During the National "Two Sessions" this year, the All-China Federation of Industry and Commerce submitted to Chinese People’s Political Consultative Conference a speech entitled "Why China’s housing prices remain high-half of the total expenditure on real estate development flows to the government" (hereinafter referred to as "the speech of the All-China Federation of Industry and Commerce"), which caused great controversy. According to the speech, the survey of "development expenses of real estate enterprises" in nine cities across the country shows that the proportion of the total expenses flowing to the government (that is, land costs+total taxes) is 49.42%. The share of development projects in Shanghai flowing to the government is the highest, reaching 64.5%.
In this regard, Shanghai Mayor Han was interviewed by reporters during the "two sessions" and questioned that "I don’t know how the data of the All-China Federation of Industry and Commerce came from, it must be wrong". However, he did not disclose the data he had at the meeting.
On March 18th, Mayor Han Zheng said at the "Implementation of the TV and telephone conference on strengthening the administration of counties and cities according to law in the State Council" in Shanghai: "This year, the Shanghai municipal government promised that government funds will be further made public." According to Shanghai’s budget reports for several years, Shanghai’s land transfer fees account for a large proportion of government funds.
China Economic Weekly recently learned from people familiar with the matter that the Shanghai Planning and Land Resources Administration is organizing documents and calculating relevant data, and may "respond" to the data of the speech of the All-China Federation of Industry and Commerce through "public clarification" soon.
However, the content that will be "publicly clarified" will probably not include Shanghai real estate tax data. Xu Jun, the news liaison of the finance and taxation department of Shanghai Municipal Government, admitted to China Economic Weekly that the real estate tax situation is not something that should be made public, so he has no obligation to make it public, and has not received any documents from the relevant departments asking the Shanghai tax department to calculate, count and organize the income of real estate developers.
64.5% of the income flows to the government?
The speech of the All-China Federation of Industry and Commerce has attracted much attention because it involves the sensitive topic of who is the promoter and beneficiary of high housing prices, the government and developers.
According to the reporter’s understanding, Ren Zhiqiang, vice president of the Real Estate Chamber of Commerce of the All-China Federation of Industry and Commerce and chairman of Beijing Huayuan Real Estate Company, who ranked first among mainland real estate developers in 2008 with an annual salary of 7.74 million, was quite active in the dispute.
On March 11th, he wrote in his blog that the report of the All-China Federation of Industry and Commerce at the two sessions revealed the composition of China’s real estate development expenses, and made the land and tax revenue, which accounted for most of the housing prices, public, and revealed the important factors of housing price increase. To solve the problem of high and low housing prices, we should start with the government, because "it is difficult to produce cheap bread with high-priced flour."
According to the speech of the All-China Federation of Industry and Commerce, "Shanghai has the highest share of the total sales revenue of development projects flowing to the government, accounting for 64.5%, and correspondingly, the share of enterprise surplus is the smallest, accounting for only 4.15%".
This data seems to subvert people’s views on the "profiteering" of real estate developers, but not only the mayor of Han Zheng, but also many officials of the Shanghai Municipal Government expressed disapproval in an interview with China Economic Weekly.
An official of the Shanghai Municipal Government who asked not to be named told the reporter of China Economic Weekly: "You can take a closer look at the speech of the All-China Federation of Industry and Commerce. The data and some opinions used are from real estate developers. The speech is completely covered with the cloak of the All-China Federation of Industry and Commerce, protecting the interests of real estate developers themselves. "
So what is the core data source of such a controversial speech?
China Economic Weekly learned in the survey that the speech of the All-China Federation of Industry and Commerce was brewed in two research reports of its subordinate, the Real Estate Chamber of Commerce. In the second half of 2008, the Real Estate Chamber of Commerce of the All-China Federation of Industry and Commerce visited 62 developers in 9 cities, including Beijing, Shanghai and Guangzhou, involving 81 real estate projects, and finally formed a cost analysis report. The full name of the report is "Overview of the Basic Situation and Main Conclusions of Real Estate Development Expenses and Sales Income Analysis in China" (hereinafter referred to as "Introduction").
On February 6th this year, the Introduction of the Real Estate Chamber of Commerce was submitted to the All-China Federation of Industry and Commerce in the form of the Investigation Report on the Development Expenses of Real Estate Enterprises in China (hereinafter referred to as the Investigation Report), hoping to serve as the speech of the CPPCC National Committee of the All-China Federation of Industry and Commerce during the two sessions this year. After that, the speech of the All-China Federation of Industry and Commerce caused an uproar.
After comparing the above three documents, the reporter of China Economic Weekly found many questions. For example, in the survey of 81 projects of 62 companies in Introduction, the sampling seems unreasonable.
