Part 2.....Once again I feel stupid....

(Today I’m stuck playing teacher’s assistant in my neighborhoods local Chinese school.  I guess once a year is something I can handle……I only hope I don’t disturb anyone.)

While in Ningbo recently I was hanging out with the Saleslady of the factory I work with.  As I’ve probably stated before, she’s a typical China Mom.  Has a kid, and a husband she seems to be mildly disappointed with.   She likes the thrill of talking with a laowai in Chinese, likes it probably more texting via WeChat.   She’s had the same job for over 15 years.  She’s been to Shanghai a few times.  Even America once.   She has the distinction of walking the Strip without ever visiting Hoover Dam, a mere 30 minute drive away.    And now she’s in Vietnam for CNY.  I am envious.

I asked her once what the average Ningbo salary was.  She mentioned around 4000 yuan.  That’s about $630 a month.  I figure she probably makes closer to 10,000 yuan, being how she’s had the same job for so long.  Which is closer to $1600 a month.  Not bad at all.   And of course she’s stuck in her job because if she had to get a new one there’s no way she’d make what she’s making now.
Well, if you recall, upon marriage she and her China Man bought a house, which has tripled in value.  

I did a mental calculation.  Her apartment is roughly the same as my house in value.  But knowing what I know about the Wonderful and Glorious Chinese People, I casually asked her,

“How many houses do you have?”

“We have two”, she replied in a “it’s no big deal” voice.

“Fuck”, I said to myself.  

And for the zillionth time I found myself wondering how someone that makes so little money can afford two houses in China? 

Or even to buy one house?

And suddenly these folks with their relatively low salaries (compared to the West) are richer than 
ME, and probably YOU.

This in one fell stroke is the success of China’s Communist Party.  As long as the value of housing continues its  climb into the clouds, the Chinese economy will continue to prosper, and more importantly, the Chinese 老百姓 will continue to feel pride about themselves and their success, and pride about their country.

For what it’s worth, the Chinese People define the value of their house in the same terms as their pride in their country.

That is, the CCP will have gotten the “buy in” of the People. 

Human Rights anyone?  Not interested.  What is a “human right” anyway?  The “human right” I care about is the right to get rich.  And the Chinese government is allowing me to do that very nicely thank you very much.

Increased foreign currency restrictions?  Not a worry.

The wealth created by the increase in housing is a bit of a gamble.  Afterall, the Chinese system is rigged so that in the end of the day, the Chinese really have no other place to put their money.  

Have you been a bad boy, and maybe taken a bribe or two? Hmmmmm

Buy a house!

Do you need to “launder” some quick cash? 

Buy a house!

We’ve heard of Ghost Cities in China right?  Who the hell do you think built these places?  Does one think a construction company would simply build them for free?   Those apartments in the city may not be occupied….doesn’t mean many of them aren’t already bought and paid for!

And once again I feel stupid.  Or hoodwinked.  Or just plain naïve.

My Master’s Degree (you know I worked for that damn piece of paper!), my foreign language, my college entrance exams, my work experience….has at the end of the day everything to do with my personal wealth.  Or better yet with my personal identity.  I want people to know I can speak a foreign language, and I want people to know I have a Masters.  It’s all on the resume!

In China, if one is Chinese, it means little.   Not one silly thing perhaps. 

A woman with a mere bachelor’s degree with a job anyone can do is quite possibly wealthier than me, simply because she lives in a Society where housing, rather than one’s college education or hard work in the office, is creating wealth.

And I feel robbed. 

In the past I’ve vaguely written a post or two about someone who at one time in my life was rather important to me.  Maybe even special. 

I saw her recently on my last trip to China.  This is a boiled down version of her story.  (Even now it pains me to write about her.)

She has a college degree.  She came to Shenzhen after graduation.  She got an ordinary job.  She was 21. Then she moved on to cosmetics and travelled a lot.  Like most young Chinese, especially in Shenzhen, she caught the “bug” of having one’s own business.  Cool.  She decided she wanted to sell tea.  I thought it was a dumb idea (come on, can’t you find something different to do in China?), but I said nothing.   I admired the fact she got a job at an ordinary tea shop just to learn the business.

She eventually moved to Guangzhou and after a couple of years did well enough to buy her mom a house and herself a 2nd hand car.   She took her mom to Sanya.  It didn’t hurt she wasn’t paying rent during this time.    Than the business died.  She sent me an email telling me she had started an Italian Gelato shop.  In reality she was just the manager of a local franchise.  (How one could become a manager without experience is beyond me.) 

