Shortly after the National Bureau of Statistics announced that home prices rose 15-18 percent in China’s first tier cities during August, several government agencies said that the market was actually slowing down.
In Beijing and Shanghai home prices went up by 15 percent year on year, while rates in the southern Chinese mega-cities of Guangzhou and Shenzhen rocketed by more than 18 percent.
Although the price increases in China’s metropolises were the largest seen since 2011, before the government had placed its most serious restrictions on housing sales, officials seem determined to draw attention away from rocketing housing costs while they grapple with consolidating their power base and maintaining economic growth.
Hear No Policy Evil, See No Policy Evil
The way that the housing situation is viewed by outside observers compared to government spokespeople can best be seen through the news headlines.
“Chinese Home-Price Increases Pick Up Steam,” said the Wall Street Journal.
“China’s Housing Market Continues To Soar,” said Forbes.
And Reuters chimed in with, “China home prices rise further in August, testing government.”
But government publication Shanghai Daily contended that, “House prices rise but pace slows.”
And less than a week earlier, a China Daily headline trumpeted, “No property bubble in sight”
Certainly there were places where the rate of increase in prices slowed — primarily in lower-tier cities, but when prices increased in 66 of the 70 cities monitored compared to 62 in July, then downplaying price inflation hints at an alternate agenda.
Lies, Damned Lies, and Political Agendas
The administration’s attempts to downplay the return to runaway price increases also colored the commentary from officials in the Statistics Bureau.
In a Shanghai Daily article Bureau statistician Liu Jianwei contended, “While home prices kept heading northward around the country, they actually advanced at a continuously decelerating pace.”
However, figures from independent analysis paint a different scenario than what the government is putting forward.
According to Reuters, average new home prices in China’s 70 major cities rose 8.3 percent from a year earlier, and that increase showed an acceleration from July’s 7.5 percent gain, making it the biggest rise since the news agency began tracking the statistics in January 2011.
New Government New Policy Priorities
While the concerns that originally motivated the government to restrict the real estate market, particularly the fears of an eventual crash in values and the need to tamp down public resentment over unaffordable housing still exist, it appears that the new regime has placed a lower priority on those factors in the political equation, at least for the time being.
Quoted in the Wall Street Journal concerning the discrepancy between the market situation and the government’s portrayal of the market, Credit Suisse analyst Jinsong Du explained, “The statistics bureau’s continued effort to paint a picture of still-benign housing-price conditions may imply that the central government wants to deal with other issues first before making a very clear stand.” said Jinsong Du, a Credit Suisse analyst.
Current priorities can be seen in the government’s drive to control internal competitors through anti-corruption campaigns, tighten public discourse through social media crackdowns, and keep the business going by allowing freer rein to the real estate market, which drives a large segment of the economy.
Mr Du took the government’s stance toward real estate prices as an indication that new curbs on the market are unlikely to be introduced soon, and his analysis is apparently shared by a number of other market watchers.
Cited in Reuters, Kaven Tsang, senior analyst at Moody’s in Hong Kong said, “We do not expect further dramatic control of the sector will be implemented in the near term.”
China News Media and Reality as a Social Construct
And it says here on Mingtiandi, that if the Shanghai Daily pretends that an obvious issue does not exist, that it’s because someone in the government told them that it does not exist. And that issues will continue not to exist until someone in the government tells them that it does exist.
And that will be roughly the same day that new real estate market restrictions are ready to be announced in China.