Cities are rich in China?

The mad growth of China’s Glorious Thirty has enriched part of the Chinese population. Cities are among the big winners. The urbanization rate in China is approaching 60% of the population. 

Beijing and Shanghai in the lead

A study by the Bank of China shows that the average wealth per household is 3.179 million yuan ( 450,000 USD) in Chinese cities.  Beijing leads these cities, with an average of 8.928 million ahead of Shanghai, 8.067, and the cities of Jiangsu, 5.069. Disparities are wide, of the 30 provinces, regions and municipalities (managed directly by the central government) in the study*, 8 are above average, with Xinjiang province in last place. See table below. 

Household housing wealth in urban areas in millions of yuan :

1Beijing8,928
2Shanghai8,067
3Jiangsu5,069
4Zhejiang4,807
5Fujian4,183
6Canton3,998
7Tianjin3,616
8Hebei3,539
9Anhui3,140
10Shandong3,020
11Qinghai2,856
12Hainan2,825
13Ningxia2,667
14Guizhou2,470
15Yunnan2,429
16Chongqing2,393
17Shanxi2,382
18Henan2,351
19Hubei2,349
20Hunan2,294
21Jiangxi2,193
22Sichuan1,933
23Inner Mongolia1,904
24Guangxi1,817
25Shaanxi1,808
26Heilongjiang1,736
27Liaoning1,716
28Gansu1,697
29Jilin1,415
30Xinjiang1,275

Unsurprisingly, China’s eastern facade is the richest, with an average of 4.61 million yuan compared to 1.65 in the northeast, 2.076 in the west and 2.635 in the center.

杭州

Real estate above all
Real estate occupies 70% of this heritage. 96% of households are owners, 58.5% own one property, 31% two and 10.5% three. In comparison, the study recalls the data of some Western countries, where the number of owners in the whole country is less important: 

Countries by home ownership rate :

CountryPercentage
Australia67
Canada66,5
France64,9
USA64,2
England63,2
Japan61,9
Turkey60,4
Korea56,8
Germany51,7
Hong Kong50,4
Switzerland42

Owner, yes, but!
Remember that Chinese owners are not owners in a certain sense! A Chinese owner doesn’t have a lifetime title of ownership, but a right of use of 70 years for the residences from the date of authorization of the soil, before construction, and 50 years for most other properties (industrial, commercial).

The largest differences in wealth are explained by the ownership of stores and factories. Owners of business assets have an average wealth of 7.768 million, 3 to 4 times more than those who do not own business assets. 
99.7% of households own financial assets, with an average of 649,000 yuan or 20.4% of average wealth.
56.5% of families have debts. 75.9% of debts come from the purchase of a home.

If this study is interesting, it should be remembered that it concerns only 60% of the population, the urbanized one. The wealth effect comes mainly from real estate market prices. For example, Beijing has an average price per square meter close to 60,000 yuan, or 8,450 USD. For the centre of the capital, the budget has to be increased significantly. Moreover, the surface area is not calculated in the same way. The common areas are included. An apartment of 100 square meter in China may correspond to 88 sq in Europe, or even much less in the large complexes. You can go down to 72. The term “efficient housing rate” is therefore used, 得房率. Thus, the habitable square meter is much more expensive. 

For more information, we will have to wait for a study on the whole of China. With lower sums? Certainly!

* The data on Tibet is not provided!

Articles consulted:
中国城镇居民家庭资产均值逾300万 负债主要是房贷
央行调查:城镇居民家庭资产均值逾300万元

7 May 2020

Beijing, the high point of the two Assemblies

The dates of the two Assemblies have been set, on 21st and 22nd of May (see article). The high point of this session will be the economy. Journalist Wang Jian, 王剑, based in the United States, on his Youtube channel, sets out 10 questions that both Assemblies cannot avoid, 中国人大政协两会无法回避的十大问题.

Les deux Assemblées

  1. Macroeconomic measures to be taken. Since the economic recovery at the beginning of March, no major measures have been taken to solve the problem of unemployment and the bankruptcy of SMEs.
  2. What is the economic objective? Local governments need clear objectives to start economic policies. At the moment, they have no direction.
  3. How to solve the problem of corporate bankruptcies?
  4. How to solve the problem of urban unemployment? Some municipalities have been pushing workers back to the countryside, but this is not a solution.
  5. What do we do with the financial difficulties of local governments? They need to provide certain services, including medical, health, education and transport services.
  6. Export companies are facing difficulties of exporting, with no guidelines from the government. Their business model does not allow them to turn to the domestic market, otherwise they would have done so long ago.
  7. The problem of foreign relations, particularly with the United States.
  8. The Silk Roads project, which has required large resources. 
  9. What is the foreign policy, what is the strategy?
  10. For the epidemic, how is China going to deal with the responsibility that several countries want it to bear and the financial compensation?

