A Glimpse of China’s Middle Class
A glimpse of China’s middle class (part 1)
Editor’s note: In maintaining the livelihood of the people and promoting harmony, an important goal is to gradually form an “olive-shaped” distribution configuration in which middle-income workers are the majority. As the middle class, the middle-income population should be society’s stabilizer. However, distorted high housing prices have overdrawn on much of what they will make in a lifetime. Then consider “early retirement,” the intensity of work, children’s education, residency (Hukou system) … The nation’s so-called middle class is saddled with all kinds of pressures. “Housing slaves,” “automobile slaves,” “credit slaves,” “slaves to the expenses of their children” … permeate the middle class, causing frustration and helplessness. Perhaps the establishment of an “olive-shaped” society is a long way off.
Recently, a journalist has gone among this population, experiencing some of the real life conditions of the “middle class,” and giving us a listen to their voice.
A house is a mountain
He bought a house. Half his salary goes to his mortgage. He can’t drive his newly-bought sedan. What originally seemed like a relaxing life has completely changed shape.
Zhou Meng, project manager at a venture capital investment company in Beijing
In April Zhou could no longer stand the provocation from the high prices of the housing market. He gathered his courage and bought a second-hand, 60-square-meter apartment near Shuangqiao (in Beijing) for more than $220,000.
The house was built in 1997. Its outer wall was grey and worn out. The housing development was small and inconspicuous among dense buildings. There weren’t even reputable-looking security guards on duty. Zhou paid no mind to this and hastily signed the contract. The real estate intermediary at his side reminded him housing prices were changing daily, and if he didn’t buy now, the prices would be higher tomorrow.
Not only did Zhou empty his and his wife’s savings for this house, he borrowed nearly $30,000 from friends and family and took out a $150,000 loan from the bank.
“Even if I had a $745 a month mortgage, at least I had a home.”
33-year-old Zhou graduated in the field of economics from a financial university in southern China. In 1999 he returned to his home province of Shandong to work at a well-known national corporation. Work was comfortable and leisurely at the time and he even met a girl working as an accountant at his company.
Beneath the leisurely lifestyle, Zhou had a “disquiet” heart. With a monthly salary of a little more than $150, Zhou experienced a degree of panic. Thoroughly dissatisfied, he just “got by.” Upon acceptance into Renmin University’s industry management master’s program in 2003, he left his company. Two years later he entered a venture capital investing company in Beijing, starting a new life.
Negotiation, estimation, planning … With four years of accumulated experience and hard work, he quickly became an integral member of the company, his achievements continuously larger, his salary reaching a new level.
However, living in Beijing, a house was an unavoidable “mountain” bearing down on his shoulders.
Zhou said he wasn’t concerned with buying a house when he first arrived in Beijing. His girlfriend was still in Shandong and they hadn’t set a time-frame for marriage. He had a flat above his company and spent little on rent. It was convenient and he could save money. He poured his heart out on his company and put his extra money into the stock market.
“Making money with money is always better than buying a house, right?”
Later, when housing prices inflated in Beijing, Zhou hesitated. He started looking at houses near his work. See house after house made him envious, he admitted. Comparing his savings at hand to prices at more than $2,200 per square meter was intimidating. He could only put the idea of buying a house aside.
“At that time I was thinking, as soon as the prices stabilize in a few years. I could save most of the price. The pressure of the mortgage would be much less.”
When the international financial crisis erupted, the housing market took a hit. His company was also influenced. Zhou was able to relax a bit. He seized the opportunity and got married, bringing his wife to Beijing. She got a job at an accounting firm as an assistant and they settled into his company’s apartment. They never guessed the Beijing housing market would make a total reversal in the second half of 2009. Prices increased by the day until the beginning of this year when they stood at an average of $4,500 per square meter for houses within Beijing’s fifth ring-road.
Zhou got anxious.
After marriage, the couple’s parents were anxious for a grandson. This was fundamentally impossible without a home of their own. When his wife first arrived in Beijing—being from an outside province without her own home—she was stopped by the police and asked for her resident registration certificate. Zhou couldn’t accept this kind of treatment. He became resolute in buying a house. With prices constantly rising, little savings and stocks that had not yet appreciated, he could by no means buy a new home. So he bought a used home. He couldn’t afford a big home so he bought a small one.
He bought a home and moved in. His once relaxing life changed completely. His mortgage was half his salary. Distance and traffic jams kept him from driving the Elantra he bought a year before. He had to crowd his way onto the subway—which of course saved him some money.
Buying a house temporarily solved his housing problem, but new problems followed close behind. The house was too small. Where would a nanny live after a child was born? His wife’s residency was in another province. Where would his child’s residency be? Where would his child go to school? These problems trouble him. Since he entered the workforce in 1999, Zhou hasn’t been able to figure it:
“My salary is 10 times what it was 10 years ago. Why is life so tense?”
Zhou said the house he just bought is a transition and he will have to trade it in for a larger one in the future. For a bigger house he will have to do his utmost to save money. His expectations for this round of national housing regulations are big. Perhaps the prices will go down after a couple years. Then he can sell his current house and buy the big house he really wants. He could bring his parents and share the joy of family life.
“Can I look forward to days like that?”