with a goal of 1,300.

The fragile, three-party coalition government of Prime Minister Antonis Samaras continues to vow it will crack down on corruption and tax evasion, but a blunt assessment last month by a task force of Greece’s foreign lenders said, “These changes have not yet been reflected in results in terms of improved tax inspection and collection.” Analysts say the failure to pursue tax evaders aggressively is deepening social tensions. “It’s a weak government with very difficult work to do, and this is very, very bad for the morale of the people,” said Nikos Xydakis, a political columnist for Kathimerini, a daily newspaper. “This year will be hell for the middle-class people. And the rich people are untouchable. This is very bad.”

In a separate report, the European Union and the International Monetary Fund said they were concerned that the “authorities are falling idle and that the drive to fight tax evasion by the very wealthy and the free professions is at risk of weakening.”

The report added that total unpaid taxes amounted to nearly $70 billion, about 25 percent of Greece’s gross domestic product. But only about 15 percent to 20 percent of the amount is actually collectible, either because the statute of limitations has run out or the scofflaws do not have the money.

It pressed Greece to focus on the cases most likely to produce real revenues, especially in vocations where tax evasion has become pernicious. “Doctors and lawyers are a good place to start,” it said.

Critics, especially the leftist party Syriza, which leads in opinion polls, say the government has not done enough to stop corruption because its members are tied to the country’s business elite and do not want to jeopardize their political careers.

“The problem is not simply tax evasion among the rich,” said Zoe Konstantopoulou, a member of Parliament from Syriza who serves on a panel investigating the so-called Lagarde list, a compilation of more than 2,000 Greeks with accounts in a Swiss branch of HSBC that had been sent to Mr. Papaconstantinou in 2010 by Christine Lagarde, then the finance minister of France. “The problem is tax evasion among the rich with the complicity and the aiding and abetting of those who govern.”

While Greece received a badly needed $45 billion in aid last month to help it avoid defaulting on its debts, critics say that unless Athens can more forcefully tap the billions it is owed in taxes, it will never pay off its debts, even if its moribund economy eventually starts to recover.

A dysfunctional bureaucracy weakened by budget cuts, two destabilizing rounds of elections last spring and an economy decimated by austerity have hampered tax collections further. But a thicket of regulations and a culture of resistance also fuel a shadow economy that includes an estimated 25 percent of economic activity.

Liz Alderman reported from Paris, and Rachel Donadio from Rome. Niki Kitsantonis contributed reporting from Athens.

Article source: http://www.nytimes.com/2013/01/06/world/europe/greece-tax-scandal-shifts-focus-from-collection-problem.html?partner=rss&emc=rss

China Raises Banks’ Reserve Ratios After Inflation Stays High in May

The central bank increased the so-called reserve requirement ratio, which dictates the amount of cash that banks must set aside, by 0.50 percentage point, effectively reducing the amount they can lend.

The ratio has been raised six times this year alone and now stands at 21.5 percent for the biggest lenders.

The latest increase came only hours after the national statistics bureau reported that consumer prices in China rose 5.5 percent last month from the same period a year earlier. That was slightly more than analysts had expected, and faster than the 5.3 percent increase in April.

Soaring commodities prices, strong economic growth, wage pressures and, in some cases, adverse weather conditions have pushed inflation higher in many parts of the world.

Some of the steepest rises are happening in fast-growing emerging nations.

Data from India on Tuesday further highlighted the trend, as well as the pressures on policy makers to intensify their anti-inflation efforts.

India’s main inflation gauge rose 9.1 percent in May from a year earlier, topping both analysts’ expectations and the reading from the previous month. Analysts widely expect the Indian central bank to continue its series of interest rate increases at its next monetary policy meeting Thursday.

The Chinese authorities are intensely sensitive to rising consumer costs and social tensions that could be set off by soaring food and fuel prices. Despite rising levels of affluence in China, higher prices for fuel, cooking oil and other staples take a significant toll on the wallets of everyday workers.

