BEIJING: The outlook on China’s credit rating in the second-largest economy was downgraded from” stable” to “negative” on Tuesday ( Dec 5 ) by Ratings agency Moody. China’s post-pandemic treatment has been hampered by a persistent housing crisis, high rates of adolescent unemployment, low consumer and business trust, as wellContinue Reading
shabby picturesNazmi Hanafiah chuckles hesitantly,” I managed to escape this spot.”
The 30-year-old IT engineer relocated to Forest City, a sizable Chinese-built housing complex in Johor, on the edge of southwestern Malaysia, one year earlier. He rented a one-bedroom apartment in teeming buildings with views of the ocean.
After six weeks, he was done. He did n’t want to stay in what he refers to as” a ghost town” any longer.
” I did n’t give a damn about my deposit or the money,” she said. I simply had to leave, he said. We had planned to meet in the same building building where he had previously resided.
” I’m getting chills just thinking about it,” he said. ” You and your thoughts are all there is around here; it’s lonesome.”
Country Garden, the largest real estate developer in China, unveiled Forest City as a$ 100 billion ( £78.9 billion ) mega-project as part of the Belt and Road Initiative in 2016.
The Chinese real estate boom was in full swing at the time. For middle-class customers, designers were borrowing enormous sums of money to construct both domestically and abroad.
Country Garden intended to create an eco-friendly district in Malaysia with practices, bars, restaurants, a waterpark, and golf courses. According to the company, there will finally be almost a million people living in Forest City.
It serves as a somber warning that the effects of China’s real estate problems can be felt anywhere, even eight years later. Only 15 % of the entire project has been completed as of this point, and, based on recent estimates, just over 1 % of total development is occupied.
Country Garden told the BBC it is “optimistic” the full plan will be carried out despite having debts of almost$ 200 billion.
It was said that Forest City was” a vision heaven for all mankind.” However, in reality, it was specifically targeted at the Chinese market at home, giving ambitious people the opportunity to own a second home worldwide.
The house would be an expense that could be used as a vacation apartment or rented out to regional Malay like Mr. Nazmi.
In actuality, Forest City’s remote location—built on restored islands far from the closest major city Johor Bahru—has turned off prospective tenants and given it the local moniker” Ghost City.”
It’s creepy, to be honest, says Mr. Nazmi. ” I had great hopes for this location, but it ended up being like a letdown. Nothing can be done below.
Forest City undoubtedly exudes an odd vibe; it feels like a deserted vacation spot.
A run-down children’s playground, an old car that is rusted, and maybe fittingly, a white concrete” staircase to nothing” can all be found on the desolate beach. There are symptoms by the ocean cautioning against swimming due to crocodiles.
Many of the stores and eateries in the purpose-built shopping mall are closed; some of them were simply unoccupied building sites. A strange sight is an unoccupied children’s train playing” Mind, shoulders, knees and toes” on circle while making countless laps around the store.
In Country Garden’s store right next door, there is a sizable model city that depicts what the finished Forest City may look like. A couple of bored-looking people are seated at the sales booth; the signal above them reads: Forest City. where there is never an end to joy.
The city’s duty-free rank is by far its biggest attract. The majority of the human activity in this area is found in the hands of native drinking and mounds of discarded alcohol containers on the beach.
As night falls, Forest City is completely black. There are hundreds of apartments in each of the huge apartment buildings that tower over the intricate, but only about half of them have lights on. It’s difficult to imagine that someone really resides here.
Joanne Kaur, one of the few locals I encounter, says,” This area is eerie.” ” The hallway is dark when you step out of your front door, even during the day.”
She and her partner are the only people on the entire floor, and they reside in the 28th floor of one of the building blocks. They are homeowners, just like Mr. Nazmi, and they also intend to leave as soon as they may.
She says,” I feel bad for people who actually invested and purchased a home here.” ” Forest City” is not what you see here now, if you were to Facebook it.
She continued,” It ought to be the job that the citizens were promised, but that’s not what it is.
It is difficult to communicate with Chinese citizens who purchased products in Forest City. A few owners were directly contacted by the BBC, but they were hesitant to comment, also anonymously.
