Tag Archives: property market

Xiao Hu, driver

Xiao Hu

Xiao Hu is a local Shanghainese. He works as a private driver for a local businessman with a net monthly salary of 3000RMB. He has been doing this job since 1999. In 1997, he joined the ranks of millions of xiagang zhigong (下岗职工), the workers layed off by the SOE (State Owned Enterprises), who no longer could enjoy the so-called iron rice bowl, or tiefanwan  (铁饭碗). Nonetheless, leaving his work unit or danwei (单位) didn’t go hand in hand with leaving his home: like most factories did at the time, unit homes were handed over to their occupants, and Xiao Hu became a home owner overnight (he obtained a leasing that, since the promulgation of the Real Estate Law in 2007, has an explicit duration of 70 years, automatically renewable, with right to transfer and to inherit).

It took him 10 years to get his personal dwelling. At that time, the housing shortage in many cities in China was such that workers had to wait as long as a lifetime to get public housing (until the mid-nineties half the population stayed in their parents homes due to this housing shortage)1. In the meantime, three generations, eight members in total, had to live in the same 24 square meters room. As the roof was high enough, they managed to build another floor so that they could double the living space, despite feeling more cramped. They had to share the bathroom and kitchen with other neighbours. When he first moved to his new home he was overjoyed. It was a 15.7 square meter apartment in one of the old Xuhui district. Back in 1985, the average living space per capita in China’s cities was just 7 square meters (one fourth the living space per capita in 2010)2. The monthly lease was, and still is, 50RMB per month.

In 1997 the number of vehicles in Shanghai was still low. He thought becoming a taxi driver could be quite profitable, with so many people earning higher salaries, expatriates flocking to Shanghai who were not allowed to drive in China, as well as tourists who came attracted by the revival of the “Paris of the Orient”. Being a local Shanghainese was an advantage since migrant workers were not allowed to get a taxi driver’s licence.  He studied how to drive and obtained his licence, but he soon discovered that it was very difficult to earn a livelihood as a taxi driver, unless he gave up sleeping. He had to pay a monthly fixed sum of 4,500 RMB from his revenue to the cab company (which was owned by the Shanghai Government). After meals, cigarettes, gas, and car maintenance, he calculated he would need to double that amount just to get by. Therefore, he quit the job after just one year and started his current job as private driver.

While during the last fifteen years the city’s economy has increased sixfold, his salary has not kept up with this pace. He has seen how soaring prices eat up his income every year, and feels nostalgic for the time when he started and had a greater purchasing power. However, this sentimentalism doesn’t go as far as longing once more for the iron rice bowl because, as he remarks, he can fill his stomach and dress warmly (chibao chuannuan – 吃饱穿暖). As is the case in many Shanghainese households, his wife oversees the household economy, giving him a 50 RMB daily allowance. Fortunately, he holds another account for himself where he deposits tips and money he gets from overtime work. As he enjoys his daily breakfast of youtiao (sort of Chinese churros) and rice congee, he reflects on the changes society has undergone during the last two decades. He has witnessed the comeback of social classes. Among his comrades from the old factory there are many who have succeeded in business and hold several apartments and luxury cars. They belong to a new rich class who flee to Sanya during winter, and who feast on hairy crabs every weekend.

Learning how to live in a consumer society where the number of unaffordable goods does not cease to grow hasn’t been difficult, as he belongs to those who learnt how to be happy with little. However, housing is a source of anxiety again, although this time for his daughter, who is already 28 years old, and won’t get married anytime soon. Had she a boyfriend, this problem would be solved, as Xiao Hu expects any prospective candidate to have an apartment as a prerequisite for further discussions about marriage. As is the case for most young people working in Shanghai, buying an apartment is almost unthinkable with just a salary (the average price per square meter is as much as 30 times average yearly incomes3). Despite the wave of redevelopments undergone in the city in the last two decades, his neighbourhood hasn’t changed, and probably will remain like this since the local government has declared the area as protected. There is little hope for an eventual expropriation that could land the family with a large apartment located in one of the city’s new districts. He considers himself lucky though, since compensation for expropriation is something that hasn’t always been satisfying. The family is contemplating buying an apartment built on farmers’ land. Although they are aware that it’s illegal, as the law forbids citizens to buy farmers’ homesteads (and forbids farmers to sell their homesteads), they are willing to take the risk. Prices are half those of similar properties in adjacent urban areas, and the local government has been lenient so far, although demolitions do happen now and again. Risk of demolition is low, he says, as he inhales the last drag of his cigarette. They still have to wait three years till Xiao Hu’s retirement, at which point they will probably leave the apartment to their daughter and the couple will move to the outskirts of the city. Or they will stay and continue sharing housing with her, and perhaps with the next generation, like the time when Xiao Hu was working at the state owned factory.




  1. Xing Quan Zhang (2008) Housing and Urban Upgrading in Yantai, China. United Nations Human Settlements Programme (UN-HABITAT []
  2. ibid 1 []
  3. China Daily. 2013, February 21. Addressing Realty Price Rises http://europe.chinadaily.com.cn/opinion/2013-02/21/content_16242064.htm Accessed 3 October, 2013 []

Miguel Elosua

Spanish qualified lawyer; PhD in Chinese Law. UrbaChina Research Officer. Has lived in China since 2006.

