With China's economy slowing more sharply than expected, the Beijing government moves to boost domestic spending by making it easier to buy a home. Fergus Naughton reports:  

Chinese homebuyers have been waiting for Beijing to unveil new measures to ease the burden of buying a new home amid a slowing economy -- and finally, authorities have followed through. Yesterday the central government announced fresh support policies for the country's slumping housing market, and it comes at a critical time.

The market will welcome Beijing's latest initiative. But much remains to be done to aid a sector that's been teetering on the brink of meltdown. More measures are expected, experts said.

"This is big news, and the actions came sooner than expected, probably because the Q3 GDP growth was worse than expected and the slowdown has proven sharper than the government has expected," said Frank Gong, an economist at JPMorgan inHong Kong.  "Boosting the property market in China is not only necessary, but also the most crucial and most important policy move to hold up China's domestic demand growth."

China's Ministry of Finance announced Wednesday night, after the stock markets had closed, a series of measures intended to stimulate the country's plummeting housing market.

According to a ministry statement, effective November 1 deed tax will be cut to 1.0 percent from 1.5 percent for first-time buyers of apartments under 90 square meters (which is generally accepted as the size threshold distinguishing average housing from more upscale digs). Mortgage downpayments will be lowered to 20 percent from 30 percent. And mortgage rates will be reduced to as little as 70 percent of base lending rates for both first-time buyers and those upgrading to pricier homes.

The current 0.5 percent stamp duty will also be abolished for individuals buying or selling homes, and land-appreciation tax for individual home sales will be waived.   In addition, the ministry said that local governments are encouraged to introduce their own policies to further reduce transaction costs and other fees in order to stimulate home purchases.

The central bank has also cut interest rates twice in as many months. Such policy moves should mark the beginning of a series of central government policies intended to ease earlier constraints on property transactions

The policy shift from "tightening" to "supportive" is widely deemed a necessary one. China's National Bureau of Statistics announced Monday that GDP growth for the third quarter was 9.0 percent - a noticeable slowdown from 10.1 percent the previous three months and the lowest quarterly growth rate since the second quarter of 2003 – though still a dream of Western economies.

Not long ago, housing prices in China seemed to just keep rising. But the rate of increase has declined precipitously in recent months. Official figures show that property prices in China's major cities rose just 3.5 percent year-on-year in September, compared with 5.3 percent in August. One of the hardest-hit regions is Shenzhen, in southern Guangdong province adjacent to Hong Kong, where prices were down an estimated 40 percent for the period.

On top of falling prices, property developers have been feeling the squeeze from shrinking transaction volumes. Homebuyers have been waiting it out in hopes that prices will fall to a lower, more realistic level. And falling prices are not good for Beijing.  In China, the property market contributes about 20 percent of GDP growth.

Sure, most developed countries would kill to have annual GDP growth rates of 8 or 9 percent.  But in China, it's widely estimated that authorities must maintain at least 8 percent GDP growth annually to generate enough jobs for youth entering the workforce -- and thereby to stave off destabilizing unrest. Now many experts expect next year's GDP growth to drop below the magic 8 percent level. China's economy is still doing alot better than in many Western countries. Still, that fact won't necessarily prevent 2009 from becoming Beijing's year of living dangerously.

     The battle to increase the life expectancy of the Chinese citizen has largely been won. Today the average Chinese lives to the age of 73, a few years behind citizens of most developed nations. Now comes the battle against rich food, cigarettes and a growing television habit. These lifestyle choices, made
possible by China's economic rise, are killing more and more Chinese every year.

     A new report, published today in the Lancet medical journal warns of "a health and economic time bomb" that could unravel China's economic miracle unless it shifts its healthcare system towards preventive policies.The rapidly aging population brought about by tight family planning policies means the country will have to find money to care for a growing numbers of elderly people who are living longer, and suffering chronic diseases like hypertension, heart disease, and stroke (now China's biggest killer).

