Chinese President Xi Jinping’s pledge to accelerate housing supply, especially affordable housing, could be bad news for property developers such as China Vanke Co. Ltd. and Country Garden Holdings Co. Ltd. Although affordable housing and private residential projects are basically two different markets, Xi’s vow reinforces the view that the government has limited tolerance for a rise in home prices. Authorities are getting concerned as home prices have been climbing in major Chinese cities in the past year. The previous government curbs on the property sector were rolled out before the new administration led by Xi took charge in March. Therefore, Xi would probably make his first move after the third plenary session of the CPC Central Committee next month. More tightening measures, such as extension of the property tax and home purchase limits, could be on the anvil. Under the country’s 12th five-year plan, China aims to boost affordable housing so that it covers 20 percent of all residential areas by 2015 through construction of 36 million low-cost housing units, including renovation of run-down neighborhoods.
Redback charm: China’s stepped up efforts to accelerate the internationalization of the renminbi have once again prevented the United States, its second-biggest trading partner, from naming the Asian nation as a currency manipulator. In fact, against the backdrop of volatility seen in the greenback and the depreciation of many other emerging market currencies, China has intentionally allowed faster gain in its currency to enhance the attractiveness of holding and using the so-called redback. Beijing is seeking to have the renminbi take a bigger role in international trade and used as an alternative for central banks’ reserves holding. According to a report, through mid-October 2013, the renminbi has appreciated by a total of 12 percent against the US dollar and gained 16 percent on a real, inflation-adjusted basis from June 2010.
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