Housing Crisis and Corrupt Government



Source: http://news.pub.house365.com/whestate/system/2009/11/09/010035817.shtml

From news.pub.house365.com


ChinaGeeks translated an article from China Youth Daily:

Housing is meant to be a one of the basic necessities of life, but at present it has become a very common problem. If the people want to realize their dream of having housing, they must count on the government to move. If government employees could feel the pain caused by these housing problems, that would give them the impetus to do something. But housing welfare for government employees is widespread, and it allows them to distance themselves from the housing market. Whether housing prices are high or low has little effect on their housing, so we must take useful steps to get them to do something. We can’t rely on their senses of responsibility or their consciences.

If the law has banned it, but civic organs are doing it openly, then that is public corruption! This kind of corruption not only destroys the government’s incentive to regulate the housing market, it gives government employees a vested interest in the continued rising of housing prices. Because government employees can get houses easily, the value and profit potential of their property increases as the amount of property they have goes up.

The existence of corruption impedes national efforts to safeguard the housing [market]2. Commercial prices are so high they’re untouchable, so a lot of people have placed their hopes in [the government] safeguarding the housing [market]. And while it’s popular right now to talk about protecting the housing market, this hasn’t really helped the common people much either, and the reason is again corruption. As commercial prices rise, the profit potential for those in power through rent-seeking rises. There has been a mass of construction in the past few years, which should bring housing prices down, but for the corrupt officials who’ve been bought by businessmen and control interests in the housing market, what reason is there to bother with “safeguarding housing”3. Money is owed on “safeguarded housing” all over, and in addition to the connections with the GDP and land finance, corrupt officials are also partly to blame.

It is an interesting angle to look at the housing crisis in China. The author assumes that the solution of the rising housing price is government official’s responsibility and conscience. And because “government employees can get houses easily”, they couldn’t “feel the pain caused by these housing problems”, so they don’t have the “impetus to do something”.

The corrupted government officials should be blamed, obviously, since the corruption behaviors shouldn’t happen anyway. The close relationship between developers and government officials is widely known in China. Sheltered under the local government’s umbrella, developers could pay no attention to the laws and rules, and manipulate the housing market.

But the corruption couldn’t be solved by arresting one or two authorities, it can only be prevented by improving China’s legal supervision system, which means, the centralization of power should be changed. If the legal supervision system is functionally running, if government is under the surveillance from independent organizations and institutes, the corruption will have no place to hide.

Hard to Live in Big Cities

Source: Daqing Daily

The housing price in China surged at its fastest pace in recent 5 years in March. It is good news for real estate developers and brokers, but bad news for home buyers, especially the ones in big cities. Daqing Daily reported that some home buyers in Beijing were enraged by the inordinately increased home price. They protested against it by stopping a developer’s car, after they got the news that the price of two condos they were looking for rose RMB 4000 per square meter, or $54 per square feet in a single day.

Buying a condominium in Beijing or Shanghai is far beyond middle-income class can afford, considering the housing price and their salaries: the median sales price of a condo in Beijing and Shanghai is RMB 20,000 per square meters, or $286 per square feet. At this price, it will cost $286,000 for a two-bedroom condo with 1,000 square feet. This is a huge amount for the middle-income class in China, whose average salary is only around $10,000 per year.

But people are still moving into, or trying to stay in big cities, especially those ambitious young generations. As far as I know, most of my classmates chose to stay in Beijing after their graduation. “Other people will regard me as a failure if I go back to my hometown rather than working in Beijing”, said one of my classmates, before leaving the collage.

Many young college graduates like her are called “ant group” by Chinese media recent years. They share apartments with others to cut living costs. They transfer from the residence to the company, spending 2 to 4 hours on overcrowded buses and subways every day. They live in poor life, but holding the dream of becoming success in the big city-that is also the reason they choose to stay.

Source: Legal Evening, Lin Hui, (法制晚报林晖/CFP)

I came across with this news photo the other day. The 25 year-old girl in the photo is living in a capsule apartment in downtown Beijing. The apartment is called a capsule because of its tiny size-only 100 square feet, without private kitchen or bathroom, only big enough for a twin size bed and a small table. The capsule house is rented $30 to $36 each month, much lower than the other apartments, that’s how it attracts people.

I have no idea how it feels when living in a 100 sq ft apartment, but it must be terrible. I think maybe it is the time for ambitious Chinese young men to turn and walked away from the big cities. They deserve a much better life in their twenty or thirty. They should enjoy the life as well as explore their career, both of which are equally important for the short journey of the life and could be easily achieved in a middle city.

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