Frenzonomics

frenzonomics
(Picture by: 安小庆)

Over the years, people have come up with various barometers for the Chinese economy, which, due to the opaqueness of official statistics, proves to be a tough nut to crack. The price of pork, the output of coal, the number of windows that light up at urban neighborhoods at night have all been used to take the pulse of the massively complex country. One of the more famous examples of such makeshift indictors is the now legendary “Keqiang Index”, named after Premier Li Keqiang, who, while serving as the governor of Liaoning province during the early 2000s, used railway cargo volume, electricity consumption and the amount of bank loans as surrogates of the official GDP figures which he, as a Communist Party provincial chief, deemed unreliable.

Jokes are to official statements what the Keqiang Index is to GDP numbers. Nowadays, The best online jokes are about the overheated housing market that since late 2015 have preoccupied the nation. “Today’s HR gauges a candidate’s hireablility by asking if he or she owns real estate. A person without an apartment is often pessimistic and cynical about the society. Those having to pay mortgage tend to be loyal, not itching for job change.” Another version has a more real-life feel to it: “Engineers who own more than one apartments in Beijing are unmanageable in the office, always ready to fire their boss, sell an apartment and go travel the world with the money; engineers who own one apartment are completely demotivated, as they are basically set. The raise they earn through harder work would be rendered pointless by the rising house price. Those without an apartment are anxious to go into the finance sector or do an MBA and won’t spend a single minute on perfecting their engineering skills. The housing market is shaking the Republic’s foundation!”

Ever since the 2009 post-financial-crisis government stimulus of 4 trillion RMB, which kick-started a massive housing market boom, anxiety about skyrocketing housing prices has filled the pages of the country’s newspapers and cadres’ speeches. Premier Wen Jiabao’s numerous promises to keep housing price “reasonable” during his last few years in office still resounds. But the jokes today capture something new in that anxiety. The rallying market is reshaping people’s psyche as much as their pockets.

One of the most cited expressions of concern in the Chinese media today is Longview Economics CEO Chris Watling’s comparison of the current housing price hike to the Dutch “Tulip Fever” that happened almost 400 years ago. The London-based consultancy lists Shenzhen, the Chinese city that borders Hong Kong, as the world’s second most expensive housing market, next only to San Jose in California. According to the firm, Shenzhen’s housing price has risen a whopping 76 percent in a single year, surpassing longtime real estate strongholds, its sister city Hong Kong, and even inner London.

It is debatable if China’s housing boom today is as economically shaky as the Tulip Fever or even the housing boom in the United States before the financial crisis, fueled by subprime mortgage. As recent as in Jun this year, bullish advocates for the Chinese property market, such as star developer Ren Zhiqiang, a Weibo celebrity, were still arguing that the rise in housing prices is driven by the unabated pace of urbanization and population inflow into cities. The large amount of down payments, backed by actual saving of the Chinese consumers, not credit, makes the boom qualitatively different from the subprime mortgage driven US housing market before the crisis.

But concerns with the sustainability of the current boom is only part of what people have been fretting about. Yes, the prospect of a spectacular crash in the fashion of the stock market last year is scary. However, to many people, the alternative, a market that continues to rally in the foreseeable future, looks as troubling if not more fearsome. The engineer joke is an embodiment of such concern: an ever booming housing market is going to eat into the very foundation of a robust, creativity-based economy that China is so eager to become.

A much more articulated version of this fear appeared on the Financial Times Chinese website on Aug 29. The author enumerates a few dire consequences of an ever enlarging housing bubble, including financial risks and depleted capitals for the “material economy” such as manufacturing. More piercingly, he observes that with the housing price spike, the “landlord mentality” that historically haunts China has been rekindled among the Chinese nouveau riche. “Many rich investors have accumulated a large amount of real estate in their hands to collect rent or simply the additional value generated from more rise in price. One the other side, more urban proletarians, those workers who can never afford housing, are created in the process.” For a regime that, more than 60 years ago, gained support by wiping out the landowning class through collectivization, the current situation seems ironic.

