There has been a relatively quiet battle between China’s government, the businesses and property investors looking to profit from China’s booming economy. While the government implements tighter measures in an attempt to slow growth and curb inflation, business owners and investors seek to cash in on the boom while they can. This battle for the stability and future of China’s economy will continue throughout the year and the fact that the 2008 Olympics will be held in Beijing this year will not deter any businesses or investors from looking elsewhere to throw their money.
With this back and forth come a slew of forecast and predictions from both sides, some optimistic while others hold the view that the government’s efforts have achieved slight success and the economy is slowing and growth is at a more manageable rate. One such positive and optimistic point of view is witnessed by an announcement from the State Information Center (SIC) announcing that they expect a 20% jump in the China’s total investment volume – specifically, urban area investment which is at roughly 21% less than during the fourth quarter of 2007.
Property investment is projected to continue developing at an increased rate, with land agents accelerating their activities and trying to close deals in a faster, more efficient basis. With this comes a fair amount of market speculation stating that property prices might fall when the government reinforces their supervision and distribution of lands for real estate purposes.
In contrast to the SIC’s opinion, Standard & Poor’s Ratings Services released a warning that the operating conditions this year in 2008 will cause a substantial amount of liquidity to simply dry up if the market does not improve. They also recognized that due to the difficulties, there will be a considerable number of developers who will not survive through 2009. However, rated developers are in a better position due to a stronger balance sheet, and deeper cash holdings.