The Chinese government is facing the greatest difficulties since 1989. At the national level, it has to provide solutions to boost the economy and at the foreign level, the United States is the focal point.



4th of May 2020

9 billion yuan of loss on Nymex

On April 21, the expiration of the future contract May recorded a drop in WTI oil in negative territory to -37.63 dollars per barrel. The Bank of China, on January 1rst, 2018, authorized this derivative, named Nymex Trésor,原油宝. With this fall, more than 60,000 Chinese investors found themselves trapped and could not meet the bank’s margin calls, most of whom are novices in the field. According to the Caixin site, the losses are close to 9 billion yuan (USD 1.15 billion). Customers have lost 42 billion yuan in deposits and have to reimburse 52 billion yuan to the banks.

Chute du pétrole

The grumbling turned to the banks who had not warned customers of the risks involved; moreover, most of them did not understand the complexity of this derivative. For the time being, the banks have not yet demanded repayment.

The Banking and Insurance Regulatory Commission,银保监会, is investigating and promises a regulation according to the law. So some will have cope with their losses ?


Articles consulted:
银保监会回应“原油宝”巨亏:要求中行尽快查清问题
中行“原油宝”风波揭示了什么问题?
原油宝(个人账户原油业务)

5 May 2020

The coronavirus as soon as 2012

Bi Shumin’s novel, 毕淑敏,” Coronavirus 花冠病毒 ” ,released in 2012, had already “seen it all”. 

From Sras to coronavirus

She is a physician and worked in fighting against the SARS epidemic in 2003. She tells the story from her experience. After eight years of writing and rewriting, she describes the spread of an epidemic, which seems to tell us about the current pandemic. With a narrative that is somewhere between anticipation and noir fiction, Bi Shumin recounts the struggle against the coronavirus in Yan, an imaginary city, in the year 20NN.

Covid Chine


To say, not to say!
The introduction sets the tone by showing the debates within the municipality on the information to be given to the public while justifying the concealment in order not to panic the population:
“What’s the news for our emergency meeting today? On March 2 at midnight, the death toll exceeded three figures, 101. The present problem is: “What is our relationship with the people? “Yuan Zaichun asked. As the commander of the epidemic control office, he has to communicate with the media every day about the situation, the number of deaths is the figure that the population pays the most attention. In the past, reports generally reflected reality. The population demands transparency and asks to be informed immediately of any news. The city of Yan, at all levels, has maintained stability.Chang Ningxiong said, “Do you all have an opinion? Speak up, we do not accept abstention.” A majority voted to expose the real situation. A minority preferred that the death figures be treated technically. Chang Ning continued: “Speak more clearly, what do you call technical treatment? » Nobody says a word. Yuan Zaichun continued: “It’s concealment. Reducing the number of deaths” He was the lawyer of this clan. »

An eventful plot
The story follows Luo Weizhi. As a writer, she is part of the special reporting team and is responsible for observing the fight against the epidemic.
Before leaving, Li Yuan, a chemist, asks her to bring back samples of the virus while giving her a medicine against the virus. She gains the trust of Yuan Zaichun, director of the Fighting Command. He gives her the autopsy reports of Yu Zengfeng, a forensic expert killed by the virus.
The documents preserved the virus and she’s infected. The powder provided by the chemist helps her to recover and she continues her investigation. As Luo is cured, she has antibodies, so she takes the opportunity to go and recover virus strains from the corpses with the director’s approval. The secret services, the aigrefins and the corrupted will try to take advantage of a miracle drug and Luo, who carries antibodies. The plot gains pace as the story unfolds, with multiple twists and turns.

Bi Shumin’s novel seems to tell the story of the epidemic that started in Wuhan in 2020. The same attempts to stifle reality, the death of a doctor, the witch hunt, suspicion, the foreign plot, intersect. As the Chinese government tries to turn the tide by storytelling the Chinese victory against the epidemic, this book comes at the right time to remind us of the danger of the epidemic and misinformation.

Articles consulted:
《花冠病毒》推出新版 毕淑敏:人类和病毒必有一战
« Coronavirus » de Bi Shumin : quand l’histoire se répète faute d’en cultiver la mémoire

3rd of May 2020

Sign of the end of the epidemic?

Finally, the dates for the two assemblies have been set!

“The two assemblies, 两会,” refer to the annual plenary sessions of the Chinese People’s Political Consultative Conference and the National People’s Congress. They were to be held in March, but the epidemic forced the government to postpone them. The new dates were announced on 30 April, with the first session starting on 21st May and the second on 22nd May. 

Dates fixées

This event, a high point in Chinese political life, takes on even greater significance this year, as it signals the government’s confidence in controlling the epidemic. Indeed, it was unthinkable to set a date with a virus that continued to circulate in the country and in the capital. The story of the victorious fight against the epidemic could not be tarnished by an infected capital city. 