To illustrate their increasing uneasiness about where real estate is leading the country, commentators need to borrow an entire vocabulary from a place where the dominance of property developers have agonized a society, Hong Kong. An article that warns about the mainland cities slipping toward “Hong Kong-ization” characterizes the autonomous metropolis as having three distinctive features: sky high property price and living costs, huge income inequality, and increasing conflicts between the natives and newcomers. The author attributes the problems to the Hong Kong government’s laissez-faire approach to real estate profiteering, whose unbridled growth squeezes the space for small and medium businesses (through expensive rent) and exacerbates social inequality (property owners vs. those who can never afford).

Nothing highlights the mainland’s resemblance to the Hong Kong case better than the 6-square-meter apartment in Shenzhen that causes a stir in the public conscious. On Sept 24, news had it that a developer was selling a set of ultra-mini flats in Shenzhen with a jaw-dropping per-square-meter price of 150,000 RMB (roughly 22,000 USD). As a reference, monthly average salary in Shenzhen is about 5000 RMB (746 USD). The mean salary is lower. Reporters visiting the place as potential buyers were shocked to find a packed scene: people were rushing there to get hold of the deal. A woman reportedly wept after her apartment slipped away to another buyer just because of a minute of hesitation.

Commentators were quick to refer to those mini-apartments as “pigeon cages“, a term once used to describe the horrible hellholes immigrant laborers and poor residents inhabit in Hong Kong. (To be fair to the developer, those Shenzhen apartments are actually much more spacious than their registered 6 square meters.) They become the symbol of the property frenzy, 880,000 RMB for literally a jail cell in the middle of a city.

There are people who see it differently. Again, Hong Kong provides the inspiration. They call such small apartments “Get-on-the-bus-property“, meaning that the relatively low total cost (because of the tiny space) allows cash strapped consumers to embark on the “bus” of property ownership. The housing boom makes it perfectly clear to many that property has become the watershed of one’s fortune. Ownership means a quick accumulation of personal asset, a defense against inflation and access to cheap credit. Without it, you are doomed with the dwindling value of cash in the bank or under your bed. To buy or not to buy, it’s not a question. That’s why when Hong Kong developer Cheung Kong Property released a 16 square meter mini-condo for RMB 1.32 million back in 2014, the Hong Kong media dubbed it “mercy to the poor“. Mainland observers bring up this anecdote with sarcasm and resignation.

The exacerbation of already severe income inequality through this recent episode of housing price spike, which spread to second and third tier cities, is the most disturbing aspect of this property market rally. As one commentator puts it, “without denying their hard-working, the property owning upper middle class should attribute most of the build-up of their fortune to property price increase. Today’s housing boom is not primarily hurting the anxious middle class, but the desperate lower classes that won’t share a penny of this market. Observers who do not acknowledge this sad fact, or even watch with amused indifference, should go into the hall of shame.”

Not just the cold-blooded spectators are to be shamed. The above-mentioned Financial Times commentary also points the finger directly at central ministries and local governments, which, as the author claims, willingly hijack a top leadership policy of clearing housing inventory and turn it into a call for re-stimulus. The result is rapidly increasing leverage of households and the simple shift of debt from the balance sheets of property developers to those of individuals. Local governments benefit tremendously from land sales and taxation on transactions while families bearing the financial risks. They are becoming “super landlords”.

As the country’s top propaganda organ, the People’s Daily weighed in on Sep 26 with an opinion piece, reflecting the graveness of the current situation. Titled “Losing the hard-working spirit, we will still be homeless with all the properties”, the article devotes much of its content to an uneasiness about the ascent of a opportunist, speculation mentality, in the same vein as the engineer joke, but with a notable twist at the end: it calls on individuals to cling to their faith in self-improvement and to not get lost in the housing pageant. The commentary was met with disbelief and ridicule. In no time, another joke starts to spread on the Internet. It applies a light touch to the original title of the People’s Daily article: “Losing all the properties, we will still be homeless with all the hard-working.”