After a year or so she decided she had learned enough and started her own ice cream business.  She bought an ice cream truck.  Then would park it in a square.  Than another.  Now she has 6 ice cream trucks.  She’s had the business about one year.  She brags some trucks make 50,000 yuan a month.  Not bad!  For the first time in her life she pays her own rent.  (Which one can easily avoid if one lives with a string of boyfriends.)   4500 yuan a month.   

She told me recently she isn’t looking forward to marriage and the clock is ticking.  But now she has a HK boyfriend.  She told me she will probably buy the apartment she currently lives in.   She has it all planned out, you see. 

The apartment is 4 million yuan.  She will put down a 2 million yuan deposit she mentioned.

I was stunned to hear this.  I knew this lady quite well.  She once asked me for a 50,000 loan for her father.  And now she has 2 million yuan? Really?  From selling ice cream?

No matter how I diced it I couldn’t come up with that number.  A Chinese acquaintance of mine simply mentioned “Chinese like to brag”.   But still a 4 million yuan apartment?  She’s only 30.   I’ll be honest there aren’t many women in China like her.  That is, only 30 and able to buy a 4 million yuan apartment.  (She tells me it’s easy to get a boyfriend when the Chinese Guy knows the girl has her own money.)  But if she actually pulls it off how can I not feel like I’m doing something wrong with my life?

Should I move to China and open an ice cream truck, too?

She casually mentioned to me over orange juice in my hotel how easy it is to make money in China. 

“I don’t even think it’s a big deal anymore”, she said.

That night, for the first time ever, she bought me dinner.  A terrible meal at that.  I got a Mojito.  She paid 300 yuan. 

China’s unique position as a country with a trillion people, intent on spending money on their kids, spoiling them in fact, makes her ice cream truck an easy sell.    I wondered if she had to sign a “no competition” clause when was first hired to manage the franchise, than realized it probably didn’t matter in China.   To top it all off I asked her about her tax rate.

“Oh, I don’t pay taxes.  I’ve never paid a cent of tax in my life.  You know that.”

What a country.

I’ve mentioned before, China’s debt maybe wouldn’t be as bad if they simply cracked down on all the tax evaders.  

She texted me in November. 

“I’ve bought BTC.”

In December when it was 25,000 I texted her back. 

“It’s time you sell.”

“When the ‘aunties’ understand the market I’ll sell”.

She told me later in January, “I made a million RMB”.  But I don’t know if she ever sold or not.   I’ve trolled her a few times since.  I doubt she did. 

If the business is right, and you have the entrepreneurial spirit, than it’s easy to make money in China.  Maybe I will write about her sometime.  I don’t know.  We’ll see.

The above examples are honest examples of wealth.  People buying property, taking a risk.
However, there is an insidious way to wealth in China that is far more common than the above (relatively) honest examples.  Inherited wealth.

China Wife’s best friend runs HR for a large Japanese company.  She is a marvelous person, but has made enough money to send her daughter, her only child, to America to study.  First high school and later University.   She went from the bottom 1% in her high school entrance test scores to the top 99% (supposedly) in her college entrance exams. 

She is a typical only child, with her headstrong ways of doing things, and upon occasion a wee arrogant and selfish.   But she is fundamentally a good person with good parents.   And as I’ve seen her grow up from a loud, boisterous kid to an extremely mature and confident person I wonder how she will influence my own daughter, who for better or worse considers her a mentor.

She is also very, very rich.  Or will be as soon her parents die and she inherits the properties they’ve accumulated over time.  The apartment they inhabit has quadrupled in value since being purchased 15 years ago.   It is so far out of the way in Shenzhen that even the damn subway lines haven’t reached it yet.   But the apartment they bought in Huizhou, a bit off the coast, will be the big money winner.  It was built brand new, and has yet to even be renovated.  It is a concrete shell.  That’s all.  And it’s been sitting there for about five years.  It is huge.  It is meant to be a retirement home.   (Unless the parents don’t kill each other first.)

This kid is one of millions yet again that have done nothing to merit inheriting such wealth.  I figure she’ll inherit around $3 million worth of assets.  And with a straight face she will consider herself middle class. 

As long as China’s government figures out the secret formula housing will continue to rise and everyone will be happy.  It is very much like October 1929.   Except everyday is October 28, again and again and again.

I personally think only a major stock meltdown in the West, or a Chinese war, can stop the inexorable rise of Chinese Housing.   Afterall, it’s more than simply supply and demand.  The Chinese People by design simply have no place to put their money.   The Government has ensured they cannot just take it abroad.  It must be spent here.  My Chinese friends don’t believe me.   At least not the former.

But forgive me if I feel just a tad poor right now.  Oh I was born at the right time.  Just maybe, just maybe the wrong country.


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