“Inflationary pressures remain acute,” commented Qu Hongbin, China economist at HSBC in Hong Kong, adding that food prices, which have been responsible for much of the recent overall increase in inflation, have risen at a double-digit pace for five consecutive months. “Inflation, not growth, remains the top macro risk facing Chinese policy makers.”

Reassuringly, the Chinese economy, which is a major engine of growth in the region as a whole, has remained resilient despite a moderate slowdown in overall economic growth.

Last month, industrial output and retail sales rose 13.3 percent and 16.9 percent, respectively, from May 2010, according to figures released Tuesday. Both increases were below those recorded in April, echoing other data that have showed slowing growth over the past few months.

Taken together, the Chinese data show that additional steps to combat inflation were needed, and that Beijing had room to rein in lending conditions without stifling overall economic growth.

“Inflation was higher than expected, and growth was stronger than expected,” said Dariusz Kowalczyk, an economist at Crédit Agricole in Hong Kong. “That means that there is room to tighten interest rates further.”

At the same time, the economic statistics Tuesday also helped ease fears that China, the biggest economy in the world after the United States, could experience too steep a slowdown.

Worries about a hard landing and excessively rapid tightening by the authorities have weighed on stock markets in China and elsewhere in recent months and have helped send the Shanghai composite index in mainland China lower by about 10 percent since mid-April.

The index rallied 1.1 percent after the release of the data Tuesday.

“The market has been increasingly worried about a hard landing in China, but the latest data show that the economy is still going strong,” Tao Wang, head of China economic research at UBS in Beijing, wrote in a research note. The current “soft patch,” she added, was likely to last only a couple of months.

Brian Jackson, an emerging markets strategist at the Royal Bank of Canada in Hong Kong, echoed this sentiment.

“Today’s numbers provide further evidence that growth is moderating in response to recent policy measures, but at a very gradual pace, with little to suggest that Beijing needs to worry about a hard landing in coming months,” he wrote in a note.

Many economists now expect the Chinese central bank to raise interest rates at least a quarter of a percentage point later this month and possibly again in July or August.

Such actions would come on top of the four rate increases staged since October.

More reserve-ratio increases also could follow as Beijing continues its fight against inflation. Rising global commodities prices and wage expectations, as well as severe droughts in China this year, are expected to fan price rises in coming months before inflation levels off again later this year, analysts believe.

Article source: http://www.nytimes.com/2011/06/15/business/15yuan.html?partner=rss&emc=rss

Inflation in China Rose to 5.5% in May

Consumer prices rose 5.5 percent last month from the same period a year earlier, slightly more than analysts had expected, and markedly faster than the 5.3 percent increase in April, data from the national statistics bureau showed on Tuesday.

May industrial output and retail sales rose 13.3 percent and 16.9 percent, respectively, from May 2010, separate data showed. Both figures were below those recorded in April, showing that the government’s efforts to cool the Chinese economy’s sizzling pace of growth are taking effect.

“Today’s numbers provide further evidence that growth is moderating in response to recent policy measures, but at a very gradual pace, with little to suggest that Beijing needs to worry about a hard landing in coming months,” Brian Jackson, an emerging markets strategist at the Royal Bank of Canada in Hong Kong, wrote in a research note.

“This means that the near-term focus will remain on inflation,” he said, adding that Beijing is likely to nudge up interest rates further in coming months and allow the renminbi to rise more rapidly against the United States dollar as part of its efforts to curb higher prices.

The Chinese authorities are intensely sensitive to rising consumer costs and any social tensions that could be set off by soaring food and fuel prices. Beijing has announced a series of steps designed to slow economic growth and the inflation that has accompanied it.

However, with the rise in global commodities prices, pressure for higher wages and severe droughts in China this year also fanning inflation, analysts expect consumer prices to continue to gain for a few months before they level off later this year.

China’s inflation-fighting measures so far have included a series of steps to restrain lending by state-controlled banks over the past year, as well as four interest rates increases since October. Many analysts now are forecasting another rate increase of a quarter of a percentage point as soon as this month.

Article source: http://feeds.nytimes.com/click.phdo?i=16d5399914f8118215c2512edf9ad44f