A Window Into China’s Economy

3:00 AM— jet lag.  3:30am, now I’m trying to compose three posts in my head.  4:00am, I get up and start in on The Book of Disquiet, full of short essays, observations, maxims.  I can’t help thinking Pessoa would have been a great blogger, if he hadn’t died in 1935. I’ve got to stop thinking about blogging.

Several commenters asked for my impressions of China.  I need to be careful because there is both an English language and a Chinese language version of my blog.  I’ve found that Westerners like to hear about what is different about a country, especially the “old ways.”  Like the swarms of bicycles and even the occasional donkey cart you used to see on Beijing streets.  Chinese prefer to emphasize the modern aspects of their country, associating the old ways with poverty and backwardness.  So I’ll try to appeal to both audiences by discussing housing, which was pretty primitive when I first visited in 1994, but is improving very rapidly.  I’ll focus on windows.

When I first visited in 1994 my inlaws had an apartment in a 4 story building that was very primitive by Western standards.  Right outside there were big piles of coal and a rail line.  Everything was just bare gray cement.  Indeed the whole city seemed gray to me.  The interior was small and very plain, and had a tiny and very primitive kitchen and bath.  And they were college professors living on a college campus in the nation’s capital.  When I say ‘campus’ don’t think of Wellesley College.

And yet even that apartment was better than what my wife grew up in.  In the 1970s the entire family of 4 lived in just one room.  The kitchen and toilet were shared with another family.  A family of mean people.  And when I say ‘toilet’ I don’t mean “bathroom.”  Baths were communal.  In 2006 I read an article in a Chinese paper that said the average size of an urban apartment had increased from about 85 square feet in 1980 to 275 square feet in 2005.  That’s an indication of rapid progress, but also shows how talk of a housing bubble in China is premature.  For a long time any housing built will be “needed” in the commonsense meaning of the term.

By the time of my 1996 visit my inlaws had moved into a new high rise building.  They lived on the 16th floor.  The elevator didn’t always work, and thus they sometimes had to walk up 16 flights of stairs with groceries.  The quality of the building was much better than the old one, almost as good as one of those high rise public housing projects on the south side of Chicago.   In other words, it was still pretty bad (but with much less crime than Chicago.)  This apartment had three small bedrooms, and the kitchen and bath were still small and primitive, but a bit better.  The windows of almost all Beijing apartments in the 1990s were small, rickety, draughty, ugly metal things with lots of small panes of glass that didn’t provide much insulation.

When I returned in 2001 a lot had changed.  They were in the same building, but their apartment had been remodeled.  And not just their apartment, but about half the apartments in the building.  How could I estimate this?  From the windows.  They were white vinyl replacement windows, usually a pair, each having dimensions roughly 18 inches wide and 3 or 4 feet high.  They now had screens (which helps as there are lots of mosquitoes) and they slid easily.  When you saw these you knew the inside of an apartment had been remodeled, probably with a lot wood paneling added to the bare concrete walls.  Why did this happen?  Economic reforms.  The residents were no longer simply renters (they used to pay about 50 cents a month), but now had a bit of an ownership stake in their units.  This economic reform unleashed a massive remodeling boom all over the country.

When I arrived a couple days ago I saw the biggest changes yet.  My mother-in-law had just moved into a new apartment of 1350 square feet on the 8th floor of a new building on the same campus.  Now the fit and finish of the interior is very good, comparable to new Western  highrise apartments.  In China even middle class apartments are bought as bare unfinished units, and you pay for all the interior fittings including kitchen and baths.  The windows are far better than the vinyl replacement windows in the previous unit.  They are vaguely Palladian, but with no semicircle on top (actually more similar to the windows in Chicago’s Carson Pirie Scott, for you architecture buffs.)  There is a six foot by six foot plate glass window (double paned), flanked by two smaller vertical windows that open.  The framing is a handsome coffee-colored dark brown aluminum, which looks very high quality.

Unlike the exterior walls of her previous high rise building, which were flat walls of bare cement with flaking lime green paint, the new building has a handsome exterior.  The massing is rhythmic and the surfaces are various shades of gray brick.  In the old high rise there were lots of bicycles on the outside, and a few cars.  The ground was packed earth, and dusty in the summer.  I wondered where people were going to put all their cars as China boomed.  The new complex has a very attractive greenery between the buildings, and ramps leading to underground parking lots.

I should explain that college campuses here are like big gated communities, with soldiers guarding the entrances.  So you might have a square kilometer with no through streets.  Indeed most of Beijing is laid out this way.  Visitors may wonder why the traffic is so bad on the huge through streets, in a city where car ownership is still far below Western levels.  The reason is that those big streets are practically the only through streets.  Even though these avenues are grand, like in other East Asian cities the percentage of the surface area covered with roads is much smaller than in Western cities.

I haven’t got out much yet, but in the past I noticed that Chinese styles seem more uniform than in the West (although that may simply reflect my perspective.)  Thus I expect the windows I see here to be repeated in millions of other new apartments all over the country.  This is just one slice of Chinese society, but it reflects what is going on in many other areas.  Indeed the Beijing airports exactly reflect the housing changes I observed with my mother-in-law.  In 1994 I arrived in a small, crowded, and very spartan terminal.  By 1996 there was a new and much bigger airport.  It seemed like a dream come true—no more long lines, no more chaos.  But by 2006 even the new airport was full of long lines and crowds of people.  This time I arrived into a beautiful new terminal, the world’s largest, with no crowds or lines.  Since 1994 I’ve seen three generations of housing, and three generations of airports.  In housing the new units have caught up to those in the West, and the new airports even exceed ours.

When Westerners think of the Chinese economy they picture shoe factories in Guangdong province, with lots of migrant workers.  But the whole point of development is not production; it is living standards.  The most important component of living standards (once you have enough to eat) is housing.  I see the changes in China’s housing as the most important aspect of their development to date (next to the 1980s farming reforms that ended mass hunger.)  Wealth allows you to buy privacy, to get away from people you don’t like.

About Scott Sumner 490 Articles

Affiliation: Bentley University

Scott Sumner has taught economics at Bentley University for the past 27 years.

He earned a BA in economics at Wisconsin and a PhD at University of Chicago.

Professor Sumner's current research topics include monetary policy targets and the Great Depression. His areas of interest are macroeconomics, monetary theory and policy, and history of economic thought.

Professor Sumner has published articles in the Journal of Political Economy, the Journal of Money, Credit and Banking, and the Bulletin of Economic Research.

Visit: TheMoneyIllusion

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