麻省理工学院STL地 业实 室

RealEstateEntrepreneurshipandSocialResponsibility

Yu-HungHongFoundingDirector

MISTI-STLChinaSummerCampProgram

InformaConSession3

Outline•  InnovaConandSustainability• China’sDevelopmentModel

• ReasonBehindtheModel

• OpportuniCesandChallenges

InnovaCon&Sustainability

SocialResponsibility

China’sDevelopmentModel

Localgovern-ments

Publicorprivate

developers

Centralgovernment

AKempttoachievethepolicygoals

mandates

TheNewNormal

TheNewNormal

Tianducheng,Hangzhou,Zhejiang

source:hKp://desertedplaces.blogspot.com/2013/08/a-parisian-ghost-town-in-middle-of-china.htmlanoramio)

HousingOversupply

HousingOversupply

Central 18%

Local 82%

Investment in Public Utilities and Infrastructure: 2011

Total: 5,906.7 Billions RMB

Budget 12%

Bank loans 27%

Others 61%

Funding sources for Public Utilities and Infrastructure 2011

GovernmentDebtAudit

•  31provinces

•  291ciCes

•  2,778counCes

•  33,091townships

•  2,454,635loans

GovernmentDebtAudit•  DebtsneedtoberepaidbyNaConalandSubnaConal

governments.

•  Debtsthatgovernmentsguaranteerepaymentsiftheygo

intodefault.

•  Debtsthatgovernmentshavetorescue(repayment

obligaCons?)iftheseloansgointodefault.

GovernmentDebtsinChina

(In$trillion$Yuen)

Year$ Level$of$Government

Central$ 9.4$$$ 50% 2.8$$$$$ 53% 2.2$$$ 36% 14.4$$$ 48%

2012 Subnational 9.6$$$ 50% 2.5$$$$$ 47% 3.8$$$ 64% 15.9$$$ 52%

Total 19.1$ 100% 5.3$$$$$ 100% 5.9$$$ 100% 30.3$$$ 100%

Central$ 9.8$$$ 47% 0.3$$$$$ 9% 2.3$$$ 35% 12.4$$$ 41%

2013 Sunational 10.9$ 53% 2.7$$$$$ 91% 4.3$$$ 65% 17.9$$$ 59%

Total 20.7$ 100% 2.9$$$$$ 100% 6.7$$$ 100% 30.3$$$ 100%

Sources:$China's$National$Audit$office$(2013)

Need$to$repayGuarantee$

obligations

Rescue$

obligations

Chinese$Government$Debts:$2012$and$2013

Total

SubnaConalGovernmentDebtsinChina

(In$trillion$Yuen)Level$of$Subnational$

GovernmentProvince 1.8 17% 1.6 59% 1.9 43% 5.2 29%City 4.8 46% 0.7 28% 1.7 39% 7.3 41%County 4.0 37% 0.3 13% 0.7 17% 5.0 29%Township 0.03 0% 0.01 0.4% 0.05 1% 0.1 1%Total 10.6 100% 2.7 100% 4.3 100% 17.6 100%Sources:$China's$National$Audit$office$(2013)

Subnational$$Government$Debts$as$of$June$2013

Need$to$repay Guarantee$obligations

Rescue$obligations

Total

Whoborrowed?

(In$trillion$Yuen)

Type$of$Entity

Joint$Venture 4.1 37% 0.9 33% 2.0 46% 7.0 39%

Gov't$Agencies 3.1 28% 1.0 36% 0.0 0% 4.1 23%

Subsidized$Companies 1.8 16% 0.1 4% 0.5 12% 2.4 13%

StateOowned 1.2 11% 0.6 22% 1.4 32% 3.1 18%

SelfOfinanced 0.3 3% 0.04 1% 0.2 5% 0.6 3%

Public$Utilities 0.3 3% 0.01 1% 0.2 4% 0.5 3%

Others 0.1 1% 0.08 3% 0.0 0% 0.2 1%

Total 10.9 100% 2.7 100% 4.3 100% 17.9 100%

Sources:$China's$National$Audit$office$(2013)

Entities$involved$in$Sbnational$Government$Debts$as$of$June$2013

Need$to$repayGuarantee$

obligations

Rescue$

obligationsTotal

ForWhatPurposes?

(In$trillion$Yuen)

Purposes

City$development 3.8 37% 0.5 21% 1.5 36% 5.8 35%

Land$banking 1.7 17% 0.1 4% 0.1 2% 1.9 11%

Transportation 1.4 14% 1.3 51% 1.4 34% 4.1 24%

Social$housing 0.7 7% 0.1 6% 0.3 7% 1.1 7%

Education 0.5 5% 0.08 3% 0.4 10% 1.0 6%

Irrigation 0.4 4% 0.06 2% 0.1 2% 0.5 3%

Environmental 0.3 3% 0.04 2% 0.1 2% 0.5 3%

Industrial$&$Energy 0.1 1% 0.08 3% 0.0 1% 0.2 1%

Others 1.2 12% 0.21 8% 0.3 6% 1.7 10%

Total 10.1 100% 2.6 100% 4.1 100% 16.8 100%

Sources:$China's$National$Audit$office$(2013)

Purposes$of$Debt$Financing

Need$to$repayGuarantee$

obligations

Rescue$

obligationsTotal

Risks

•  Localgovernmentsdependonlandleasingrevenuetorepaytheirdebts.(Bytheendof2012,11province,216ciCes,and1,396counCeshaveusedfuturelandrevenuesascollateraltoborrow3.5trillionRMB,about37%ofallsubnaConaldebts.)

Risks

OpportuniCes• Re-useunder-uClizedlandandbuildingsfor:o  innovaCvestartups;o  co-workingspaces;ando  co-livingspaces.

• newbrandingstrategy—environmentconservaConandculturalpreservaCon.

Challenges• Keystakeholdersrefusetoworktogether.

• RealestatedevelopersmaynotpayenoughaKenContothetypesofservicesdemandedbycustomers.

• NeweducaConprogramsonrealestatemanagementmaybeunavailable.

Local public finances !

Proposed Land Tenure Reform Strategy !

1! 2!

Ecology and farmland

preservation and food security!

3!

Rural land tenure!

4!

Integration of urban and rural land markets!

Land value sharing!

Rural !leasehold

system!

Public land acquisition

system!

Land use !planning!

Agricultural modernization!

New town development!

Transportation!

Incomplete property rights

houses!

Clearly defined and

secure leasehold

rights !

Gradual legal reforms and policies to stabilize real estate prices!

Banking and !real estate investment

reforms!Land quota

trading system!Alternative !

local revenue sources!