China began to allow private homeownership only
in 1998, setting the stage for an historic urban land
rush. Now the government is trying to engineer
a different kind of transformation: getting more
people to rent.
After a public outcry against spiraling housing
costs, President Xi Jinping used the milestone
19th Party Congress in October to pledge that
the nation will make rentals as important as
purchases. City governments from Beijing to
Shanghai have earmarked public land to auction
to property companies that would develop rental
projects only. Developers including Country
Garden Holdings Co. have announced plans to
build millions of rental units. State-controlled
banks are offering large credit lines to developers
for financing such projects, and the Shanghai
Stock Exchange is encouraging the creation of
investment products similar to real estate invest-
ment trusts, backed by rental income.
“The push for rental properties shows a new
model is starting to emerge,” says Shen Jianguang,
chief Asia economist at Mizuho Securities Asia Ltd.31
GARLINGHOUSE: COURTESY RIPPLE. APARTMENT: QILAI SHEN/BLOOMBERG
THE BOTTOM LINERipple wants to change how banks move
money around the world. That may or may not have anything to do
with the digital currency XRP.○China’sgovernmentwantstomakeiteasiertoputoffbuyingahomeToPayRentIs
A rental apartment
in Shanghaitransactions to send money between the two
countries, says Nicolas Palacios, the company’s
chief financial officer. Each of those has averaged
from $500 to $1,000, he says. On Jan. 11, Ripple
announced that MoneyGram International Inc.
would begin testing the currency for sending
remittances. Two more remittance companies
have signed on to test XRP since.
XRP has fallen 54 percent from $2.92 in
early January. Swift’s Newman says such vola-
tility is bound to turn off bankers and their cli-
ents. “If the value of a cryptocurrency is going
up and down like a yo-yo, this isn’t a serious
medium of exchange,” he says. “It adds unnec-
essary complexity. The solution is worse than
the problem.” Garlinghouse says XRP’s first
adopters won’t be big banks, butcompanies
sending money in less common currencies.
The subtleties of the global bank payment
system may be lost on traders who just want to
get in on anything crypto. “It’s important forinvestors to be aware of the qualitative differ-
ences between XRP and other cryptocurrencies,”
says Angela Walch, a research fellow at the Centre
for Blockchain Technologies at University College
London. Among them: Ripple’s outsize role in XRP.
Ibrahim Alkurd, a university student in Wales,
scooped up some XRP at under $1 in December
after he heard rumors it would be listed on
Coinbase, the big U.S. exchange. That didn’t
happen, but Alkurd also liked that Ripple had
partnerships with banks. The likelihood of XRP
“doubling or more when it was at 30¢ was far
more probable than Bitcoin doubling,” he says.
Michael Jackson, a partner at Luxembourg-based
Mangrove Capital Partners and a cryptocurrency
investor, has a different take on XRP’s rise: “I
haven’t found anyone who gets it.” —Matthew
Leising and Edward Robinsonin Hong Kong. It would be something in between
the capitalist frenzy that’s seen Beijing come to
rival Hong Kong, the world’s priciest city, for hard-
to-afford housing, and the previous communist sys-
tem where dwellings were allocated by work units.
Other measures to calm the market, including a FINANCE Bloomberg Businessweek January 29, 2018