The World Bank says property price increases in China are modest. (China Quarterly Update/World Bank)
By Caitlin Kenney
Our conversation with NPR business correspondent Frank Langfitt on yesterday's podcast made me wonder about the possibility of a property bubble in China. A quick scan of headlines from some major newspapers shows I'm not the only one.
The Financial Times has a piece on the "fears" of Zhang Xin, chief executive of Soho China, one of the country's most successful privately owned property developers. Ms Zhang tells the FT she's worried that the demand isn't real and that it's banks that are driving up the prices.
"In Manhattan, they have vacancy rates of 10-15 per cent and they feel like the sky is falling, but in Pudong [the central business district in Shanghai] vacancy rates are as high as 50 per cent and they are still building new skyscrapers."
Carl B. Weinberg of High Frequency Economics sends a bummer note this morning."The global economic downturn is not taking any time off for summer vacation," he writes. Global credit has stopped growing, he notes, and German retail spending is looking very 1990.
But that's nothing compared to the news out of Japan, where overall pay clocked in last month as the lowest in 20 years. Cash earnings are down 7.1 percent over June 2008, as companies cut summer bonuses by 17 percent. Wages were down 2.5 percent lower than May 2008. With less money in their pockets, Weinberg writes, Japanese families will be spending less for a long while. "This is what a depression looks like, eh?" he writes.
It's hard out there for a high-tech manufacturer. Glenn Stevens
Glenn Stevens, the governor of the Reserve Bank of Australia, plotted some interesting numbers in a report yesterday. According to his research, the more a country's economy relies on manufacturing high-tech goods, the harder its GDP got hit by the recession.
If you want to invest in Chinese banks, that's cool. But once you do, stay for a while, all right?
According to reports, a top banking regulator says foreign investors in Chinese banks will soon be required to "lock-up" for five years. Right, now the minimum is three years. But in this global recession, any foreign banks are selling their stakes in Chinese banks and running as soon as that 3rd year is up.
In his "Daily Notes on the Global Economy," Carl B. Weinberg of High Frequency Economics notes Japan's drop in exports last month -- down 45.7 percent from the previous January. The bold and italics are his:
We have never seen anything like this in a major developed market economy.
Japan's finance minister resigned in disgrace Tuesday after slurring his speech and nodding off during the G-7 summit in Rome last weekend in yet another political distraction as the world's No. 2 economy battles an ever-deepening recession.
Finance Minister Shoichi Nakagawa denied he was drunk on the job and blamed his bizarre behavior at a press conference in Italy on cold medicine and jet lag, but friends and foes alike weren't buying his excuse.
South Korea's industrial output plunged 14.1 percent in November from a year earlier, dropping at the fastest pace in history amid growing concerns over worsening economic conditions, a government report showed Tuesday.
That's the biggest drop since 1970. If you're wondering, industrial production in the U.S. declined that month by 0.6 percent.
Here's a really interesting story by a former colleague of mine at the LA Times, Don Lee.
(By the way, it was leaked late yesterday that the paper is essentially closing its once mighty 50-plus reporter Washington bureau, which is a terrible journalistic crime. The news upset so many people at the paper and is a huge loss for journalism. But I digress.)
The story of note takes a look at how tens of thousands of factories in China are shutting down, some by owners who are literally just walking out the door.
Stocks across Asia have hit the skids. They're at a four-year low. Investors are worried about a string of bad earnings reports from corporations -- read: a possible global recession.
The Korean won is the weakest it has been against the U.S. dollar since 1998.
The Korean Chosun.com offers this editorial: "How to Save the Korean Economy." It calls for quick intervention by the government, and provides a great view into the international nature of this crisis:
The main reason for the volatile stock and forex [foreign exchange] markets is foreign investors unloading US$34.8-billion worth of Korean stocks from the beginning of this year until last Friday. Over that same period of time, foreign investors sold $12.2-billion worth of Taiwanese stocks, $11.2-billion worth of Indian shares, $11-billion worth of Japanese shares and $4-billion worth of Thai stocks.
