September 25th, 2021

Dionysus, Silver and Red

REAL ESTATE

The possible collapse of Evergrande, China's second largest property developer, has reverberated through global financial markets. With over $300 billion in outstanding debt, 3.8 million jobs on the line, and investments across consumer industries, the scale of the impact could be great.

The company's fall bodes poorly for China's over-leveraged and over-expanded real estate market. In a 2012 paper, YA PING WANG, LEI SHAO, ALAN MAURIE, and JIANHUA CHENG present a detailed history of the sector.

From the text:

"In 1981, over 82% of urban housing was in public ownership but by 2002, 80% of public housing had been sold, mainly to their occupiers. Comprehensive reform policies that commercialised urban housing were implemented in the early 1990s. In this reformed system, most urban housing would be provided through the market but some 15% of low-income families, with insufficient financial power to become homeowners, would require socially rented housing. Government supported affordable housing was to be the main source of urban housing and would cater for low to middle-income urban households (~70% of the population), including most public sector employees. On top of the housing market was commercial housing provision for the rich (~15% of the population).

Nominally, in two decades China had changed from a nation renting from state owned enterprises to a nation of homeowners. However, a large proportion of homeowners had not been fully exposed to the market; they purchased as sitting tenants, at prices that did not fully reflect market values. In 1997, China’s central bank encouraged all government owned banks to undertake mortgage business. The bank reduced basic interest rates seven times between 1996 and 1999, and introduced a 20% income tax on interest earned from savings. Mortgage interest rates were gradually reduced from 10.5 per cent in 1997 to 5.7 per cent in 2002. These policies were accompanied by a continuous and steady increase in housing supply. Between 2000 and 2002, over 2 million new homes were built each year in cities and towns. This urban housing development helped China successfully avoid serious impacts from the Asian financial crisis. The real estate industry emerged as a key economic sector and in some cities contributed more than half of total local GDP."

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June 24th, 2020

Running Horse

LABOR IN CHINA

In her 2007 book, Against the Law: Labor Protests in China's Rustbelt and Sunbelt, sociologist CHING KWAN LEE paints an intricate portrait of the two segments of the Chinese working class that have most acutely experienced the country's changing political economy: laid-off and retired workers in China’s industrial rustbelt, and young migrant factory workers in the export-oriented sunbelt.

From the preface:

"Although unemployment and exploitation can be found in many places and at different times, peculiarities of China’s postsocialist conditions have engendered features of labor politics that defy conventional categorization. First, the law, fledgling legal institutions, and the rhetoric of legal rights are central to labor protests throughout China, even though very few workers actually believe in the effectiveness of the regime’s ideology of law-based government. Second, leading to the formation of neither a national labor movement nor representative organizations, the several thousand worker protests that erupted every year throughout the 1990s took the prevailing form of localized, workplace-based cellular activism. With workers blocking traffic in the streets, lying on railroads, or staging sit ins in front of government buildings, these demonstrations presented a palpable threat to social stability, at least in the eyes of the national leadership. What must be emphasized, however, is that workers’ cellular activism has thus far rarely escalated into large-scale, coordinated, cross-regional unrest.

What, then, is the nature of working-class agitation in this period of marketization and globalization? Above all, I have found that the communist regime’s strategy of accumulation, in the form of what I term 'decentralized legal authoritarianism,' both generates the impetus for and places limits on working-class protests in this period of market reform. This larger political economic context of reform shapes not only collective mobilization by workers but also popular rebellion in general, and therefore is a key to understanding the institutional foundations of China’s economic dynamism and sociopolitical tensions."

Link to the publisher's page.

  • "Labour strikes in China are always launched by unorganized workers rather than by trade unions." Feng Chen on China's quadripartite wage setting system. Link.
  • "This chapter investigates the role of social networks during China's most dynamic period of urban protest (1919–1927) in Shanghai." A 2007 book chapter by Elizabeth Perry. Link. See also: Perry's groundbreaking 1993 book on Chinese labor politics in the early 20th century, and her 1980 analysis of peasant rebellions in Huaipei from 1845–1945. Link and link. ht Julian G.
  • Meg Rithmire reviews regional approaches to Chinese political economy, asking: "How have local governments differently interpreted and implemented national reform policies? What explains different decision-making regarding investments and growth strategies? And how have different local growth strategies beget different socioeconomic consequences?" Link.
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