![]() ![]() ![]() “It’s under my name because I’m 26 years old and was able to take a 30-year loan from the bank,” Chen explained. That apartment was later sold in 2008 to a family friend about to marry, doubling their return the Chen family moved the windfall into their current newbuild, which cost 970,000 yuan (or roughly $143,000). He wouldn’t have been able to afford the apartment if he’d only had his job in the state-owned steel factory. He was making 5,000 to 8,000 kuai per month because of his ‘side hustle’ as a manager of a laundry factory. ![]() “ paid 50,000 kuai as down payment, took out a ‘personal loan’ from the property manager, and paid him off in three years. ![]() “In 1998, my dad bought our first 93-square-meter apartment (two rooms, one bathroom on the top floor of a six-story building with no elevator) for 180,000 ,” said Chen, a state worker from a typical middle class coastal family who did not wish to be named or even have their location identified. That meant a lot of complex deals building on other deals. With unreliable and government-fiddled stock markets, 70 percent of Chinese wealth is held in real estate while land sales remain the main source of income for those same corrupt provincial administrators. Property became the most reliable source of investment for Chinese families, who did everything they could to get a foothold on the ladder. Once the market was in place, however, house prices went up, and up, and up. “If farmers had received the full market value for their land and enjoyed normal investment returns,” economist Arthur Kroeber wrote, “they would now have an additional five trillion yuan in household wealth.” If you were a rural resident, then it was a riskier lottery: Some people got generous payouts from selling their land to their local government, whose officials sold it onto private developers while pocketing hefty “commissions.” Others got a punch in the face and a bulldozer through the front door. So-called boomer urbanites often got to buy their property at a peppercorn sum from their work unit (or danwei) upon retirement. Well, sort of-private citizens still can’t own land in China, but they can lease it from the government for 70 years, a period that was widely understood to be extended indefinitely. Unusually for most developing nations, China’s urban class was largely grandfathered into its equity, enjoying a relatively smooth transition from tenant to landowner. Now, it’s ditching those attempts entirely in the hopes of re-inflating the bubble that once underpinned China’s economic growth. For years, Beijing has tried to rein in prices but kept giving up under pressure from stakeholders. That middle class, now the Chinese government’s bedrock of support, is under threat from its crumbling real estate market-and with it, the Chinese Communist Party’s credibility. On the edges of Beijing, identikit housing projects stretch for miles on end, a partially complete Legoland concreting hundreds of acres of villages and farmland that once made up the capital’s outskirts.Īfter decades of Maoist hostility to private property, restrictions on the purchase of private property were finally lifted in the early 1990s: It didn’t take long for a mainland middle class to emerge, one as obsessive over house prices as any of their Western counterparts. ![]()
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