      Afflictions common to wealthy Western countries caused three quarters of all deaths in China in 2005, compared to 47 percent in 1973, the report says.
Ironically, improved diet is leading to worse health. Meat consumption is up, but fruit and vegetable intake is down. The Chinese diet now contains more oily
food, explains report co-author, Dr. Xiao Shuiyuan of Central South University in Changsha, chairman Mao's hometown. Today's culinary Cultural Revolution runs counter to the hardscrabble, lean living of Mao's 1960s heyday. Levels of fat in rural diets rose 100 percent in the two decades prior to 2002,

At an unusual late-night press conference called for 11:45 PM Friday, Foreign Ministry spokesman Liu Jianchao announced the Olympic reporting regulations for foreign correspondents were becoming permanent. This is welcome news.  Without such a decision, temporary Olympic rules would have expired at midnight -- and we would've reverted to 90's-era regulations that required us to get government permission before traveling and conducting interviews in the provinces -- even if our interviewees were other foreigners.  

      This is another step in China's opening to the outside world, and moving closer to adopting international standards. It is also a positive legacy of the Olympic Games, which were the initial rationale for relaxing the antiquated decades-old rules in January 2007. Since then, Chinese authorities have concluded that foreign media coverage during the Olympics was generally positive for China's image -- and this undoubtedly gave more open-minded officials added confidence to push for a permanent liberalization.

     I've always felt it was impossible to revert back to those 1990-vintage regulations -- like trying to put toothpaste back into the tube. (Disclosure: I was president of the Foreign Correspondents' Club of China for three years, until May of this year.) However we're not out of the woods yet.

    One of the next steps for foreign correspondents here is to try to ensure that Chinese sources and interviewees are not intimidated, punished or (as has happened in the past) subjected to physical violence.  Despite the less stringent restrictions during the Olympics period, foreign reporters noted quite a number of implementation problems at the grassroots, including at least 30 incidents during the Games themselves.

     All too often in such cases, it appeared local authorities increasingly were pressuring Chinese citizens not to speak to foreign media. When such intimidation succeeded, foreign correspondents were unable to talk with their intended interviewees -- regardless of the more liberal rules. This is something to watch carefully.

     Here's a statement on the new regulations from the Foreign Correspondents Club of China, the president of which is Jonathan Watts of The Guardian:

Recently Newsweek's Duncan Hewitt spoke to Nicholas Lardy, a leading commentator on the Chinese economy at the Peterson Institution for International Economics in Washington D.C., about the global financial crisis and its implications for China.As export growth slows, China faces renewed pressure to boost domestic consumption, and stimulate its service sector.  Several prominent Chinese economists at a recent conference organized by the Shanghai Academy of Social Sciences emphasized that China had relied too heavily on manufacturing in recent years.   Lardy went further by explaining how the export boom of the past few years, and the resulting over-investment in manufacturing, had had a significant negative impact on the service sector. He said low interest rates and an undervalued currency were two of the main culprits. Excerpts:

Hewitt: How serious is the imbalance between manufacturing and services in China, in your view?

Lardy: There’s increasing evidence that China’s whole growth pattern has been distorted over the past five years: the share of investment going into manufacturing has doubled – and that’s just official data. There are several complementary reasons for this: one is recovery from the last slowdown in late 90s, when the share of narrow manufacturing declined to just 15 per cent which is really low – now it’s up to 30%. Also the undervalued exchange rate has increased the profitability of tradable goods.  More recently there’s also been the under-pricing of energy, which is significant.   We’ve also had an under-pricing of capital: if you can get a bank loan, the cost of capital is zero in the current environment - and that obviously favors capital intensive things over less capital intensive things, so it helps manufacturing.  For service industry the availability of cheap capital is not so important, but if you’re adding ten million tons to your steel capacity it’s very important.

At the end of this week, China will send an important signal about its commitment to greater press freedom. The trouble is no one yet knows whether it will step forwards or backwards. Foreign journalists in Beijing are eager to know because we're directly affected, but our readers will be too. What's more, what happens to reporting rights for foreign journalists may also hold hints about future prospects for the Chinese media, who are the real key to well-informed public debate emerging here.

What's at issue is State Council Decree No. 477. The decree expires on Oct 17th. It's full Orwellian name is the Regulations on Reporting Activities in China by Foreign Journalists During the Beijing Olympic Games and the Preparatory Period, which is a pretty good description of what it was about. It eased serious restrictions on the rights of foreign journalists. Before its Jan 2007 introduction, foreign correspondents had to ask for local government permission to do interviews in any province or city they wanted to visit. This required them to give the provincial foreign affairs office a full interview list and schedule. Interviewees were often swiftly intimidated or permission denied.

