Wenzhou woes are warning for all to see; even the loan shark market is stretched, and the nationwide liquidity shortage in June made the situation much worse
September 26, 2013 Leave a comment
Wenzhou woes are warning for all to see
Thursday, September 26, 2013
Data show that among 70 major Chinese cities, 69 saw home prices rise in August year-on-year. In first-tier cities – Beijing, Shanghai, Guangzhou and Shenzhen – prices jumped 18 to 20 percent, and in second-tier cities, 7 to 10 percent. Where did prices fall? Wenzhou, Zhejiang province. Known as the birthplace of China’s private economy, Wenzhou boasts numerous entrepreneurs making electrical equipment, chemicals, medicine, building materials and textiles. With their wealth, some of the businessmen turned to speculation. Data show that home prices in Wenzhou peaked in early 2011, and since then, have plunged 26 percent. The city faces three major woes. Debts have soared at local firms amid the economic slowdown in America and Europe. Secondly, even the loan shark market is stretched, and the nationwide liquidity shortage in June made the situation much worse. Third, the property market bubble burst, and it is China’s only city permitted to float policies to boost home purchases. Even Wang Shi, chairman of the mainland’s largest developer, Vanke, has warned the nation’s property bubble is similar to that of Japan in the 1980s. Will anybody listen to him? Dr Check and/or The Standard bear no responsibility for any decision made based on this column.
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