r/Economics • u/Ashamed_Werewolf_325 • 19d ago
Home prices in China’s school districts go off the boil amid crackdown on elitism to ensure balanced allocation of resources | South China Morning Post News
https://www.scmp.com/business/china-business/article/3146131/home-prices-chinas-school-districts-go-boil-amid-crackdown17
u/random20190826 19d ago
As a former Chinese person, there is one layer of this stupid system that is deeply unfair to people born in other places.
From 1949 to 1958, Chinese people living in mainland China can move freely within the country. But in 1958, the government started implementing a hukou (household registration) system and restricted movement for people within the country. Since the allocation of resources between rural areas vs. cities vary drastically, and there are extreme variations between large cities. So, every family in mainland China would have a hukou in a city or town, with a designation of either "agricultural" (for rural areas) or "non agricultural" (for urban areas).
I will give you an example: I have hukou in Guangzhou as a non-agricultural family in Guangzhou (big city). I, therefore, had a "better" education (in elementary school, since I came to Canada afterwards) than people with hukou either outside the big cities (even as a non-agricultural household) or Guangzhou residents with agricultural registration.
For me personally, I think hukou needs to be abolished permanently, as I believe that a citizen of a country should be allowed to go anywhere within that country's borders (otherwise, what is the point of citizenship?). Looking at the fact that in the 2010 Census, there were 219 million people born between 1980 and 1989, 188 million people born between 1990 and 1999 and 147 million born between 2000 and 2009, this is a sign of a country experiencing population collapse and people should be given absolute freedoms to move (and remove restrictions that prevent citizens from leaving the country).
2
u/Electrical-Contest-1 19d ago
This is very interesting! I always wondered about people’s ability to freely move about China. Moving to relocate, but also to visit different areas. Are there restrictions on domestic tourism there? What was the reason for that change to that system in China?
I can only imagine a country of that size would have very different places both in culture, development and geography.
3
u/random20190826 19d ago
The way that it works nowadays is this: you are born (to someone who already has a household registration, hopefully). The health department issues a birth certificate, and it is used to add you to your parents' household registration. You get an 18 digit national identification number assigned to you (kind of like how a social security number is assigned to you, but this number explicitly states your birthday). You get a national identity card for ￥20 (5 year validity for persons under 16, 10 year validity for persons 16-25, 20 year validity for persons 26-45 and lifetime validity for persons over 46). This card contains your name, date of birth, race, sex, residential address and coloured photo on the front and the issuing police department, issue date and expiry date on the back.
Now, domestic tourism is usually unrestricted (I am not sure if tourism to "dangerous" areas such as Tibet or Xinjiang are restricted) as my parents brought me to different places up and down the east coast to vacation (including Beijing--I climbed parts of the Great Wall before I was even 3 years old lol...). But, because your national identity card has all of this information on it, that you would be immediately identified as a non-local person. Public benefits (such as a child's education) are tied to this kind of household registration, and trying to enroll a child into school outside of your place of registration is costly (financially speaking). If you want to get a job outside of your place of registration, especially in "large" areas (Beijing, Shanghai, Guangzhou, Shenzhen), you need a "temporary residence permit" (so, basically, you will never be regarded as a local unless the local government permits you to change your registration). Some say that if you are a highly educated, highly skilled professional from a place other than a large city in China and you want to change your household registration to Beijing, you will have better luck immigrating to the United States instead (under EB-2, I assume, I am not an American and not familiar with American immigration law).
Some cities, realizing a collapse in population, had substantially removed barriers to entry in terms of household registration change. Some provinces are allowing anyone from anywhere in the country to move there and just have household registration because they are desperate for people (to work). This is hopefully the beginning of the end of hukou, which is an obviously outdated system only suitable for a command economy with huge shortages, not a highly financialized, hyper capitalistic and highly individualistic economy full of computers and smartphones (a lot of Westerners think China is huge on collectivism, which is not true. China has high income taxes and sales taxes but very low on benefits to the poor (the money must have gone into the offshore bank accounts of corrupt government officials). Its health insurance system is just as shitty as the American system with very large out of pocket costs and non-covered medications and services and its pension system is going broke for pretty much the same reason Social Security is going broke).
If China was a presidential republic (a la Taiwan aka Republic of China), I would bet that it would either be significantly smaller or have very, very decentralized control (even more decentralized than the United States, but more centralized than the European Union). Tibet, Xinjiang and Inner Mongolia have very different cultures when compared to the rest of the country, so much that you have to either give every province substantial self-governance or those areas would not even be part of China. I also happen to know that the culture of Guangdong differ significantly compared to the culture of other places on the East Coast (Shanghai, Beijing, etc...) even the languages they speak are not mutually inteligible (except, China imposes Mandarin on everyone except areas too poor to hire high quality teachers).