In practice, journalists often ignored this restriction and the authorities increasingly let us get away with it.  Nonetheless such interviews were illegal, so Decree No. 477 was a big step forward. It says foreign journalists need only obtain "prior consent" from organizations or individuals they want to interview.

It hasn't worked perfectly. Many thuggish local officials have tried to stop journalists doing their work and some reporters have even been wrestled to the ground or had equipment damaged. It excluded Tibet, and during Tibetan protests in March reporters were turned away from Sichuan, Gansu and Qinghai provinces too. Up till Sept 11 2008, the Foreign Correspondents' Club of China had documented 336 cases of interference in reporting. What's more so many incidents took place during the Olympic period that interference this year has already overtaken the whole of last year, with 176 cases by early September, compared to 160 in 2007. But it was a step forward. These Olympic reporting rules expire on Friday. So last week, someone asked the Foreign Ministry's spokesman at a regular press briefing to tell us what'll happen. Here's what he said:

"Though the Beijing Olympics is over, China's principle of opening up stays unchanged. The door of China remains open to the world. Foreign media and journalists are welcome to report in China as always. We will continue to provide active facilitation and assistance to you. This will remain Was that a "Yes"? Or was it a "No"?  It sounds OK, but might not be. You'll notice spokesman Qin Gang didn't actually answer the question. In fact, listening to him, I wondered if nothing will happen on Friday and we'll be left to go on guessing.

Chinese human rights activists had hoped jailed dissident Hu Jia would win the 2008 Nobel Peace Prize. Having a Nobel prize winner would've brought a storm of international attention to their cause. They felt they'd lost the chance of having a worldwide platform when the Nobel committee instead on Oct. 10 announced the awardee to be Finnish diplomat Martti Ahtisaari – a highly worthy but much less controversial candidate - for his three decades spent resolving conflicts like those in Aceh and Kosovo.

Hou "Maggie" Wenzhou is a friend of Hu Jia's who herself spent 18 days in detention this summer for her role in an alternative pre-Olympics "Human  Rights Torch Relay". She says she was arrested by five plainclothes police in a downtown Beijing café, hooded and shoved into a van shortly after the campaign distributed 1,000 posters in southern townships notorious for police brutality against farmers protesting land seizures.

I talked with Hou as we sat in the corner at a children's party juggling slices of sticky cake on paper plates. She told me of her disappointment at the Nobel committee's decision. Hou has known Hu Jia for four years since they combined forces to oppose the trial and imprisonment of blind activist Chen Guangcheng, from Shandong province.

She describes Hu as a "rather moderate" personality, a self-effacing type who gathered support and a reputation among China's democracy advocates because he has "a good heart" but is "more courageous" than most. "Hu Jia is a man of conscience, a man of courage, a man of very pure soul…it's not that those qualities are impossible for another person but it's very difficult to express [them] in this land", she said. Hu Jia had expanded his campaigning  from HIV/AIDS sufferers to farmers' land rights. The thirty-five year old is serving a three-and-a-half year jail sentence for subversion after he, among other things, testified online to a European parliamentary hearing.

To Hou, the Nobel Prize is a potential platform to promote China's need for human rights, rather than a booster for any one person. The winner gets "a voice to speak out worldwide".  She would be "equally happy if [jailed lawyer] Gao Zhisheng were to win it or [exile] Wei Jinsheng, or the Tiananmen mothers". The point is to "make the human rights issue more widely known and the Chinese government more embarrassed". Some would say the Chinese government has proved resistant to embarrassment -- as shown by its determination to ride out criticism of its treatment of Tibetan protesters earlier this year -- but she criticizes Western governments as simply over-willing to accept China's official promises of improvements.

Hou says that, during her detention, her interrogators eventually acknowledged that they'd nabbed her to prevent her disrupting China's image during the run-up to the Olympics. "They said, 'Look we're having a major symphony going on, and you come to play the Chinese erhu [a type of traditional fiddle]. It doesn't sound right'". Conditions inside Qincheng prison on the northern outskirts of Beijing were tolerable. She was held in a clean, new, low-rise building, more like a hotel room – her words - than a prison cell but lights were kept on 24-hours a day, and she was videoed constantly.

