A while ago, my friend Dfzh posted an article on Facebook. It initiated a round of discussions among a few friends, with a focus on the recent property boom in China.
Some Chinese economists who argue for the merits of a Keynesian style market economy have openly defended the Chinese Government’s position. They claim that an over-priced property market is a small price to pay for preventing a sharp rise in unemployment.
I am not an economist. I cannot put forward a technical argument against this kind of fallacy. My friend Dfzh is not an economist either. However, he does represent a middle-class group in China. This group neither owns capital nor controls the State. Instead, they derive their income and status from service and management. Like many Chinese people in his socio-economic group, Dfzh has become increasingly disenchanted over the Chinese Government’s economic policy, as well as the CCP’s strong grip on power. He has regularly expressed to me his concern about a widening gap between the rich and the poor, and how this is creating social instability.
The following is what Dfzh says about the recent property market boom in China:
Two years ago when we happened to see a 120,000 RMB (some 18,000 USD) per square metre residential apartment (湯臣一品) just on the bank of Huangpu River (黃埔江) in Shanghai, we just saw it as a joke, and then took some photos so that we might be able to share this joke with others later. The complex was made up of several plain buildings alongside the river, and it had never hooked any large fish by then. We would have ignored it if someone in a guard room had not chatted with us about it.
Now it seems we are the joke instead. According to recent reports, many of these incredibly expensive houses have been sold. More and more cities, such as Beijing and Shenzhen, are selling houses with price tags of over 100,000RMB (15,000 USD) per square metre. The most exorbitant record has been produced recently in Shanghai, where a residential apartment is selling at a price of 160,000RMB (23,500 USD) per square metre! Wel laway! Standing in front of these unbelievably ultra-luxurious houses, we are speechless!
In a country where one billion peasants and “peasant-workers” or “migrant workers” are earning some 1,000RMB (146 USD) a month if they have jobs, who can afford to buy these golden houses that some said are even more expensive than prime properties in New York or other big cities in the developed world?! 20 years ago we called a rich man “10,000-yuan-family (萬元戶)” because he had assets of over 10,000RMB (1,460 USD). For the super-rich, we called them “millionaires (百萬富翁)”. That’s to say: one could afford most things he wanted, not to mention a house, if he owned that sort of money.
Today, what can one do with a million RMB? Not much really. One can’t even settle down in a house in the city! Yet how long does it take for one to earn a million RMB in China today? If you are a “peasant-worker”, that would be more than 80 years. If you are a common white-collar worker who earns 2,000-3,000RMB a month, the time frame will be reduced to 25-40 years. So, you know by now who are the prospective buyers of those houses? They are definitely not common people. They are not even rich people in a conventional sense. They are the upstarts, who are mainly CCP’s powerful members and their families, as well as businessmen who are colluding with those in power for licences to exploit the general public.
This way of looting people by producing inflation is much more malicious than highway robbery. Few Chinese people are aware of the extent to which their wealth has plundered when prices continue to rise. Some people are naive enough to think that they are getting richer because their houses have appreciated in value. Hoot! Stupid Chinese people! Black-hearted CCP bandits!