The suicidal and voiceless

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The past few days I browsed the Internet trying to find someone who could speak from the standpoint of Yang Gailan, the 28-year-old farmer and mother of four, who committed suicide after slaughtering all her four kids by axing and force-feeding them pesticide. Her husband killed himself a few days after losing his entire family in a single day. The tragedy stunned, confused and angered a lot of people, who only slowly came to the gruesomeness of the case following the revelation of disturbing details of the struggling family living in the remote mountains of Gansu province, located in the arid far west of China, one of the poorest corners of the country.

The closest I could get is a blogpost by Luo Yufeng, a popular online figure who came from an abject background and made her name by intentionally posing herself as a buffoon that attracted wide disdain and ridicule. Lately, she emigrated to the United States and reinvented her public image as a hard-working self-made woman who successfully transformed her existence, materialistically and intellectually. In the blogpost she said she could relate to Yang’s situation, not just to her material poverty, but also to the “despair” that haunted people like her. She recalled her own experience as a countryside teacher, where her teenage female students dropped out of school to get married and raise kids. “They told me that going to college merely postponed the same misery of trying to locate a low-paying job and barely got by. At the age of 15, the girls already saw no hope in changing their circumstances. Sadly, many of them were actually right in their assessment.”

This is one of the rarer pieces in the aftermath of the tragedy that tries to make sense of it from a poor person’s point of view. As in most events that capture phenomenal online attention, the space is dominated by educated, urban (and largely male) voices. In a way, they help amplify the story to enable a wider discussion. But the limitations of a middle-class world view also risk trapping the debates in pathetic premises resembling the gated neighborhoods of Chinese cities.

The article that almost single-handedly turns the poor family’s death into a national subject of debate is called “The ants in a prosperous time“. In a broad stroke manner, the author attributes the tragedy to extreme poverty and the society’s diminishing opportunity for upward mobility. “They are the downtrodden ants in a time of prosperity, unimportant, uncared for, neglected.” It calls on the society to better treat its disadvantaged, marginal members and advocates for significantly increasing welfare for such social groups.

The sentiment is familiar, which probably explains why it went viral on people’s WeChat walls almost two weeks after the incident actually happened on Aug 26. Prior to that, media reports about the killing, particularly the one by The Paper, were restraint in its attribution of specific causes. Information was simply too scarce to reach any conclusion about why Yang Gailan wielded the ax at her own children. Her grandmother was the last person to talk to the dying woman. By that time all four children were unconscious. The last words from Yang, if her grandmother’s recollection was correct, were bitter and enigmatic. She muttered about being “hard pressed” and insisted of taking her kids “with her”. The last minutes of her life did not give her the luxury of elaborating further.

But this does not stop commentators from imposing their own mental frames onto the case. The “ant” piece is an example of a class-anxious social group looking through a pre-defined lens at tragedy whose meaning is far from clear. By framing the case as a failure of a social structure to provide upward mobility, the piece caters to people who are constantly fretting about maintaining and raising their social status. They share a disdain of elites that keep a tight grip on precious resources and sympathize with the society’s most disadvantageous members. But it is hard to tell if a woman in remote Gansu mountains, for whom poverty has been inherited and internalized as a mode of life for generations of her family, would be primarily driven by a sense of social justice.

Another typical urban response to the case is even more reductionist. People fixate on the details revealed by media of the material possessions of Yang’s family: three oxen, three goats, twelve chickens, plus the tiny stream of income from Yang’s husband, a laborer at a pig farm in a nearby town. To the online spectators who busy themselves with calculation, these seem to be far from the kind of extreme deprivation that would account for the desperate act of homicide and suicide.

By negating the “poverty” narrative, critics try to override an overall sympathetic reaction to the tragedy with a stricter moral judgment. “She is first and foremost a murderer,” as one influential online figure would emphasize. Others call her a pervert and a psychopath. The response is not new. As this blog has explored before, online commentary about violence committed by marginal communities is becoming increasingly unforgiving and harsh. The view insists that no personal misfortune, social ailment or political suppression could be used to justify aggression against others. While an indiscriminate denouncement of violence seems morally infallible, in the public sphere the uncompromising stance also tends to shut out serious discussions about root causes, which are often blamed for “rationalizing” violence.