Hou was startled to find her investigators were "very senior", which she ascribes to official nervousness that she speaks English and studied at Harvard. As well as insisting her own May 30 detention was unlawful, she gave them pointers on correct police procedure, and repeatedly insisted that protests and multiple voices are normal. She was eventually released on June 16 after being ordered to write a "self-criticism". She denied any wrongdoing, told the police they had a genuine role to play ("That was the first paragraph", she says) but should respect others just as she respected them. As a final piece of advice she suggested China's rulers follow the example of new emperors seeking public support throughout history and release political prisoners.

Hou returned home to find her apartment stripped bare. It's not the first time Hou has been detained but it's the longest; the previous maximum was12 hours. She's also had some 100 days of house arrest in the last five years. This seasoned campaigner doesn't see any sign of China loosening up. On the contrary, she believes the wave of so-called "color revolutions" in ex-Soviet satellites since 2003 that have ousted corrupt governments of ex-Communists-in-new-clothing gave China's leaders a bad fright, and things here have been getting tighter ever since. She believes the West should pay more attention to things other than economic growth. That wish may be hard to realize, however, as the world reels under the impact of the global financial crisis.

     By Duncan Hewitt 

Ke Haiqi is excited about the apartment he bought last year. Located in a modern residential compound in Shanghai, it's a 2,000-square-foot duplex with four bedrooms, two living rooms and no fewer than six big balconies. He has access to a tennis court in the compound and a communal garden. He bought the place because he's planning to get married next year, and is currently rushing to finish renovating it in time for his wedding. Despite being a 40-minute drive
from the city center and the lack of a subway line, Ke paid about $150,000 for the apartment in the midst of China's real-estate boom, borrowing from his brother to make the 40 percent down payment and taking out a loan from a commercial bank. "For most people of my age, their family will pay part of the
cost of buying their home," he says. "Parents feel they should do this on behalf of their children."CC
     Many Chinese of Ke's generation have been chasing the lifestyle of their American counterparts. By opening up the real-estate market 10 years ago, China's leaders triggered an extraordinary boom in housing construction—the cost of the average home in Beijing has risen fourfold in the past eight years. Like many Americans, homeownership has become a significant source of personal wealth. Ke's apartment appreciated 30 percent six months after he bought it. The real-estate boom has gone hand in hand with the rapid growth of the middle class in China. Officially defined as those earning between $8,000 and $70,000 a year, it is a estimated to be 80 million strong. Although that's a small fraction of China's 1.3 billion people, it's growing quickly—15 million were added to the group between 2005 and 2007.
     With growing wealth has come rising expectations. Ke's apartment is a far cry from the traditional house of his childhood, in a small town south of Shanghai, where he shared a bedroom with his two brothers. "Most of the middle class in this city would now expect to live in a residential compound with at least a swimming pool and a nice garden, as well as good transport connections," says Li Cheng, a real-estate consultant in the southern boom town of Shenzhen. The seriously rich, meanwhile, buy themselves suburban villas or new townhouses, or move into luxury apartment compounds with names like "Rich Gate."

     This story first appeared as a Web exclusive Oct. 11, 2008. To read the rest of the story click here.

Sometimes so many headlines relate to China in so many different ways that only a list can do them justice. Or maybe I just want to save time and space, rather than create lenthy and tortuous transitions to link these disparate threads together. Here's China by the numbers, from Oct. 10 headlines:

3.6 percent -- This is today's drop in the Shanghai Composite Index, and that's the good news, if you can imagine it. Virtually everywhere else in Asia plummeted even further, and Wall Street is headed for its worst week in history. The Nikkei 225 stock index closed 9.6 percent lower. Hong Kong's Hang Seng index dropped 7.2 percent. The ASX 1200 in Sydney closed 8.3 percent down. KOSPI in Seoul fell 4.2 percent. India swooned7.1 percent.

5 -- The number of members on the committee who today announced the Nobel Peace Prize would go to former Finnish president Martti Ahtisaari for his diplomatic efforts to resolve conflicts from Africa to Aceh.  Chinese authorities were pleased that the prize did not go to imprisoned activist Hu Jia; they had indicated Hu was not the "right person" to be honored in such a way, after his name had been mentioned as a top contender.

27 -- Total for the number of people arrested so far in China's tainted milk scandal, in which four infants have died and more than 53,000 have been sickened by milk formula containing the industrial chemical melamine. Today the state-run Xinhua News Agency warned that "Law-breaking producers will be blacklisted and outed publicly."