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Real estate speculation and its social consequences

SPECIAL FEATURE Edited by Natacha Aveline-Dubach

China Perspectives 2013, 2.

Editorial by Natacha Aveline-Dubach

China is undergoing intense urbanisation at a rate largely surpassing anything Asia has experienced and the magnitude of which might well have a lasting effect on the global economy. Some 350 million rural residents are expected to move into urban areas by 2025. If current trends persist, 221 cities could have populations surpassing one million by 2025 – against 35 in Europe now – of which 23 could have more than five million. This urbanisation phenomenon poses a major challenge to the building industry and opens up formidable investment potential. In dealing with real estate issues in China, academic literature has largely focused on land use as a means of capital accumulation by local authorities, conflicts over expropriation procedures, or distortions in land use – especially wasteful use of farmland. However, little is known of the workings of property markets and the modalities of action in that industry. This special feature aims to open new paths of reflection on the structuring effects of property dynamics in China’s urbanisation.

Rooted in Deng Xiaoping-era reforms, China’s property market really took off in the 1990s with the growth of a private housing market. In just a few years, official steps to externalise the real estate of work units transformed thousands of people into owner-occupants. This has been accompanied by a marked rise in property prices in coastal cities. Is this because of speculative activities, or do these spurts stem from the Chinese productive system’s economic performance? The media have reported on extreme instances of real estate oversupply in several places, the most spectacular being the Ordos “ghost city” in Inner Mongolia. Mylène Gaulard notes these supplydemand distortions and defends the bubble hypothesis. She points to the abnormally high property-price/income ratio and to rising real estate debt in the Chinese economy. She traces the origin of speculative activities to 1994, when there was a convergence of fiscal recentralisation, an upsurge in local collectives’ indebtedness based on land collateral, and housing commodification… Read the full text of the editorial

Changes in the Chinese Property Market: An indicator of the difficulties faced by local authorities – Mylène Gaulard

(Download PDF)

ABSTRACT: For the past decade, China has faced an extremely sharp rise in property prices and increasingly large investments made in this sector. Although some economists consider this change to be no more than the result of the increase in urban salaries that has gone hand-in-hand with China’s strong economic growth, this article will show that it is in fact a “property bubble” resulting from the speculative activities of certain economic agents operating in this sector. Local authorities play a major role in this, especially in their efforts to increase their income, and their behaviour needs to be analysed in order to better understand that a bursting of this bubble might expose economic problems of a far deeper structural nature than those usually identified.

Challenges and Opportunities Facing China’s Urban Development in the New Era: A statistical and spatial analysis – Han Ruibo, Wang Linna

ABSTRACT: The acceleration of urban expansion has greatly impacted the study of China’s urban system, and the urban function at the national level has largely been characterised by the spatial distribution and evolution of cities. In order to understand the dynamics of urban development in China, it is necessary to analyse the history of city evolution and understand the context in which that evolution took place. The first section of this paper introduces the urbanisation process in China since the 1950s in order to demonstrate the origins of China’s recenturbanisation patterns. Subsequently, the structural transitions of city scaling and urban clusters are presented by employing Rank-size Analysis and satellite imagery, followed by the challenges brought about by these changes. Finally, the spatial distribution and transition patterns of China’s urban system are analysed using Centrographic Analysis.

Finance Capital Launches an Assault on Chinese Real Estate – Natacha Aveline-Dubach

ABSTRACT: Over the past two decades, global market finance has taken root in China to seek property investment. This article examines the spatialities and anchorage methods of finance capital within Chinese national territory. It highlights the spatial and sectoral differences in the composition of property portfolios as a function of the return/risk coupling. These differences are exacerbated by a split in the geographical origin of the funds, which determines differentiated conditions of access to land and management of the investment time horizon of the assets portfolios. The penetration of finance capital into urban space tends to increase the fragmentation and functional specialisation of districts, a phenomenon fostered by entrepreneurial urban policies. As a result, urban projects are becoming standardised in terms of both design and program. They are increasingly governed by external references that favour the expansion of multinationals and transform lifestyles and consumer habits.

Commodity Housing and the Socio-spatial Structure in Guangzhou – A study based on estate-level residential property prices – Ryanne Flock, Werner Breitung, and Li Lixun

ABSTRACT: Commodity housing has become a major engine of urban restructuring and social change in China. It is alleged to aid growing residential segregation and urban fragmentation. In this context, housing price is viewed as an important sorting mechanism. This article investigates this claim by looking at Guangzhou’s housing market and analysing data of 797 commercial housing estates. It analyses the development of commodity housing and the trends of housing prices in the city and maps the locational patterns of high, middle, or low housing affordability within this sector.

China’s Regional Strategy and Challenges in East Asia – Joseph Y.S. Cheng

ABSTRACT: China has rapidly developed a sophisticated regionalism strategy in East Asia. Minimising the region’s “China threat” perception has been a significant consideration in this strategy. Unfortunately, the ongoing escalation of tension concerning territorial disputes over the Diaoyutai / Senkaku Islands and the South China Sea, initiated by a series of high-profile naval exercises in the latter half of 2010, has reinforced the “China threat” perception and bolstered the hedging strategies of countries in the region. China is aware of its relative disadvantage, and it has been keeping its options open while allowing ASEAN to maintain the initiative.


Jacqueline Nivard

Jacqueline Nivard, Centre d'études sur la Chine moderne et contemporaine

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