Economist red-faced over Shenzhen property bet
Embarrassed mainland economist Xu Dianqing has apologised over his bullish bet on the Shenzhen property market a year ago, adding fuel to an already heated debate on the subject.
Professor Xu was quoted by mainland media during last year's housing boom as saying that Shenzhen property prices would continue to rise in line with economic principles.
'Let's be a bit more candid. If Shenzhen's housing prices are one fen lower [in a year's time] than they are now, I will take out a full-page newspaper ad as an apology to Shenzhen residents,' the professor said at a forum in Shenzhen on July 11 last year.
Professor Xu, a part-time professor with Peking University's China Centre for Economic Research, admitted in his blog on Tuesday that he was wrong.
The about-face comes as the world economy continues to reel from the subprime crisis in the United States and mainland stock markets shed more than half of their gains since the beginning of the year because of economic uncertainties. Natural disasters have also had an impact, particularly the Sichuan earthquake of May 12.
Along with other major cities such as Beijing and Shanghai, Shenzhen has ridden a property boom in the past four years, with housing prices rising to records of about 19,300 yuan (HK$21,980) per square metre in August last year.
But prices nosedived to 11,143 yuan a square metre in May before bouncing back up to 14,600 yuan last month, due largely to the manipulation of government statistics.
Li Ling , a researcher for Shenzhen World Union Real Estate Appraisal, said the city's property market had shrunk by 20 to 50 per cent since last summer.
'Although summer has been the traditional peak period for the mainland real estate market, Shenzhen's property sales and prices are decreasing,' Mr Li said.
'We have seen more homebuyers rather than speculators in the past six months, but it's expected that the property prices will go down further, with limited homebuyers and the government's credit tightening measures.'
Chen Qian , a mainland property commentator who disagreed with Professor Xu's view on Shenzhen, said homeowners there might not be ready to accept just an apology if they became heavily indebted after taking advice from people such as Professor Xu.
'Many homebuyers used up their savings from three generations to buy a house and will spend the next 30 years paying back home loans,' said Mr Chen, better known on the mainland as 'Niu Dao' or 'Bull Knife'.
Professor Xu's apology triggered outrage on the internet. Some suggested homebuyers in Shenzhen should sue him.
'Many Shenzhen residents believed in him and followed his advice to buy an apartment at a high price,' one netizen said. 'Why did we believe in him? It's because he is from an economic research centre of a renowned university.'
An information technology engineer in Shenzhen questioned the professor's integrity, accusing him of being 'a spokesman for the property developers, instead of an independent scholar'.
The professor's apology has called into question of the ethics of many mainland academics who have been blinded by material gain to become cheerleaders for vested interest groups.
Mr Chen said the professor's comments showed he had not done his homework.
Beijing-based economic analyst Liu Zhengshan said the bet was an insult to economic studies and 'a testament to the widespread shallowness among mainland academics'.
Professor Xu admitted it was not professional for a professor to bet on property prices, and he told mainland media that his full-page apology would be out on July 11.