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Don't overstate verve of real estate
(China Daily)
Updated: 2010-01-22 07:46
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Though an economist with an official background recently said real estate was a pillar industry of China's economy, its importance should not be overemphasized, says an article in Guangzhou Daily. Excerpts:
In a recent interview, an economist with an official background, though expressing his personal opinion, said the real estate was a pillar industry of China's economy despite having generated bubbles.
His remark is not so proper, especially at a time when buyers and sellers are struggling to cope with rising housing prices. The task now is to reduce housing prices, and overemphasizing the importance of the realty market will do just the opposite.
We should, instead, review the realty sector. It may have been the pillar industry in many countries, but that's no reason to place it on the highest pedestal of China's economy.In fact, it's time we asked whether the real estate deserves the title of pillar industry?
Take the global financial crisis as an example. It was caused by the US subprime mortgage crisis, which in turn was the result of over-heating of that country's real estate sector.
To avoid going through the consequences that the US did, several Chinese provinces have already stopped promoting real estate as a pillar industry. Official recognition of real estate as the pillar industry is likely to create more bubbles and more chaos, and help raise housing prices further. It will create more scope for corruption, too.
Only if the realty market is fully compatible with social justice and welfare, can it truly deserve the title of pillar industry.
(China Daily 01/22/2010 page9)