1
u/ItsJustATux 18d ago
Fascinating. Thanks for the write up.
trying to enroll a child into school outside of your place of registration is costly (financially speaking)
Interesting. America jails parents for this.
-2
-8
u/Terrapins1990 19d ago
Well looks like investing in property in China may be getting much harder for its populace which is sad considering investing in property is one of the few options open to them
16
u/Mexicancandi 19d ago
Did u read the article? The Chinese gov's actions are to reign in insane property values that were in school zones. From what I read the speculation was getting as bad as California's or Japan's.
-3
u/Terrapins1990 19d ago
I did read the article which is why I'm not surprised by the move but realistically values in certain school zones are elevated in every country because people want quality for their kids which makes buying up property in those areas attractive as an investment vehicle. Is anyone really that surprised by this.
7
u/EtadanikM 19d ago
You realize China’s real estate market is one of the biggest bubbles in history right?
4
u/Terrapins1990 19d ago
Yep if it were to ever to fall china would go into deep recession perhaps depression. Its because people in china do not have the same investment options as other people in other countries do.
4
u/EtadanikM 19d ago edited 19d ago
Maybe they realized that you can't keep a bubble going on forever and that it's better to pop it and face the consequences than inflate it more?
Also, the people who will lose from popping a real estate bubble are mainly real estate speculators and rich gated communities, not the average person. I have a feeling the Chinese government doesn't feel a great amount of pity for them.
3
u/InvestingBig 19d ago
What investments options do they not have? They have real estate and stocks in their local markets. The exact same thing 99% of americans are investing in.
4
u/savehoward 19d ago
$2.1 million for a 3 bed 2 bath house isn’t in the interest of any populous.
Just the opposite. Investing in proper just became less lucrative for speculative high-end housing bubble in China and more affordable for the middle class populous who live in a home instead of leaving the house empty.
That $15,000/square meter house that was 102 sq m was a obfuscation of a $1.5 million 20 x 50 foot house that was reduced 42% from $2.1 million for a 3 bedroom 2 bathroom house.
1
u/Terrapins1990 19d ago
2.1 million in areas like nyc and silicon valley for instance is expected because guess what its either the finance capitals/tech capitals of the country with large concentrations of high income earners. The assumption that price cannot go up because people are outbidding other is ridiculous. Does it get a little insane yeah but guess what people in those jobs can afford to do so. The 💡 that price can't go up because your area is in high demand is disingenuous
3
u/savehoward 19d ago
you are comparing unlike things. the difference is the housing prices in China are based on implausible expectations housing prices will skyrocket forever and creating an economic bubble, reflected by vacancy. in new york and silicon valley there are people living in those houses whereas Chinese speculative homes are extremely vacant.
one more nail in the coffin for you is banned private property because guess what, there is no private ownership of land in China. so in nyc if you bought the house, you buy the land that you can pass on to your family or sell in the far future indefinitely. all land in China belongs to the government to be leased out for 20-70 years. the idea that housing only rise because people are earning more income to spend on perishable housing without recognizing the dangers of a bubble is vile.
2
u/EtadanikM 19d ago
You realize the price to income ratio in major Chinese cities is six times that of Silicon Valley and New York City, right? There was a post literally last week talking about how the price to income ratio in Beijing was 49 - as in the average person in Beijing needed 49 years of devoting all their income to pay off the average apartment.
That's never been sustainable, and it isn't driven by the high income of local earners. It's driven by real estate speculation. Which helps no one except real estate speculators.
And now those speculators will pay for bidding the prices up so much.
1
u/[deleted] 19d ago
[removed]
1
u/AutoModerator 19d ago
Rule VI:
All comments must enagage with economic content of the article and must not merely react to the headline. This post was removed automatically due to its length. If you belive that your post complies with Rule VI please send a message to mod mail.
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.
1
u/[deleted] 19d ago
[removed]
1
u/AutoModerator 19d ago
Rule VI:
All comments must enagage with economic content of the article and must not merely react to the headline. This post was removed automatically due to its length. If you belive that your post complies with Rule VI please send a message to mod mail.
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.
37
u/Mexicancandi 19d ago
Super cool. Wished we did something similar here in the states. Teacher exchanges in poor/rich districts are an interesting idea.