The Chinese government is attempting to pass the baton of growth from state-funded infrastructure investment to the private housing sector. Construction cranes sprouting in big cities, busy furniture shops and soaring property sales all show that the transition is going smoothly so far, though officials are wary that housing prices may rise too high, too quickly.
China’s biggest listed property developer, Vanke, lifted its housing starts target for this year by 45%, while its rival Poly Real Estate said sales in January-July rose 143% from a year earlier.
Building companies are flat to the board. Zhang Minghui, owner of a small building company in Beijing, said, "It’s been a long time since we’ve had a day off. Several months, I think, though I can’t remember exactly.
From late last year to early this year, we basically had nothing to do. Everybody was careful with their money because of the crisis and so projects got delayed."
In November, Zhang cut his staff to three in November but is now back up to a crew of 14.
Reuters reports the economic importance of the property sector in China is hard to overstate. Investment in residential housing accounted for about 10% of gross domestic product before a property boom turned to bust in 2008, roughly the same as the contribution from the country’s vaunted export factories.
The housing market rebound in Beijing, Shenzhen, Guangzhou and other big cities means that prices are already back to their 2007 peak.
The stunning illustration is of a construction worker walking past a billboard with a real estate advertisement outside a construction site in Beijing July 10, 2009. It was taken by Jason Lee of Reuters