The companies belonging to Hong Kong businessman Li Ka-shing’s younger son Richard Li made a joint announcement. Pacific Century Cyber Works (PCCW) and Pacific Century Premium Developments Limited (PCPD) will sell their Beijing location: Pacific Century Place. It is apparent that Li Ka-shing and his son are removing all their business from mainland China. In just one year, the Li family sold over 20 billion yuan of property in the mainland. Experts believe that, as Asia’s richest man, Li Ka-shing is very sensitive to China’s economic prospects. His ‘evacuation’ will influence the decisions of the rest of China’s rich.
On April 8, PCPD, chaired by Richard Li, Li Ka-shing’s son, signed an agreement. They will sell Beijing Pacific Century Place to Gaw Capital owned by Thai Chinese Kenneth Gaw. It will be sold for US$ 928 million (about $ 5.75 billion yuan). The deal will be completed around August 28.
Pacific Century Place is a famous landmark in Beijing. It is located in Beijing’s famous Sanlitun area, and is close to Zhaolong Hotel. It is surrounded by diplomatic apartments, Sanlitun Bar Street and embassy district. This 169,900 square meter property includes two office towers, service apartments and a shopping mall. The announcement reveals that the unit price is about 33,800 yuan per square meter. The industry believes that this price is completely nderestimated. Prior to this, the project had a projected value up to 8 billion yuan.
Since last August, Li Ka-shing has frequently cashed in on assets in mainland China. This includes Guangzhou Duhui Plaza, Shanghai Oriental Financial Center and Nanjing International Finance Centre.
Li Ka-shing’s family will have cashed in on 20 billion yuan in one year, from his mainland properties, after completing the Pacific Century Place transaction.
Yang Peichang, economist: “The Li family are the most sensitive people. They have low anticipation towards the Chinese economy first of all. Secondly, they are preparing early for possible chaos in China. This is because of the increasingly prominent social disorder in the country. Thirdly, they probably didn’t handle well their relationships with the senior level officials, and can’t stay in China.”
Since 2012, foreign capital started to retreat due to sluggish domestic demand, weak exports and stressed social situations. Media have described China’s manufacturing industry is as miserable as someone crying.
In mid July last year, the RMB went down, and the capital market experienced sharp fluctuations. Sina Finance had estimated that more than one trillion yuan of hot money had diverted out of China.
Yang Peichang: “Chinese people should make a decision now. You could say the ordinary people are lambs to the slaughter. People with certain property should think about how to find a way out, since future inflation is relatively grim. From the financial point of view, inflation will be destructive.”
Economist Yang Peichang suggests that the local debt will increase tremendously.
This is because the local government has basically sold the land and there will now be no more revenue. On the other hand, the weak industry means tight revenue sources. The government can only solve this capital problem by printing money. Interest groups will also transfer a large amount of currency overseas to resist reform, and China will see money shortages. Yang Peichang indicates that it will be even worse without fundamental changes. This is because people’s security is a lack of protection.
Last year, ghost towns emerged in second and third tier cities, resulting in a cheap housing market. Recently, real estate in first tier cities such as Beijing, Shanghai, Guangzhou’s have cut prices. The new tactics to draw customers have been displayed, such as beauty model show, hot dancing and free food.
Ma Jiesen, economic commentator: “It is the end of the crazy China Real Estate.
Low prospects are showing up everywhere. The CCP is still trying to pull up the economy by investment. However, it has become less and less efficient. This is because China’s economy is slowing down, and many drawbacks will emerge.”
Being the Asia financial weather vane, Li Ka-shing’s move has highly concerned people in the capital world. Li Ka-shing’s is rarely seen to undersell tens of billions of assets in Hong Kong and the mainland. Li has further confirmed rumors that he is evacuating from Hong Kong and is now abandoning China. –