Xu said China is on the way to becoming a mid-income country and unlike sectors such as telecommunication and energy, there is not much government interference in real estate. Nevertheless, "Just because real estate market is booming in China, it does not mean you have to get involved as it's a very local game," he told participants at the FIABCI-Malaysia Global Summit 2009 here on Oct 3 with the theme 'Reviving the Economy through Real Estate Growth'.
Xu said the real estate market in China is still very young. "30 years ago, in the 70s, flats were allocated by work units and it was common for three or four generations to live under the same roof, and in the 80s, work units still remained the only source of housing as renting was illegal and only a few people could afford commercial flats. In the 90s, the selling off of flats by work units caused a strong demand for housing. So, we are still looking at a high number of first time home buyers in the country," he said in his talk on 'Recovering from the crisis: lessons learned and opportunities for real estate markets and the global economy'.
He added that China's economy is already seeing recovery with a likely 3Q growth of 9%-10% (government target was 8%) and estimated double digit growth for 4Q. he said Chinese consumers continue to buy cars and homes. "Quite often, when Chinese people buy cars, they would also like to upgrade their homes," he said, explaining the relation between both industries and Chinese consumer behaviour.
On how Malaysian properties can be marketed to the Chinese, Xu said Malaysia has extremely affordable amenities and healthcare facilities. "Malaysia could play as a stepping stone for Chinese families before they proceed to the United State and United Kingdom," he said.
Xu, who is also director of advisory for the Economist Intelligence Unit since 2004, said policies should be more favourable to the private sector for a more stable environment: "This would mean tax reduction for corporate and personal income tax, as well as relaxing equity issuance. Financial liberalisation is the key to China's sustainable development." Inflation in China stands at -0.1%" Job creation is very important, he added as each year there are 7 million university graduates who need jobs in the country.
According to Xu, China will remain the biggest exporter of savings, with an estimated current account surplus of US$355 billion. Foreign reserve stands at USD$2.2 trillion and Xu estimated that by the end of next year, it will be US$2.5 trillion. "There is a low deposit ratio in China, at 67% compared to other countries, and this means while credit growth is explosive, deposit growth is also very high. If a bubble bursts, our banking system is strong and our balance sheet will likely to expand. I am not saying Chinese banks are better, they are just in a more protected environment compared to other countries," he said. Deposit ratio for United Kingdom and Australia, for example, is 123% and 143% respectively.
TOP PICKS BY EDGEPROP
Cheras Condo (0 Entry Cost+Pay U RM1k Every Month)
Cheras, Kuala Lumpur
2 Sty Semi D Tmn Tasik Semenyih, Semenyih
[Investor] Bandar Sunway Concept Subang Condo
Subang Jaya, Selangor
Imperial Jade Residenz @ Bandar Seri Alam
Amara Boulevard and Service Residences
Peaceful Area ,Good For Ownstay & Investment
Segambut, Kuala Lumpur
[Mid Valley Condo] Price Drop 50%+RM90k CASH BACK
Mid Valley City, Kuala Lumpur
Ready Tenant, Confirm Rental Get Up To Rm3000
Welcome Investor, Confirm Rental Beside Famous Uni
[BEST BUY]Invest 650sqft Condo Price Drop
Desa Parkcity, Kuala Lumpur
2 Storey House @ Bandar Rimbayu - Fully Furnished
Telok Panglima Garang, Selangor
BEST KL Condo Promo Package [Free Furnished KLCC]
KL City, Kuala Lumpur
LUXURY CONDO WITH INFINITY POOL,1st HOME BUYER
Youth City @ Nilai Best Investment Township Condo
Nilai, Negeri Sembilan
Twin Key Project Surround by University & Malls
KL Sentral, Kuala Lumpur
Country Heights Kajang (Taman Bukit Impiana)
Country Heights, Selangor
Bangsar 5-star condo [Rent To Own] Walk to Mall
Bangsar, Kuala Lumpur
0 booking fee FOR condo Beside UNIVERSITY
Bukit Jalil, Kuala Lumpur
Nearby Airport , Best Choice For Cabin Crew& Pilot