Social media, however, provides some empirical evidence. One Liaoning state customer commented in a article praising the development,” This is very misleading. Forest City is currently a ghost area. There are absolutely no individuals. It is remote from the capital, has subpar living quarters, and is challenging to get around without a vehicle.
The price of my system has dropped so much, I’m silent, was one comment that asked how they could get a payment on their house.
China, where the real estate market is chaotic, is experiencing this kind of stress.
The authorities feared a balloon was forming after years of excessive borrowing by developers and imposed strict restrictions in 2021. The guiding principle of China’s leader Xi Jinping was” Homes are for living in, no guesswork.”
Big corporations have run out of money as a result of these actions to complete massive jobs.
Other problems, such as Covid’s limitations on the amount of money Taiwanese citizens could spend worldwide and travel restrictions, have made it particularly difficult for companies like Country Garden to launch international projects.
Tan Wee Tiam from KGV International Property Consultants says,” I think they definitely pushed it a little too much, too fast.” The most important lesson to take away from starting a project this optimistic is to make sure you have enough cash flow.
Evergrande, the most indebted real estate company in the world, was the subject of a bankruptcy hearing this week in Hong Kong. The determine finally adjourned the reading for a sixth time, giving the Chinese company six weeks to come to an agreement with its creditors.
Country Garden maintains that the current state of the Chinese real estate market is nothing more than “noise,” and that its Indonesian activity continues to operate as usual.
Additionally, it stated that the project was” healthy and secure” thanks to ideas to incorporate Forest City in a new special economic zone between Malaysia and nearby Singapore.
However, without access to funding, it is difficult to imagine how initiatives like Forest City can be completed or how it will draw residents any time soon. Chinese-built home is currently a difficult offer, to put it mildly.
According to Eveline Danubrata of REDD Intelligence Asia,” It’s a meat and egg condition.” Pre-sales are generally used by a designer to help finance construction.
However, buyers wo n’t invest money if they are unsure of whether they will ultimately receive their apartment keys.
Forest City is a typical example of passion versus reality when it comes to China’s real estate crisis. It is evidence that constructing tens of thousands of rooms in the middle of nowhere is insufficient to persuade people to live there, despite the fact that outside factors perhaps have contributed to the current situation.
In the end, the Chinese authorities will determine the fate of Forest City and plenty of other projects throughout China. There were rumors last month that Country Garden had been added to a preliminary list of designers who may receive financial support from the Chinese government, though it is still unclear how much.
However, it’s unlikely that individuals like Mr. Nazmi did return. He declares,” I will certainly make a more careful choice the next time.” However, I’m glad I left because I then have my life again.
4 December 2023 at 17:33PUBLISHED
Mae Fah Luang University has questioned the authenticity of a previous teacher’s state that she was mentally ill, which she cited as justification for quitting her job to pay for her PhD scholarship.
The former teacher, also known as” Dr. Keng,” is being sued by the school for 16 million baht in restitution.
Mae Fah Luang stated in a speech that she had never filed any documents to prove her mental interruption when she resigned from her position in response to an in-depth TV interview with Dr. Keng that aired on Monday night.  ,
On October 3, 2005, Dr. Keng began teaching at the university’s school of management, according to the speech. She received scholarships from the college and the Ministry of Science and Technology at the time on September 17, 2008, to do a postgraduate degree at Kent University in England.
Dr. Keng returned to work at the university on August 2, 2013, after college. She submitted her departure, which became effective on September 1, 2014, only over a year later, on August 19, 2014.
According to the speech, Dr. Keng later approved her departure after confirming her decision to resign and acknowledging the terms of fellowship payment.
The original teacher was required to pay back the Finance Ministry’s scholarships totaling 630, 207.46 ringgit and 194, 730 pounds, as well as the University of Mae Fah Luang University, in accordance with the terms of her fellowship contracts and the rules of the Ministry of Science and Technology at the time.
Scholarship award recipients are free from payments under the Finance Ministry’s contracts and regulations if they can demonstrate that their emotional state prevented them from paying off the debts with medical documentation from a public hospital.
