The local governments just got bailed out, maybe that was part of spurring them to cough up some funds for this project? Twisted logic, admittedly, but everything in China appears to run like this.
China Drags Feet on Affordable Housing
According to a recent report (in Chinese) from the state-run Xinhua news agency, construction has begun on only 30% of the 10 million units of public housing the central government has pledged to build this year.
An unnamed funding department head at a Shanghai-based bank recently told the Oriental Daily that because of credit tightening in recent months, banks are left with little to lend for property development, even government-backed public housing projects (report in Chinese).
“There are lots of (public housing) projects but little cash around. It’s like we have ten pots but only eight lids,” a property executive told the Shanghai newspaper.
China cracks the whip on affordable housing
Faced with growing public anxiety over rising costs, Premier Wen Jiabao told China's legislature in March the government would ramp up a campaign to build affordable housing for the country's millions of low-income earners.
The subsidised housing will cost an estimated 1.3 trillion yuan ($200 billion), with about 500 billion yuan provided by the central and local governments and the rest coming from the private sector, Xinhua news agency said.
But less than one-third of the low-income homes to be built this year in some cities had started due to a lack of funds and some projects had quality problems, Xinhua said.
They've really painted themselves into a corner. The survival of the government hinges on publicly financing an additional building boom in an environment of extreme elevated costs caused by a public/private sector building bubble.
Meanwhile . . .
The bellwether Hang Seng has nearly retraced down to the Japan Earthquake/Fukushima sell off.