Female suicide rate in the Chinese countryside is historically high, with rates hitting alarming levels in the 1990s, at points 26% higher than men in the countryside. Those rates have since then plummeted (as much as 90% by some studies) thanks to massive migration into the cities which results in relatively freer, more upbeat lives for women. However, for those who remain in the countryside, the day-to-day stress of life, not only poverty but also a host of pressures in relation to supporting the household which disproportionally fall on the shoulders of women, still can be unbearably heavy. As a traditional saying goes, there are only three solutions to women’s problems: “one – to cry; two – to scream; and three – to hang herself”.

When experienced observers look closer at the details dug out by in-depth reporting, what they discover is exactly the kind of suffocating household stress that has cornered Yang Gailan to a brink. In a penetrating analysis of the micro-politics of Yang’s misery, the author sifts through publicly available information and singles out Yang’s grandmother as a more plausible cause of Yang’s fatal decision on Aug 26.

As the de-facto matriarch of the Yang family, the old lady divorced two husbands in the earlier years of her life for their incompetence. After her daughter, Gailan’s aunt, later killed herself by ingesting pesticide, the tough woman was left with her slow-minded, quiet son, and his two daughters. Gailan’s elder sister was married early to outside the village. And the burden of serving her grandmother and her father fell squarely on her tender shoulder. Villagers recollected Gailan often being scolded by her grandma, who leaved the impression of being demanding and inconsiderate. In order to keep her in the family, the grandmother “adopted” a husband for her, instead of marrying her out. From that moment on, the 20-year-old’s fate as a servant to the family has been locked in, attending to two elders and raising four kids, all on her own, until on that day, she collapsed

These are mere deductions and interpretations, to be clear. The difference is only that some are slightly more restraint and cautious than others when it comes to offering a conclusive, meaningful reading of a case at once appalling and heartbreaking. In this regard, rural China lacks its own interpreter. As one pessimistic observer puts it, in a public sphere dominated by an urban discourse, “the countryside cannot articulate itself.” No farmer’s representatives, no peasant intellectuals, no rural women’s advocates emerge to help make sense of Yang’s destruction of her entire family. The countryside remains silent while urban spectators heatedly debate morality and social welfare.

But does the countryside automatically understands itself? Asks one voice. It claims that certain extreme behaviors simply evade comprehension, no matter where it happens. What the society can do, rather than prematurely declaring that it “gets” these incidents, is to bide its time and make note of all the observable facts until it can fully grasp what has been going on. The unstoppable impulse of the Chinese Internet to (over) interpret any occurrence of significance is “hindering us from reaching a genuine understanding of our world.”

Ground Zero

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Everything feels like a déjà vu of the 2011 high-speed train wreck.

On Aug 16, four days after the devastating blast in the coastal city of Tianjin, local officials once again turned their daily press conference into a national spectacle, not for its brilliance, but for its jaw-dropping level of confusion. In front of live broadcasting cameras from all over the world, the city’s chief propaganda official could not answer the basic question of “who’s in charge of the emergence response?” In previous occasions, they had also dodged questions in utterly clumsy ways, such as abruptly walking out while journalists watched in disbelief.

The scene is reminiscent of the press conferences after two high-speed trains collided in Wenzhou four years ago. In the aftermath of the accident that killed 40 passengers, the nation was incensed by the arrogant and smart-ass comments from the spokesperson of the Railway Ministry. His notorious comment that “no matter whether you believe it, I believe”, instantaneously became a joke on the internet.

But the two events resemble each other on a deeper level. The chaotic governmental response in the initial few days of the disaster, which dealt another heavy blow to the government’s (remaining) credibility, betrays the fundamental lack of unity in the Chinese officialdom which often tries to project the image of a tightly clenched fist. And in both cases China’s societal forces make use of that precious vacuum to pierce into the territory with determination. The impact of such small breakthroughs, after years of retreat, is yet to be seen.

