The opening of the 492-meter Shanghai World Financial Center on August 28 was curiously subdued, despite a higher-than-expected occupancy rate of 45%.
Minoru Mori, the man behind the mainland’s tallest skyscraper, expressed optimism about prospects for the building and Shanghai’s property market, citing strong demand for premium office space.
But elsewhere, the outlook was less cheery. Vanke, China’s largest listed property developer, saw sales plummet 35% in August to US$595 million, showing that weakness in the property market was no longer a point for abstract discussion. In late August, Vanke slashed prices up to 20% to try to boost sales.
Earlier buyers were so incensed by the price cut – and the company’s refusal to give refunds – that they trashed a Vanke showroom and office in Hangzhou. Although this was an isolated incident, it suggested that a worsening economy could spur similar public discontent elsewhere.
Beijing’s priority is to stave off public panic as it introduces measures to help weather the storm.
These concerns are not confined to property. As the Shanghai Composite Index flailed around the 2,000-point mark in mid-September, the Communist Party’s Publicity Department ordered major domestic financial websites to avoid negative reporting on China’s stock markets. Earlier, the China Securities Regulatory Commission had introduced new rules ostensibly aimed at preventing brokerages from issuing misleading information, but also considered an attempt to stem the flow of bad news.
The efforts at controlling information came in the wake of a string of disappointing data all pointing to weaker growth. Economic expansion in Shenzhen, the city at the heart of China’s principal manufacturing region, has slipped to a 30-year low. This would appear to confirm the extent of the strain on export-oriented firms, prompting concerns about job cuts.
Hopes that domestic demand could stand in for falling export numbers were dealt a blow as August’s trade data showed a huge decline in imports.
It’s too early to say whether frustration and anger, such as that directed at Vanke, could spread to other areas of the economy. But with ongoing worries about inflation and falling capital markets continuing to erase wealth, Beijing will have its hands full.