Since the economic reform of the 1980′s, China’s economy has grown by leaps and bounds. With such fast-paced growth, China’s industries required ever more land for expansion. Local governments, eager to please industry, found a simple way to meet this increasing demand: expropriation. As all land in the People’s Republic of China legally belongs to the state, and not to individual citizens, local governments have devised clever ways to reclaim land. By cutting off the supply of utilities or even resorting to outright violence, governments may compel tenants or house owner to sell their land and houses at unrealistically low prices; the governments then turn around and sell this land to industry, turning a huge profit for state coffers. The following is a true story of one such “eviction”, conducted by the Yueyang government of Hunan Province against the land and property of Mr. Xiong.
In 2006, the Yueyang government decided to reclaim the land of the Yangshan Area, where Mr. Xiong’s house is located. In March of 2009, the government priced Mr. Xiong’s 252-square meter house at a nominal value of 203 RMB per meter squared. In compensation, the government will offer the Xiong family three relocation apartments at a subsidized price of 500 RMB per meter squared, but limited to 90 meters squared per every subsidized apartment. For any floor space greater than 90 squared meters, the family would be forced to pay the difference under market price. In the Yangshan Area the market price of a crude apartment is approximately 2300-2800 RMB per meter squared. Thus, whereas the Xiong family will sell their house to the government for 51,000 RMB, to purchase a comparable house from developers the family will have to pay close to 600,000 RMB. To compound the injustice, the government also offers no guarantee of when and where the subsidized housing complex will be built, thus leaving the family essentially homeless for the interim. Indeed, some residents evicted as far back as 2003 still do not have permanent housing to this day over 6 years later.
When the Xiongs initially refused to sell their house and property, the government at first resorted to intimidation, threatening to fine the family until they relented. When this tactic failed to break the resolve of the family, the government upped the ante by threatening the family with forced eviction and subsequent demolition of the house. Finally, on the morning of April 22, 2009, the government lost their patience and resorted to outright thuggery. The government paid a group of gangsters armed with clubs to march to the Xiongs’ house and threaten the family with physical violence. When the family called the police, no help came. Finally, the gangsters broke down the front door and beat the family to the point where the wife, mother-in-law, and sister were sent to the hospital for emergency evaluation. While the family was at the hospital, the Xiongs’ house was emptied of its furniture and valuables, and their house demolished. In just a single day, the Xiongs were physicially assaulted, robbed of their belongings, and left homeless, all at the hands of a brutal and greedy local government.
The hardworking men and women of rural China do not oppose industrialization, and they recognize that for China to ascend to its rightful place in the world’s economy sacrifices must be made by all. However, such transactions must be conducted under the rule of law, with provisions for the protection of property under a transparent legal system. Until such conditions are met, the actions of the local governments of China represent nothing but tyranny.

I think in many ways people are starting to expect way too much of China too quickly. The massive stress placed on its economy by the population size and domestic problems alone are big enough issues to deal with without having to “save the world” at the same time. As long as they can get their economy in order, kickstart infrastructure projects and bolster consumer confidence (while convincing them to buy bigger-ticket items), it will certainly be a step in the right direction for the global economy.

For Zuzana Ali, who commented on this blog yesterday, the chinese gobernment has some issues indeed, but we cannot pretend to think that “capitalist-democracy” is the only way to go. It worked in Northamerica, it worked in Europe, but it does not work in many other parts of the workd. I live in China for a year, and there is nothing of pressure, stiffling or whatsoever, it surprised me to see that the gobernment was constantly encouraging people to learn, they gave bonus, benefits, and this was enforced. Things which we do not see that often in the West, if they are happy that way, who are we to try and force them to be westernized? what right do we have?

The quest for atmospheric profits needs to be dampened. The expectations are way too high…

A more realistic goal, in these economic times, is to not lose money.. not be concerned about not making money…

If one sets the expectations lower that investment in China will not lose money in the short term, then China is still a safe bet….