I have written in the past (and, it now seems, over optimistically) about how China’s economy is different and why that might help it weather the current crisis better than some other countries. One reason is its unique hybrid economy that mixes rigid state control with wild west free market capitalism. The central government control in theory should allow Beijing to order banks for example to lend, something President-elect Obama obviously doesn’t have as an option. In the story about how hard China’s landing would be (link above) I quoted an investment bank analyst speaking candidly about one area where the government might do some good:
In the early 2008 bubbling property market, authorities conveyed to potential house buyers that they would be wise to hold off. “The government basically said, ‘You’d be a complete idiot to buy an apartment right now because we’re going to make sure that prices drop like a stone,’” says the investment bank analyst. “Now the government is telling them it’s not just okay to buy, it would be a great time to buy and the banks will be happy to lend to you. Of course people will start buying again.”
It now does indeed appear that ordinary Chinese are perfectly able to read such signals. As JP Morgan economist Jing Ulrich writes in her latest analysis:
A series of supportive measures, combined with aggressive interest rate cuts and accelerated price reductions from October have begun to lure some Chinese homebuyers from the sidelines, bringing higher transaction volumes in the closing months of 2008. Transaction volumes rebound sharply December sales transactions in major markets were substantially higher over October levels (Beijing: 33%, Shenzhen: 124%, Shanghai: 86%). Average daily transaction volumes across seven cities tracked by J.P. Morgan’s China property analysts rose by 27.7% M/M in November and 8.1% in December.
Obviously a good deal of that is pent up demand and there’s guarantee it will last long. Bu amid all the gloom, at least there’s some glimmer of good news for property owners in China.