Opinion

George Chen

Not just an accident

George Chen
Jul 25, 2011 04:11 UTC

By George Chen
The opinions expressed are the author’s own.

We’ve talked about whether China’s economy will have a soft or hard landing. In fact, what China needs is a pause. Lots of things in China may be moving way too fast. Including our trains.

On Saturday, at least 35 people died when a high-speed train smashed into a stalled train in eastern Zhejiang province, raising new questions about the safety of the fast-growing rail network. For a Reuters story, click here.

In my view, the train crash does not only raise doubts about China’s big ambitions and effort to build its high-speed train network. It also adds to people’s frustrations over the way the country is administered. Some political commentators have said the “accident” was not really an accident but an incident, which in the end may have corruption, irresponsibility and bureaucracy to blame for.

For investors, it could be a time to short on those high-speed train related stocks. The Ministry of Railways tried the best to regain trust from the nation’s frustrating passengers that China’s latest high-speed train technology is safe and advanced. Such declarations came less than 24 hours after the tragedy that the the entire country is now mourning.

I think the market has already given its response to the rail ministry — shares of China train equipment makers fell as much as 16 percent on Monday. Meanwhile, many investors began to refocus on airlines. For a related Reuters story, click here.

Why property prices in China won’t fall

George Chen
Feb 25, 2011 08:01 UTC

property

By George Chen
The opinions expressed are the author’s own.

Let’s face it — it appears there is only upside for property prices in China.

Chinese officials from Premier Wen Jiabao on down to small city mayors have been telling the public they will try their best to keep property prices under control and have indeed done much in the past 12 months via tightening monetary policy and government restrictions on property purchases. The result? Unfortunately, the more they talk, the more disappointed Chinese people feel.

The People’s Bank of China, the country’s central bank, has so far raised bank required reserve ratios (RRR) nine times since January 1 last year. The most recent on February 18 brought the RRR to a record 19.5 percent. The theory is that as banks place more money with the central bank, market liquidity should tighten and buying power for everything, not just property, should weaken.

  •