Outbreak of commonsense in China*

From the FT:

Li Daokui, a professor at Tsinghua University and a member of the Chinese central bank’s monetary policy committee, said recent government measures to cool the property market needed to be part of a long-term push to bring high housing prices under control. He added that there were still signs that the economy was overheating and recommended modest increases in interest rates and the level of the currency.

“The housing market problem in China is actually much, much more fundamental, much bigger than the housing market problem in the US and UK before your financial crisis,” he said in an interview. “It is more than [just] a bubble problem.”

He was speaking ahead of Monday’s announcement by the State Council that it had approved a plan to reform real estate taxes, the clearest indication yet that the government will for the first time impose an annual tax on some residential housing in order to rein in rising prices....

* The People's Republic of China, not to be confused with The Republic of China, which already has a modest Land Value Tax, of course.