From the authority’s side, the difficulty with handling the Tianjin blast, as with the Wenzhou train wreck, lies with the structure under which the different administrative jurisdictions are organized. The accident happened in Tianjin, in a GEOGRAPHICAL sense. Administratively speaking, it happened within the bailiwick of the Tianjin Port Group, a state owned entity that falls under the “dual management” of both Tianjin and the Ministry of Transportation. And in that administrative enclave, the different regulatory responsibilities are divided like puzzle pieces among the Tianjin municipality, the Ministry and the Port Group. Fatefully, the permitting schemes relating to the storage of explosive chemicals and the fire department in charge of the port are run by the Port Group under an authorization from the Ministry, not by the municipality.

With the train accident, the Railway Ministry was ultimately responsible for what happened on the rail track, but since it also happened geographically in Wenzhou, Zhejiang province, it made the local authority unavoidably involved. The tension between the Railway Ministry and the Wenzhou local government flared up in the initial stage of the rescue work, when the latter disagreed with the plan to remove the car from the track before confirming that nobody was still alive inside it. It put the Railway Ministry, and the entire official communication effort on embarrassing defense mode for five days, until Premier Wen Jiabao came to the rescue.

Official communication after the Tianjin blast was even more disastrous. An evaluation conducted by a think tank affiliated with the People’s Daily accused the six post-blast press conferences as “producing secondary communicational difficulties”, a sophisticated way of saying “they did more damage than good.” Instead of dispersing doubts, officials actually created more of it by acting completely clueless in front of the press. Censor did not help either: “Cutting the broadcasting is only counter-productive in this era of smart phones.”

While some were quick to ridicule the seemingly incompetent bureaucrats, others offered an alternative explanation: these officials, who invariably came from the municipal government, were meticulously following a clear bureaucratic logic. They did not want to second guess the intentions of their colleagues who were actually responsible for the incident. Neither did they want to cover somebody else’s back. Unlike their Wenzhou counterparts who made that tension explicit for everyone to see, the Tianjin authority took a much more passive approach. The theory goes that it is likely they really did not know what was stored inside that warehouse and had no authority to decide who should be in charge of the rescue work.

The apparent lack of mandate and coordination from the government side had a more far-reaching side-effect: its complete loss of the ability to set the agenda. Yes, the self-valorization is still there, but it was quickly muted by waves of to-the-point questions. The aftermath of the blast saw the return of the 24-hour news cycles that the Chinese society had not seen for a while. They were propelled by social media platforms such as Weibo, which fed new raw materials into public attention on a real time basis. Yet it was ultimately the more market oriented media outlets that had been driving the evolution of the discussion and the news agenda. After the initial shock by the magnitude of the explosion, it was the media that quickly drew the public’s attention toward the massive loss endured by the firemen who first responded to the accident. Southern Weekly’s decisive Aug 13 exclusive interview with a survived fireman, who told the newspaper on record that they were not informed of the hydro-reactive nature of the chemicals in the warehouse, set the tone for an intensive round of public questioning of the authority’s liability. The Paper rode on that tide and interviewed the fire department’s spokesperson at the central government level, who incidentally revealed the fact that those first-responding firemen did not fall under the official fire-fighting system, but were “hired hands” employed by the port itself. Caixin immediately followed on that lead by digging out the exact three teams that first showed up at the site and were instantaneously devoured by the explosions. Yet their sacrifice had not been accounted in the official death toll released to the public. The bitter irony of “unequal death” has since then become a commanding mood of the Chinese internet.

The Southern Weekly-Paper-Caixin news relay was impressive, but it was just one thread that the Chinese media were persistently following through. Simultaneously, other bold outlets, including a new Shanghai-based digital platform called Jiemian.com, were trying to uncover possible corruption behind the string of green lights that the warehouse owner (supposedly a private company) managed to obtain before setting up a deadly time bomb in the vicinity of a densely populated area. Clues led journalists to the management and shareholders of the company, including Zhi Feng, its General Manager, who happened to share a very rare surname with a former vice mayor of Tianjin. This line of investigation culminated at the end of the Aug 14 press conference where officials had to exit the venue under the bombardment of one single question: “Who is Zhi Feng?”