The important points
This year, the economy should be the most important point, although it is not certain that the government is setting a target for 2020 after a 6.8% drop in GDP in the first quarter. Economic stimulus measures and tax cuts are expected.
Lifting people out of poverty, 脱贫, the goal for 2020 will also be at the forefront. On 29th April, the province of Anhui announced that nine districts had been lifted out of poverty. Seven provinces have yet to lift districts out of poverty.
Legislative revisions to health regulations

Article on the subject :
中国确定两会时间令世界瞩目 外媒:显示国家回归正常

Friday, 1rst of May

A real estate boom in Shenzhen? Yes, but!

The real estate market halved 

While the market for office properties, is going through a difficult period, sales in residential real estate are increasing. Prices in March 2020 showed a strong increase of 1.6%, compared to February. Transaction volume also increased by 3.8 times reaching 8008 units in March — the highest in the last two years.

Business loans changing market directions

Industry experts are concerned that this increase may be fuelled by corporate lending. Several articles, including in the Youth Daily and on the Xinhua website, report that Shenzhen’s banking authorities announced on April 22nd, 2020 that loans granted to businesses are being diverted to the real estate market, as part of their governmental support resulting from the Covid-19 crisis. In fact, governmental measures taken to help companies in the midst of the epidemic give out commercial loans at lower rates (around 4%) than residential real estate rates. Furthermore, these governmental loans also allow buyers to see a 50% decrease in their interest rates with an upper limit of one million yuan (around 80,000 euros). As an example, for a three million RMB loan, the buyer benefits from a reduction in interest from RMB16,000 to RMB11,000 for his monthly payment. Some buyers, who did not have their own company, used shells or middlemen, who provide them with a company in their name for 3,000 to 5,000 yuan. Even speculators got into the game.

A moderate impact?

Government agencies have not quantified the extent of these maneuvers. Articles judge that loans to companies illegally directed towards the real estate sector do not affect the majority of real estate transactions. Analysts believe that this unorthodox use is only one of the reasons for the market’s rise. Indeed, the city of Shenzhen acted too late to prevent Yin Yang* contracts that allowed for lower taxes and overvaluation of properties to obtain larger loans. These practices increased the volume of transactions.

While this increase is very real in these uncertain times, it is partly due to the redirection of loans to businesses and the lack of rigour of the control authorities in the sale process.

* On a sales contract, a lower sale price is officially declared. The tax department calculates taxes based on this official price. This way, the buyer who usually pays the taxes for the seller, makes some savings. On another contract, the real price is written down. This document will remain in the hands of the buyer, the seller and the real estate agent.  

This practice is widespread in many sectors. The authorities let it happen by “opening one eye and closing the other, 睁一只眼, 闭一只眼”.

This type of contract was used as a pretext to bring Chinese star Fan Bingbing under control.

Articles on the subject:

深圳楼市暴涨是不是经营贷惹的祸 in the Youth Daily 青年报

经营贷违规流入楼市惠企好政策为何肥了投机者 on Xinhua’s website 新华网

2 May 2020

Signe de la fin de l’épidémie?

Enfin, les dates des deux assemblés ont été fixées!

« Les deux assemblées, 两会, » se réfèrent aux sessions annuelles plénières de la Conférence consultative politique du peuple chinois et de l’Assemblée nationale populaire. Elles devaient se tenir en mars, mais l’épidémie a obligé le gouvernement à repousser leur tenue. Les nouvelles dates ont été annoncées le 30 avril, la première débutera le 21 mai et la seconde le 22 mai. 
Cet événement, point d‘orgue de la vie politique chinoise, prend une signification encore plus importante cette année, elle signe la confiance du gouvernement dans le contrôle de l’épidémie. En effet, il était impensable de prévoir une date avec un virus qui continuait de circuler dans le pays et dans la capitale. Le story telling de la lutte victorieuse contre l’épidémie ne pourrait être entaché par une capitale infectée.

Dates fixées


Les points importants
Cette année, l’économie devrait être le point le plus important même si on n’est pas certain que le gouvernement fixe un objectif pour 2020 après une chute de 6,8% du PIB au premier trimestre. Des mesures de relance économique et des baisses de taxes sont attendues.
La sortie de la pauvreté, 脱贫, but de l’année 2020 sera également au premier plan. Le 29 avril, la province de l’Anhui a annoncé que neuf districts étaient sortis de la pauvreté. Sept provinces doivent encore faire sortir des districts de la pauvreté.
Des révisions législatives sur les règlements sanitaires

Article consulté :
中国确定两会时间令世界瞩目 外媒:显示国家回归正常

Vendredi 1er mai 2020