However, the statement stated that Dr. Keng had always submitted for medical documentation to the university during her tenure or prior to her resignation.
Eventually, Dr. Keng presented clinical evidence to the Administrative Court in the province of Chiang Mai, but it was too late for her to follow through on her fellowship agreements. So, the Chiang Mai judge ruled that she had to pay back her scholarships.
On April 18 of this year, Dr. Keng filed an appeal with the Supreme Administrative Court.
Mae Fah Luang stated in the assertion that a settlement is not possible while the test is still going on. It claimed that the university had supported Dr. Keng’s desire to study abroad and had always treated her very and honestly.
The college asserted that it would follow the Supreme Administrative Court’s decision and that its actions in relation to Dr. Keng were based on legal treatments and conditions.
Former chief economic advisor Choi Sang-mok was nominated by South Korean President Yoon Suk Yeol on Monday ( Dec4 ) to serve as the nation’s new finance minister. The current president is widely anticipated to resign in order to run for office. Prior to parliamentary elections in April, which willContinue Reading
BEIJING: A Hong Kong court granted Chinese real estate behemoth Evergrande until the end of January to put together a restructuring plan on Monday ( Dec4 ), giving the troubled company much-needed breathing room as it teeters on the verge of bankruptcy. The enormous debts of the real estate tycoonContinue Reading
HONG KONG: The prosecutor asked the troubled developer to meet with relevant authorities to discuss loan restructuring terms before adjourning the hear into a bankruptcy petition against China Evergrande Group to the following month. After Evergrande’s attorneys requested an adjournment and stated that no collectors were “actively seeking” liquidation ofContinue Reading
3 December 2023 at 12:11PUBLISHED
37,579 people have been identified by the Interior Ministry as needing federal assistance to pay off debts totaling more than 1.5 billion ringgit to product fish across the country.
Sutthipong Chulcharoen, the everlasting director for the interior, announced on Sunday that 19, 061 product fish across the nation owed a total of 1.53 billilon ringgit.
The highest number of informal debtors was 2, 496 in Bangkok, followed by 1, 610 in Songkhla ( who owed 131.89 million baht ), 1, 489 in Nakhon Si Thammarat ( 49.76 million ) and 965 in Samut Prakan ( 38.53 million baht ).
According to Mr. Sutthipong, those who are unable to pay off loan fish may seek assistance with debts. Dopa. Come. region offices, municipal halls, or hotline 1567.
As Prime Minister Srettha Thavisin just promised , the Interior Ministry was urging unofficial debtors to register for assistance in order to alleviate people’s debt, he said.
Few register for new initiative on 1st day
The government’s nationwide initiative for debtors needing help to settle debts with their non-bank creditors received a lukewarm response on Friday as many appeared reluctant to sign up for assistance on the first day of registration.
The higher number of debtors registering online, though still lower than expected, suggested that many debt-strapped people were too embarrassed to come forward to register in person for help, according to several state officials handling yesterday’s registration.
Four registration options are being offered until Feb 29, namely by registering online via the website debt.dopa.go.th, through the ThaiID mobile app, by calling the 1567 hotline number of the Ministry of Interior’s Damrongdham Centre, at any district office nationwide, including Bangkok.
In Nakhon Ratchasima, only two people showed up for the registration at the Muang district office on Friday morning, while about 60 others registered online, said Natthaphat Phutsa, the district office chief.
The combined debt of these 62 people was about 2 million baht, he said, adding that no non-bank creditors in the province had registered for the debt settlement problem.
A 49-year-old petrol station cleaner who earns 9,000 baht a month and was one of the two people registering in person at the district office said she was struggling to pay the interest on 40,000 baht she borrowed three years ago during the Covid-19 pandemic.
She was forced to stop work for several months and didn’t have enough money to pay for food and rent.
She is now repaying the debt with monthly instalments of 4,000 baht which is covering the payment of the 10%-per-month interest only, leaving the 40,000 baht principal the same.
The government is well aware that many debtors might not have the courage to come to register for help in person, and that is why online registration options are being offered as well, said Deputy Prime Minister Anutin Charnvirakul.
He said the programme won’t write off the debts, but it will help people negotiate a fairer rate of interest.
