China’s XI faces pushback on property-tax plan
The president of China Xi Jinping has come up against resistance after trying to implement a property tax across the country aimed at bringing housing speculation under control.
According to the Wall Street Journal, Xi tasked the most senior of China’s four vice premiers with implementing a nationwide levy.
Beijing will instead focus on rolling out a more limited tax plan because of the resistance, in addition to exploring its options around providing more affordable housing instead.
Xi Jinping has made no secret of his desire to tame China’s property bubble. But he is facing resistance over a key measure aimed at curbing housing speculation—a nationwide property tax. The latest from @Lingling_Weihttps://t.co/0KyM53Jmzv— Jonathan Cheng (@JChengWSJ) October 19, 2021
Initial proposals considered testing the tax in up to 30 cities, however it has duly been scaled back to ten, according to reports.
Reducing the cost of housing is not impossible. China can build infrastructure 100-1000X faster than the US because they allow innovation in construction.— Balaji Srinivasan (@balajis) October 19, 2021
Compare hours to years. Then do a financial model. That kind of improvement in time slashes rent. https://t.co/JycR9gvL1Q
Those who expressed their opposition to the policy include local governments who suggested it could negatively impact property values or lead to a sell-off.
Additionally, high-ranking members of the CCP and lower-level members overwhelmingly expressed their disapproval via internal debates.
"Xi has made no secret of his desire to deflate #China’s #property bubble. But he faces resistance over a measure aimed at curbing housing speculation: a nationwide property tax"— China Beige Book (@ChinaBeigeBook) October 19, 2021
Property sector derisking has opened the door. Discussing odds w/clients.https://t.co/Yltrs3t8r6
The debacle surrounding Evergrande highlighted the dependence of China's economy on investment in real estate.
However, rebalancing the economy is providing a headache for Xi, especially when it comes to finding a way to create demand outside of real estate.
China's $18 trillion debt bomb is exploding. After #Evergrande, 3 more real estate players default. State owned enterprises lead the default list. 165 countries owe "hidden debts" worth $385 billion. This has the makings of a financial pandemic that will hurt the whole world. https://t.co/G3AHOhE5O9— Palki Sharma (@palkisu) October 19, 2021