Land Grabs and Housing in China

I was in Hong Kong recently and somehow ended up having a strange conversation with a couple of Danish guys who worked on the mainland in a job that gave me a different insight in to what is happening in China. I don't need to go into much detail about what they said but just want to concentrate one of many things that they said, which stuck in my head. This was basically that there are millions of empty houses in China and that this, together with other issues, could contribute to a burst economic bubble with devastating effects.

The Chinese government have been turning to building housing in an attempt to boost economic figures. Yet many of these houses are out of reach for working people in China, who can't afford to escape their usually below standard and cramped housing. It was estimated last year that there 65 million vacant homes in China. But it seems that authorities will carry on building as even if land has an empty factory or housing on it, its price rises, compared to if it was used for agriculture. This has led to local governments gaining between 30 and 50 percent of their revenues from land sales to enable construction. The pressure local governments receive from above to show positive economic figures forces them to do whatever they can to make the figures look right, without looking enough at long term effects.

This obviously can't go on for much longer. Housing prices will fall, real estate developers won't be able to pay back the loans that are needed to buy and develop the land, and this could potentially lead to another big crash in the capitalist system. Time will tell whether this will happen and to what extent.

For the mean time, land grabs are still happening though as for the short term they will boost the economic figures, especially as it seems that the manufacturing industry can't grow any more. In fact China's manufacturing activity contracted for the third straight month in January. This is in connection to the struggling world economy.

These land grabs are essentially forcing citizens of China to give up their land for little compensation and a dim future. And if manufacturing carries on contracting, this economic loss will be passed on to the workers by them losing jobs and wages. So essentially the poorest in society will have less land for agricultural use and less and worse paid jobs available to them.

We have seen that in the case of Wukan that people need to fight back over this and there is a sense that it is inspiring others to struggle against the authorities over this issue. There has recently been a protest by 1000 people from a village called Wanggang, also in the Guangdong province, that shows that Wukan may not be a one off situation but other villages could follow its quite inspirational struggle. On top of this, there are still workers continuing to take action on issues that affect them by striking or even blockading roads in the run up to the Lunar New Year.

The whole situation looks like a mess and it is hard to see how much longer this can carry on.