At the end of the day, about 22,900 people registered, of which 21,001 people did so online, while only 1,089 people walked in for the service. The total debts were 935.31 million baht, according to the ministry.
In Ubon Ratchathani, Thotsaphon Kraiphan, a village head in Warin Chamrap district, said that even though he had assured debtors in his village they could register confidentially online for help instead of going to the district office in person, many appeared reluctant to do so.
They would have to disclose information about their creditors — who are acquaintances or residents in the same community, he said.
In a way, these debtors were thankful for the easy loans offered to them during a time when they couldn’t turn to anyone else for help, he said, adding that getting a loan from a formal financial institution was too complicated for many.
In Khon Kaen, Kritsada Thongbanthum, 58, said his debts spiralled from 10,000 baht eight months ago to 80,000 baht, as his business is not doing well and he had to keep seeking more loans from different creditors.
Had Deng Xiaoping not sought and received advice from Japan and Singapore in his creation of “socialism with Japanese and Singaporean characteristics,” China’s economic miracle would have been less miraculous. China’s current economic woes stem largely from Xi Jinping’s abandonment of this paradigm.
When Mao Zedong died in 1976, China was the second poorest among 140 countries. Deng Xiaoping proclaimed a remedy of “reform and opening up” to foreign countries, drawing from previous Asian success stories. During an October 1978 trip to Japan, Deng met with business leaders, toured a Nissan auto plant and saw China’s future.
“We are a backward country and we need to learn from Japan,” he told a press conference in Tokyo. His first official foreign economic advisor was Saburo Okita, one of the legendary architects of Japan’s economic miracle. Over the years, 22,000 advisors from Singapore came to China.
Instead of Mao’s command economy dominated by state-owned enterprises (SOEs), the government adopted a Japan-style industrial policy. Deng combined various governmental measures to direct resources to modern industry, leveraging the efficiency of private firms.
To avoid the pitfalls associated with economies favoring a single “national champion” across assorted industries, it becomes imperative for private companies to engage in healthy competition. By 2018, SOEs dwindled to 12% of urban employment and exports and one-third of business investment.
SOEs never could have created the economic miracle. Nearly half of SOEs regularly run losses, causing the economy to shrink every time they make a product. Even profitable SOEs create less growth than private companies for every yuan invested.
In a reversal of that record, Xi is resurrecting SOE dominance. In 2012, before Xi ascended, only 32% of bank loans went to SOEs. By 2016, SOEs received 83%, but these loans took a while to translate into a stronger presence in investment and employment.
This policy reversal stemmed from the Chinese Communist Party’s (CCP) worries that private companies could become a separate locus of power. In addition, Xi has compelled many private companies to accept interference from CCP branches in their management decisions, resulting in declining efficiency, as measured by return-on-assets.
Equally indispensable to growth are the foreign companies that transfer technology and drive exports. As in Japan, exports facilitated industrialization because, when Deng began, China’s people were still too poor to buy modern factory goods and could not yet produce goods that were competitive in the global market.
Singapore proposed to Beijing its own strategic solution — bringing foreign companies to China to make and export products. By 2000, according to the International Monetary Fund, foreign multinationals produced half of China’s exports, especially high-tech items.
Foreign companies exported 100% of computer products, compared to 40% of clothing. This process transferred knowledge to all new private companies that supplied 80% of the content of these exports and even to unrelated firms.
While Xi does not want to isolate China, he believes China would be more secure if it were less dependent on foreign technology and firms. He asserts that China no longer needs foreign technology as much as before.
Xi is miscalculating. In 2015, he launched a “Made in China 2025” program aimed at becoming self-sufficient and achieving global supremacy in several pivotal technologies and products. The program has fallen short.
For example, China’s tax breaks for companies issuing lots of patents caused them to shift from high-quality patents to lower-quality ones. That has actually reduced innovation, according to a study by Chinese academics.
While China has made tremendous strides in some technologies and created some world-class companies like Huawei, driving away foreign firms hurts innovation and growth.