In Shanghai, Introduction selected 30 projects from 29 companies, 31 projects from 19 companies in Guangzhou, and 7 projects from only one company in Beijing.
What is even more incredible is that, as a "professional survey" of a national real estate enterprise chamber of commerce, four of the nine cities (Xi ‘an, Suzhou, Chengdu and Shenzhen) only selected one project from one company. Among them, the project in Chengdu is only in the "planning and design stage", while the companies in Suzhou, Xi ‘an and Shenzhen are "small", and their "sparring" nature seems too obvious.
In addition, the reporter learned that all the statistical data in the speech of the All-China Federation of Industry and Commerce came from the "REICO Studio", which was jointly funded by the Real Estate Chamber of Commerce of the All-China Federation of Industry and Commerce, Midtown Alliance, Wantong and Huayuan. Some professionals told reporters that the accuracy of the survey data is worthy of scrutiny, because there may be selective sampling problems, which leads to the unfairness of the scientific nature of the survey.
The secretary and mayor shouted for price reduction.
Behind the "war of words" is the wrestling between the government and real estate enterprises on the issue of "whether to protect or suppress housing prices".
"In the past six months, there have been various indications that Shanghai’s real estate policy has turned, and the government’s request for real estate developers to reduce prices has become more and more clear." A senior Shanghai real estate industry insider told China Economic Weekly.
The reporter noticed that after entering January 2009, Shanghai leaders frequently conveyed such information to the outside world: Shanghai’s housing prices are on the high side, and real estate developers should "follow the trend" and "actively reduce prices".
During this year’s "two sessions" in Shanghai, Ni Jianda, president of Shanghai Chengkai Group, and Ji Baohong, chairman of Shanghai Wangyuan Real Estate Company, as representatives of Shanghai real estate developers, put forward their opinions to Yu Zhengsheng, secretary of the Shanghai Municipal Party Committee, and Han Zheng, mayor of Shanghai, respectively, and thought that the Shanghai municipal government should stabilize housing prices and should not build affordable housing and low-rent housing on a large scale.
For such an idea, on January 19th, Yu Zhengsheng, secretary of the Shanghai Municipal Party Committee, made it clear: "House prices can’t be high and can’t go up any more." On February 21st, Han Zheng, the mayor of Shanghai, made it more clear: "At present, housing prices in Shanghai are indeed on the high side, and housing prices are generally regulated by the market, but the government should use some policies to guide and promote consumption, and more people will buy houses at lower prices."
A person from the real estate industry in Shanghai told China Economic Weekly: "According to the secretary and mayor, it is impossible for Shanghai to introduce the policy of tax refund and home purchase. While the secretary and mayor call on real estate enterprises to actively adjust prices, they should also think about the real reasons for the high housing prices. This is the original intention of the All-China Federation of Industry and Commerce to issue a research report."
Is there a gray expenditure in the developer’s 30% profit?
Just as people were "expressing their opinions" on the issue of "data", Cheng Siwei, a famous economist who was the vice chairman of the 9th and 10th the National People’s Congress Standing Committee (NPCSC), threw out his views on the current composition of high housing prices. During the "two sessions", he said in an interview with the media that in 2005, he and his doctoral students made a housing price reference model, and then checked three points in Beijing, Shanghai and Fuzhou.
Cheng Siwei revealed: "As a result of the check, the house price cost, including land price and building materials cost, accounts for 50%, the government’s taxes and fees account for 20%, the developer’s profits account for 30%, and part of the developer’s 30% is gray cost. To put it bluntly, it is the cost of bribery. One is that developers take the initiative to pay bribes, and the other is that powerful government workers ask for bribes. If you don’t give me money, I won’t give you a batch or do it for you. "
In fact, over the past year or so, among the important corruption cases in Shanghai, there are not a few people involved in real estate. Yin Guoyuan, former deputy director of Shanghai Real Estate Bureau, Kang Huijun, former head of real estate speculation in Shanghai, Wang Miaoxing, former party secretary and chairman of Shanghai New Long March (Group) Co., Ltd., Zhou Xiaodi, a real estate tycoon in Shanghai, suspected of illegally reselling land use rights, Qin Jinlong, former president of Shanghai Zhongxiang Group, suspected of embezzling state-owned assets of 160 million yuan, and Zhang Keming, former deputy head of Putuo District in Shanghai, all seem to reveal the existence of "grey areas" in the real estate industry.
The reporter noted that although the "gray expenditure" was not mentioned in the Survey Report submitted by the Real Estate Chamber of Commerce to the All-China Federation of Industry and Commerce, an "unforeseen expense" was seen from the cost analysis in the Overview, which accounted for 3.08% of the total cost.
Editor: Zhang Renhe
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