Ye Tan: The Real Estate Market Must Be Controlled To The End.

The real estate market must be controlled to the end.

Real estate has become the only secret of China's monetary regulation. It can not be abandoned halfway.

First of all, to curb real estate is to curb inflation expectations.

In June 18th, the central bank issued the 2009 annual report, reiterated its importance to maintaining the basic stability of the general price level and continued to implement moderately loose monetary policy.

The annual report puts forward the favorable conditions for China to maintain the general price level with basic stability. It points out that the pressure of rising prices will increase the flexibility and pertinence of macroeconomic policies according to the changing circumstances, and at the same time, increase the supply of agricultural products, and curb the excessive rise of housing prices in some cities.

It can be seen that agricultural products and housing prices are the main areas to curb rising prices.

The suppression of real estate is to stimulate the kinetic energy of China's economic growth.

On the same day, Li Daokui and Xia Bin, member of the central bank's monetary policy committee, put forward the idea of continuing to curb housing prices.

When attending the 2010 financial and Investment Summit, Xia Bin said he should spend two to three years to prepare for the real estate bubble.

While increasing the construction of affordable housing, it is necessary to introduce a "simple and easy tax policy to combat real estate speculation" as soon as possible.

On the same day, people's Daily published an exclusive interview with Li Daokui from the opposite direction, indicating that real estate regulation will not cause economic growth power shortage. The real estate regulation policy is the antidote for large-scale credit in 2009, and the future policy housing will be included in the policy control category.

According to common sense, to curb inflation, we should increase interest rates rather than suppress the real estate market.

China's current rate hike has been double checked.

The first is the constraints of the vested interests of the central enterprises and local governments.

There is a downward trend in the profits of central enterprises. Last year, local financing platform loans were excessive. At present, increasing interest rates will increase the burden of central enterprises and local financing platforms. The essence of this is to let non-performing loans rapidly surfaced and face the pressure of the largest vested interests and banks themselves. The central bank must be cautious about raising interest rates.

Profit growth of central enterprises has declined for 4 consecutive months.

By the end of 2009, the balance of local financing platform loans was 7 trillion and 380 billion. If the loan interest rate is 5.76% in accordance with the 3-5 year loan rate, the loan interest paid by the local financing platform should be 425 billion yuan.

If the loan interest rates are raised by 27, 54 and 108 basis points respectively, the interest of the local financing platform will be 20 billion yuan, 39 billion 900 million yuan and 79 billion 700 million yuan respectively.

More importantly, there is a trend of deflation in the real economy. Since June, prices or orders have been declining from upstream resources to downstream exports, and interest rates between banks and private lending have remained high.

The rise in exchange rates has partly replaced the urgency of raising interest rates.

In June 19th, according to the domestic and international economic and financial situation and China's balance of payments situation, the central bank decided to further promote the reform of the RMB exchange rate formation mechanism and enhance RMB exchange rate flexibility.

If the RMB exchange rate formation mechanism returns to a basket of currencies in 2005, the RMB exchange rate will rise slightly, and it will also be able to receive domestic economic and monetary tightening.

Curbing the price of real estate can control the amount of credit and restrain the turnover speed of money.

If the United States is to create a credit market mainly by issuing bonds, China is using real estate as the most important collateral to issue credit.

The CBRC warned the housing loan risk in the 2009 annual report. In 2009, nearly 10 trillion of the new credit was added, and the balance of real estate loans of banking financial institutions was 7 trillion and 330 billion yuan, up 38.1% from the same period last year. With the gradual increase of the uncertainty in the real estate market, the unprudent behavior in the personal housing mortgage loan business may be aggravated.

In fact, the real estate industry has become the most important collateral for Chinese financial institutions. It accounts for 75% of the local investment and financing platform, and individuals also obtain various kinds of credit through real estate mortgage.

If the real estate collateral is discounted, and even the government does not allow real estate to be used as collateral, then the credit increment will fall sharply.

In other words, if the real estate price goes up, the loan losses will be reduced by real estate as collateral, which will increase the capital ratio of banks.

High capital ratios allow banks to take up more loans.

Many enterprises that rely on bank financing gain more capital, thus increasing investment spending and expanding aggregate demand, resulting in an increase in output.

Perhaps we can say that real estate was unfortunately chosen as a credit collateral to become China's scapegoat to control inflation.

Yes, the regulation of real estate is mainly due to the excessive color of Finance and money.

In return, real estate has become the most important channel for China's illegal distribution of wealth. The scapegoat itself is not innocent. Therefore, when offering a sacrificial altar, no tears of sympathy can be gained from the people.