Before Xi’s rise, foreign firms suffered procurement discrimination and intellectual property theft, but the situation has escalated in both frequency and severity. It now includes arrests of foreign personnel on dubious charges of espionage, along with demands that foreign firms involve CCP branches in business decisions.
As sales in China decrease, companies are less willing to tolerate such impositions. Foreign direct investment into China from all countries plunged by 8% in the first eight months of 2023.
The clampdown on private and foreign companies couldn’t come at a worse time. With the labor force shrinking and private investment decelerating, China cannot grow well unless it increases growth in total factor productivity (TFP) – more output from those labor and capital inputs.
During 1980–2010, TFP accounted for about 40% of the growth in GDP per worker. Under Xi, the TFP growth rate has plunged by two-thirds, which is one of the biggest drivers for China’s per capita GDP growth halving from 9% in the decade before Xi ascended to a forecasted 4% or less in the coming five years.
Rather than correct this productivity drop, Beijing tried to boost growth by building a surplus of “apartments for no one,” financed by excessive debt. This has resulted in financial turmoil and demonstrations from buyers still waiting for their homes.
Xi is either deceiving himself about the causes of China’s economic headwinds or demonstrating his willingness to sacrifice economic growth to pursue political goals at home and abroad. The effect of weaker growth on political stability is yet to be determined.
Richard Katz is Senior Fellow at the Carnegie Council for Ethics in International Affairs.
This article was originally published by East Asia Forum and is republished under a Creative Commons license.
Increased tariff ‘too high’ for households
Prime Minister Srettha Thavisin will hold a discussion with relevant agencies after news emerged that the Energy Regulatory Commission (ERC) is planning to raise the power tariff from 3.99 baht per unit to 4.68 baht per unit from January-April next year.
News of the possible rate increase has prompted renewed calls for the government to revamp the country’s allocation of domestic natural gas supplies to ensure access and fair prices.
“The rate is unacceptable. It’s too high. As chairman [of the ERC], I’ll call a meeting to discuss the rate. I can’t allow that,” he said.
That said, he conceded that the power rate is likely to be raised anyway, though by how much has yet to be decided. He also insisted the government will find a win-win solution, both for consumers and plant operators.
When asked if the government will review the country’s energy structure, Mr Srettha said the issue “will be discussed”.
The cabinet agreed to cut the power tariff from 4.45 baht to 4.10 baht per unit in an effort to help reduce the cost of living on Sept 13. Another meeting held on Sept 18 decided the rate would be further decreased to 3.99 baht per unit from September to December.
The reduction was proposed by Energy Minister Pirapan Salirathavibhaga following talks with the ERC.
Responding to the prime minister’s statement, Pongpol Yodmuangcharoen, spokesman for the Energy Ministry, said on Thursday the new rate of 4.68 baht per unit is only a suggestion.
The final decision has not been made as it is subject to review by Mr Pirapan, he said.
He said he was confident that the new power tariff would be lower than the proposed rate. “It’s based on an initial calculation by the ERC that is based on a sole factor, which is debt repayments to Egat,” he said.
The spokesman said Mr Pirapan had asked all agencies concerned to find ways to ensure electricity prices remain reasonable after the New Year holiday, adding ideally, the rate would be set at a little over 4 baht per unit.
Meanwhile, Isares Rattanadilok na Phuket, vice-chairman of the Federation of Thai Industries (FTI), said the government is unlikely to adopt the proposed rate and will find ways to push the costs down.
He said the private sector has made some suggestions, including the reallocation of natural gas in the Gulf of Thailand, adding that he thinks the power tariff should not exceed the current rate of 3.99 baht per unit.
It is reported that the ERC’s calculation took into consideration the impact on consumers and Egat’s long-term sustainability. The higher rate is meant to compensate for rising fuel costs, offset some losses the Egat absorbed and provide it with the necessary liquidity to service its debts.
Woraphop Wiriyaroj, a list-MP from the Move Forward Party, said electricity bills are expensive because, in Thailand, power generation relies on LNG imports while much of the domestic supply goes to petrochemical industries.
He said natural gas in the Gulf of Thailand, which is cheaper, should be reallocated for generation to help bring down electricity bills. He called on the government to act fast to bring down power bills.
