Most Chinese kept from good wages & affordable homes
|June 30, 2010||Posted by Staff under Progress Report, The Progress Report|
Most Chinese kept from good wages & affordable homes
Chinomics — China to Adopt Hong Kong’s Land Lease Model?
A bigger pie has not meant higher wages, just out-of-reach homes for most Chinese. But the government might not be afraid to do what works. We trim, blend, and append three 2010 articles from the Los Angeles Times, Jun 19 and Jun 21, on strikes and dowries by David Pierson, and the Wall Street Journal, Jun 21, on public land by Cathy Holcombe.
by David Pierson and by Cathy Holcombe
- China’s labor unrest may help U.S. manufacturers
Their demands may seem commonplace: Better pay and better conditions.
But the impact of Chinese workers walking off their factory lines in recent weeks could one day reshape China’s economic relationship with the United States.
Labor unrest at companies including Honda electronics giant Foxconn and a parts supplier for Toyota has shifted attention in China toward the gap between rich and poor and the sustainability of cheap labor. It also comes as minimum wages are rising in a handful of provinces and cities.
Workers have not shared in China’s booming economy. In 1999, the ratio of Chinese laborers’ income to the gross domestic product was 53%. Today it has declined to 40% — compared with 57% in the U.S.
In theory, getting more money into the hands of ordinary Chinese would spur the buying of goods and services. That would take pressure off Beijing to rely on exports to keep its share of the economy humming — and give US manufacturers a more level playing field.
Chinese Premier Wen Jiabao said that conditions for China’s 130 million migrant workers needed to improve. The People’s Daily, a Communist Party mouthpiece, ran an editorial saying that adjusting the gap between rich and poor was crucial for China’s economic development.
In China’s tightly controlled media, coverage of the unrest in factories has been muted. In foreign outlets there were reports that strikes were continuing at a Toyota parts factory in the northern city of Tianjin and at a Carlsberg brewery in the southwestern city of Chongqing.
JJS: The article went on to worry readers about how when people improve their lot, the economy suffers. But, how can you put the economy over the people? Isnt the point of the economy to provide for the people? Zheesh! People!
- China’s housing boom spells trouble for boyfriends
Though more women are becoming career oriented, China remains traditional. Males are expected to be breadwinners while females rear a family’s only child. Unlike in the United States, where home buying takes place after marriage, owning a place in China has recently become a prerequisite for tying the knot.
Chen Xiaomin, director of the Women’s Studies Center at the Shanghai University, said “This is a huge change in Chinese society. No matter how confident a woman is, she will lose face if her boyfriend or husband doesn’t have a house.”
When previous generations courted, most Chinese were poor. The state doled out homes through an individual’s work unit. Marriages were usually arranged, and it was customary for a bride’s family to provide a dowry — be it money, bedding, or even a sewing machine.
But in 1998, the central government launched one of the largest transfers of wealth in human history. It let people buy homes from the state, often with subsidies. That created developers, investors, and speculators.
Home prices in major cities including Beijing and Shanghai have easily doubled over the last year. A typical 1,000-square-foot, two-bedroom, one-bath apartment in the capital costs $274,000. That’s 22 times the average annual income of a Beijing resident.
In a survey last year on Sohu.com, a popular portal similar to Yahoo, 73% said homeownership was a necessity for marriage. An almost equal percentage said they had difficulty buying an apartment.
A new female archetype is the bai jin nu, or gold-digger. Bachelorette Ma Nuo has become one of China’s most recognizable bai jin nu: “I would rather cry in a BMW than smile on the back of my boyfriend’s bicycle.”
- Chinomics: China Adopts Hong Kong’s Land Model
In Hong Kong and Singapore, the median income is just over half of the United States, but the average house price is much higher. Hong Kong and Singapore property market bubbled for decades without bursting due to government. Since it relies on rents, it limits land supply to keep prices high, and for those unable to buy, it provides public housing — to about 50% of the population.
In China, government has yet to build enough public housing. Half of Chinas 1.3 billion people crowd into urban areas. Those local governments depend on land revenue. Plus they bear the billion of debt from the economic stimulus. They expect land value to save their balance sheets.
This March, Beijing increased the threshold to participate in China’s land auctions and requires winning bidders to pay 50% in weeks and the full cost of land within one month. Over time, such measures would drive small developers out of the market, and allow big ones to achieve higher profits. Meanwhile, income from selling land lets China postpone expanding the tax base, a politically sensitive issue.
JJS: A geonomic alternative is to steer clear of counterproductive taxes and rules favoring bigger players. Instead, recover all rents — whether by taxing, leasing, assessing, auctioning — then pay citizens a dividend. No matter how high the value of land, it would be shared, so housing would be affordable.
Even when the native expert says it, we don’t hear it
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