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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: donald sew who wrote (33548)	11/11/1998 9:31:00 PM
From: Ramsey Su	Respond to of 94695

Donald, friend just returned from HK and S China. Black market is around 9 yuan to the dollar vs, I think, around 8.2 yuan official. He also said once you cross the HK SAR border into China, things are dirt cheap. Competition must be heating up. SCMP also just reported a double digit drop in exports last month. The only thing positive about China is Zhu Rungji. If he succeeds in keeping China afloat this round, he should win the Nobel price for economics. He got some bank reform projects starting 1999. China will probably solve their bank bad debt problem before Japan starts tackling theirs. Ramsey

To: donald sew who wrote (33548)	11/12/1998 7:15:00 AM
From: robnhood	Read Replies (2) \| Respond to of 94695

Naz new highs---- members.aol.com

To: donald sew who wrote (33548)	11/12/1998 9:08:00 AM
From: Haim R. Branisteanu	Respond to of 94695

Today I also read an article that Shanghai RE is on shaky footing.(on Ask Mohan Tread Haim Shanghai Offers Tax Breaks To Bolster Housing Market By IAN JOHNSON and KARBY LEGGETT Staff Reporters of THE WALL STREET JOURNAL SHANGHAI, China -- Faced with a collapsing real-estate market, China's biggest city is pushing Western-style tax breaks to spur sales. Wang Jian had always wanted to buy a house with a yard. But the 31-year-old trader with German trading company Melchers GmbH had always found prices too steep. Last month, however, she heard about a new government policy that would allow her to deduct 100% of the price of a new home from her tax bill. "The new policy really made the difference," she said. "It pushed me to buy." That's exactly what Shanghai authorities had in mind when they drafted their new tax policy a few months ago. For each year until 2003, it allows home buyers to deduct up to the full purchase price of their home from their income taxes -- giving most buyers an effective income-tax holiday for the next five years. Foreigners Buying The measures are spurring a rush of young, affluent Shanghainese eager to buy. The policy is too new -- it was promulgated in July but never publicized -- and China's bureaucracy too inefficient to know exactly how many are buying, but anecdotal evidence suggests word is now spreading quickly, with hundreds, perhaps thousands already taking advantage of it. At Melchers, for example, Ms. Wang estimates that a dozen of her colleagues are planning home purchases because of the new policy. Said Julia Duanmu of realtor First Pacific Davies: "In many foreign companies, we're seeing half the staff sign up." The effects would be larger but for China's ineffective income-tax collectors. In China, low salaries and myriad ways to cheat tax laws mean few people pay income taxes. The best corporate citizens are foreign companies, which pay higher salaries and have enough fear of the government to make sure all their employees pay taxes. That means the new housing-tax deduction is basically limited to the thin class of foreign-employed young professionals who fill Shanghai's bars and restaurants. While the beneficiaries of the new policy are relatively few, however, Shanghai's real-estate glut is huge: This year alone, the government says it will build approximately 14 million square meters of housing -- only 60% of which will find buyers. Although relatively few in this city of 14 million people, employees of foreign companies still number about 19,000 and earn about five times the wages of state-sector employees. That means the new policy should help Shanghai's beleaguered high-end housing market, where prices for villas and top-rate apartments have fallen by about half during the past two years. Savings of $16,000 Ms. Wang's new home, for example, cost $84,500 -- but it was priced at more than $100,000 two years ago. She estimates the government's tax policy will save her $16,000 in taxes, effectively cutting that much off the price of her bungalow in Shanghai's western suburbs and making it an affordable luxury. Lu Yongquan, a senior administrator with the Shanghai tax bureau, said officials are "trying to make tax policy for the housing market more in line with systems like the U.S., where tax incentives are used to spur home purchases." So far, he said, "initial interest is huge," and officials are scrambling to answer taxpayer inquiries. Although the policy is temporary, Mr. Lu said it may be extended if results are satisfactory. Other cities also are studying the policy. A longer-term policy might encourage more expatriates to take advantage of the tax breaks, said Alice Wood, director of Asiana Pacific, a real-estate agency. "A lot of people are interested, but worried that the government may cancel the rule next year," she said. For many people, though, the immediate savings are too good to pass up. Fanny Zhong, a 26-year-old employee of U.S.-based advertising company Leo Burnett Co., figures she can use the tax breaks to recoup 8% of the $33,800 purchase price of a house she bought in Shanghai this year. Next step, said Ms. Zhong, may be to become a landlord. "We're even thinking about buying a second house," she said. --------------------------------------------------------------------------------