800 million, approximately -- The number of farmers who will be affected by reforms affecting rural land use rights, currently being debated at an Oct. 9-12 communist party plenum. Today state media trumpeted rural land reform as topping the meeting's agenda. New measures are slated to make it easier for farmers to lease or transfer management rights for land, which is technically owned by the state (actually by local administrative units) and contracted to individuals or families.

17   -- The number of Chinese Uighur Muslims who've been held for years at the U.S. naval base at Guantanamo Bay, Cuba. A U.S. district judge in Washington D.C., Ricardo M. Urbina, had ordered them to be released and flown to his courtroom today, when he would discuss logistics for their release to supporters in the area.  However a Federal appeals court intervened to block the decision -- much to the relief of the Chinese government, which had enthusiastically supported the U.S. "war against terror" because it justified a crackdown against Uighur separatist in China's far Western Xinjiang region. The paradoxical twist here is that these 17 Uighurs -- who'd been captured in alleged terrorist training camps in Pakistan -- have been cleared from suspicion of being anti-U.S. "enemy combatants", but Washington is reluctant to repatriate them to China for fear that they'll be tortured back home.

73 years -- The age of the exiled Tibetan leader the Dalai Lama, who was hospitalized in New Delhi today suffering from gallstones.  Representatives of the Dalai Lama have been involved in delicate talks with Chinese authorities about his campaign for greater cultural and religious autonomy for Tibetans. The exiled leader's state of health had taken great importance after serious anti-Chinese riots broke out in Lhasa and other Tibetan communities in March. Many Chinese officials seem to believe Tibetan unrest will fade away after the death of the Dalai Lama. But a number of Tibet-watchers in the West assert that he is the key to a lasting resolution of anti-Chinese ferment on the roof of the world -- and that more extreme Tibetan activists will have more clout if he passes away before an agreement is reached.

      On Dec. 20 – in his last media interview before being detained–Chinese human rights campaigner Hu Jia never dreamed he'd be a frontrunner to win the Nobel Peace Prize. He told Newsweek that, if not for the  August 2008 Olympics, " I might be behind bars." A few days later, he was. Now Hu, an environmental and HIV/AIDS activist, has been named by Stein Tonnesson of the Oslo-based International Peace Research Institute as a frontrunner to win the prestigious award.  The institute's website stated that the time "may be ripe now to award the prize to a Chinese human rights activist just after the 2008 Olympic Games." (No Chinese has won the Nobel Peace Prize, though the exiled Tibetan religious leader the Dalai Lama did in 1989, a few months after the June 1989 crackdown on pro-democracy protestors in and near Tiananmen Square.)

Hu Jia isn’t widely known in China, thanks to strict censorship of sensitive political issues such as human rights violations. Still, the Nobel Foundation has been known to pick dark-horse candidates in the past to make an ideological or symbolic point (see Al Gore). In the symbolism department,  2008 marks the 60th anniversary of the Universal Declaration of Human Rights, so a dissident winner makes sense. Meanwhile the committee has been considering Chinese awardees for the Peace Prize for years. But in past years, such a move might have derailedBeijing’s ties to the West in the delicate run-up to the August 2008 Olympics.

Now the Games are a thing of the past. And Hu , along with wife Zeng Jingyan (an outspoken blogger in her own right who remains under strict house arrest, caring for their infant daughter) are being named more and more as possible Peace Prize winners. They're more famous abroad than at home. Though he has campaigned for a wide range of issues, from the endangered Tibetan antelope to freedom of speech, Hu and Zeng were perhaps most effective at disseminating news of human rights abuses suffered by other dissidents, such as the imprisoned blind activist Chen Guangcheng.

Hu  was detained Dec. 27;  in April he was sentenced to three and a half years for "inciting subversion of state power."  In a Nov. 27, 2008 webcam address to European parliamentarians he had made comments critical of Beijing, and later became an icon for foreign activists pushing Beijing to fulfill its pre-Olympic promises of greater civil freedoms.

The five-person Nobel Peace Prize committee will risk antagonizing Beijing, however, if it chooses Hu. Foreign Ministry spokesman Liu Jianchao has warned that the prize "should be given to the right person", specifically indicating that Hu was not an appropriate choice. The winner will be announced in Oct. 10 inOslo.