Four years ago, the train tragedy defined Sina Weibo as the no.1 social media outlet that had the potential to replace traditional market-orientation media as China’s agenda-setter. The Tianjin blast seems to have catalyzed the re-invention of the traditional media. The perfect storm of media inquiry this time excites a veteran observer into saluting his former colleagues: “In the past few days, most of the first-hand media coverage with added value all came from the familiar bloc of Beijing News, Southern Metropolis Daily, Southern Weekly, Caixin and iNewsweek. Despite the increasingly suffocating and difficult environment, you guys are still charging ahead. Stay safe!” It indeed looks like a renaissance for which those news organizations have been saving up. Almost overnight, they unveiled to the world the formidable arsenal they have accumulated: WeChat live broadcasting, 360 degree panorama photography, and HTML5 aggregation of information. All of a sudden, drones seemed to have become a standard piece of equipment in a journalist’s backpack. And the images that they produced within hours of the incident stunned the world. Many of those news organizations probably have become substantially stronger after this battle: viewership of their materials on digital channels exploded, which almost certainly translates into a larger follower-base online.

A widely read blog by a young journalist who ventured into the core area of the explosion epitomizes this “charging ahead” spirit, showing that the “renaissance” likely goes beyond an instrumental level. Without even carrying a bottle of water, he sneaked into ground zero that was sealed off by the police and stayed in the war-zone for a full day to capture first-hand images of the event. These were heartbreaking documentations of the broken Chinese dreams. The most surreal pictures were the debris that was blown out of the apartment buildings: cash, a Teddy bear and a bouquet. “Everyone’s life is like a pottery jar with lots of stuff in it. But it’s too fragile. Shake it, and it’s broken.”

The metaphor is not new, nor is the sentiment. What’s interesting is how naturally a journalist’s eye-witness account of a blast scene turns into a sort of elegy for the vulnerability of middle class life. It is a resonance reinforced by almost every memorable mega-events in recent years, from the 2011 train wreck to the 2012 Beijing flooding to the Shanghai stampede earlier this year. The plight and insecurity of the Chinese urban middle class are part of what have fueled the pointed questioning and fearless investigation of the Chinese media. Just like what a survivor wrote after escaping from his expensive Vanke apartment building hundreds of meters away from the epicenter: “This high-end neighborhood is only two-hours of driving away from the Tiananmen Square. It’s full of foreigners and multinational corporate executives. Yet only a few banging noises rendered it an empty war zone. Who can imagine that nearby this ‘little Europe’ something equivalent to a tactic nuclear weapon has been installed?”

The familiar motif prompted an influential Weibo commentator to pull out a four-year-old post written at the wake of the train accident on what he termed “corruption terrorism”:

“At the early stage of corruption terrorism, the middle class does not have to worry too much. You are not the ones who work at coal mines or production lines. But when it further exacerbates, most of the population can’t stay out of it, as you cannot avoid taking a train, driving a car or going across a bridge. Your apartment may have a quality problem, so is the food you buy from the supermarket. In its most advanced stage, even the privileged cannot escape from it.”

It seems that after four full years, the country has arrived at the exact same spot. Just as his predecessor did after the Wenzhou train collision, Premier Li Keqiang’s belated arrival at the blast site brought certain order to the post-disaster disorientation. And one of the first things he had to say publicly was the commitment to equal treatment of firemen who lost their lives in the mission, a direct response to an item high on the media agenda.

Some were pessimistic. To them, there is little sign that the iron curtain shielding the corrupt politician-business bond, which is probably the real culprit of the explosion in the first place, is letting loose even a little bit, despite “almost half of Beijing’s best journalists concentrating their efforts on Tianjin.” But for other observers, the mushroom cloud over Tianjin might have changed something permanently: “After Tianjin, the Chinese public’s NYMBY (“not in my backyard”) protests against industrial facilities will almost certainly become unstoppable.” Be it a legacy or a spell, this sounds like the most plausible post-Tianjin scenario that the country needs to face. We may still be circling around our Ground Zero, but something is definitely growing out of it. At the moment, we can’t tell if it’s going to be beautiful or ugly.