A famous economist in Hong Kong - Larry Lang: "99% of white-collar workers in China and their families are about to face bankruptcy. And it's inevitable! There's no escape! This may happen in the next 2-10 years. You can try to guess this number as much as possible. But it will definitely happen, it's not an exaggeration." Just like I predicted that the employees of China's state-owned enterprises would inevitably be unemployed, at that time, no one believed it. But it will indeed happen. Because in such a developing country like China, it will always exchange economic development through inflation and reform measures. And each pain brought by reform is borne by the people. Whether it is the lost young intellectuals during the up-to-the-mountain-and-down-to-the-country movement or the large number of laid-off workers caused by the reform and opening-up leading to the collapse of many state-owned enterprises. If they could have some foresight, then I think they might leave themselves a way out. But because of excessive trust in documents and excessive trust that life won't change dramatically, it has led to their personal tragedies.
Some people say the government will not ignore the bankruptcy of white-collar workers. In fact, the government does not want to see this happen either. But what can be done... How to put it? Think about the laid-off workers back then. It caused such a huge social shock. What can be done now? When today's white-collar workers go bankrupt tomorrow, it will be just the same.
After more than 20 years of reform and opening-up, China's economy has rapidly taken off. But the old system has not been completely changed. Various key industries still operate under the government monopoly mechanism. Such as: banks, finance, metallurgy, energy, telecommunications, information, transportation, medical care, education, land. At the beginning of the reform and opening-up, it was impossible for us to comprehensively reform these things. But today, the contradictions brought by monopolistic operations are increasingly prominent.
The first to bear the brunt is real estate. Because China's legal system is not sound, especially the mistakes made in the financial and transformation sectors have led to a continuous rise in real estate prices. With the increase in real estate and the concentration of migrant population in big cities, the income of urban new migrant workers, also known as "white-collar workers," has nominally increased as well. For example, in Beijing, monthly salaries ranging from 3000 to 15000 RMB are common. But this part of the income is mainly used to pay rent or mortgage loans.
In order to deeply understand why 99% of white-collar families will go bankrupt, we must first understand why house prices are so high? Where is the height? How does the capital run? (Here the white-collar refers to those who have bought houses or are preparing to buy houses.) As well as the related effects brought by the development trend. This article will explain it to you in three stages.
1: The first factor leading to the surge in housing prices: the opening of loans under bank competition.
In fact, the main reason for the surge in housing prices is that the people are paying for the mistakes made by the government. For example, a developer once borrowed 10 million yuan from a certain bank to develop a property. If he couldn't repay the loan, he would be unlucky because all the banks are in the same system, if you owe money and don't repay it, there will be no chance for a comeback. However, on the basis of bank reforms, China opened a loophole, in order to promote competition among banks, the Industrial and Commercial Bank of China, Agricultural Bank of China, Construction Bank, etc., were all independently operated. This is originally a good thing. But the problem is that these banks are not private but owned by the state. We can imagine the result when a developer borrows 10 million yuan from the Industrial and Commercial Bank of China. He only needs to use 5 million yuan to develop the property, then raise the selling price, and mortgage the property under development according to his selling price standard to borrow another 20 million yuan from the Agricultural Bank of China. Then use 10 million yuan of the 20 million yuan to develop a higher-priced property and find the Construction Bank to mortgage and borrow 40 million yuan. This is a snowballing crazy loan model.
Whether the houses are sold or not is not important, the key is that the housing prices must be high, and cannot be reduced. Anyway, the money of the bank is not private, so it's natural to get more loans from the bank with "legitimate" high retail-priced properties as collateral.
The result of this is that housing prices only rise and never fall! Because they cannot fall! If they fall, the loans issued by the bank will never come back. This is the government's bank, the government's money! So, in order to plug this financial black hole, some colluded experts and media begin to wildly create public opinion using various propaganda tactics to threaten and lure people into buying houses.
For example, the severe shortage of land resources, if you don't buy a house now, you will only be able to live in the suburbs in the future, and so on. This leads people to have no choice but to buy houses. Actually, the situation where people cannot live in the city center is fundamentally impossible to happen. Urban residents are a process of renewal, those who work live in the city, elderly people retire and prefer to live in the suburbs. As long as the population does not explode, there will not be a situation where office workers cannot live in the city center. Although these public opinions have caused many people to buy houses, but merely this, the housing prices have not yet risen to the current ridiculous level. Following this, the government made another mistake.
2: The second mistake leading to the surge in housing prices: Chinese-style mortgages.
Mortgage was originally a very popular system in the West, which was quite suitable. But once this system is applied in China, there are some problems. Because, in terms of the larger system, all banks are owned by the state, not privately. Therefore, the loan gate cannot be controlled. As long as the paperwork passes, people can get loans.
In order to quickly alleviate the financial black hole caused by the first mistake, the government began to implement the individual mortgage system for housing sales. They often cite examples of American grandmothers and Chinese grandmothers to induce people to take out mortgages. Indeed, some people took out mortgages, and even crazily mortgaged. Those who have some "connections" with the bank. They first mortgaged a house worth 800,000 yuan, paid 100,000 yuan as down payment, and then borrowed 700,000 yuan from the bank. Afterward, they raised the price of the house to 1,800,000 yuan and sold it. At this point, their relatives or parents bought it again, also using the mortgage method, paying 300,000 yuan as down payment and borrowing 1,500,000 yuan from the bank. Then they left it alone. What if they don't repay the loan? The bank can take over the house or not. According to the contract, if I can't repay the money, you can take away the house, and we will have nothing to do with each other.
So after a round, the house whose price has been inflated several times returns to the government and the bank. This explains why many new developments are bought by "real estate speculators" as soon as they start construction. They are not gambling on the appreciation of the house. Instead, they take the house to clean up the bank.
What should the bank do with this house? It dare not reduce the price. It can only add a little more and continue selling. Therefore, ordinary people can hardly buy reasonably priced houses now! Even if you buy directly from the developer, it may have already changed hands several times and returned to the bank and the developer. To put it bluntly, in the current 8000 yuan per square meter house, only 2500 yuan is the house price, and 5500 yuan is due to the financial black hole caused by decision-making errors! In other words, you are painstakingly cleaning up the mess for others.
3: The third issue: When will white-collar families go bankrupt??
Now that we have studied why house prices rise, let's study the possibility of bankruptcy of so-called white-collar families in Chinese cities.
First of all, white-collar incomes abroad are indeed high, but they are valuable. However, white-collar workers in China generally have poor quality. Internal conflicts within Chinese companies are serious. Everyone looks down on each other, everyone is stubborn. Therefore, it's no wonder that foreign companies entering the mainland market start to exclaim: "It's hard to hire people in China!" I also deeply feel this way. Someone might say: "If white-collar workers are not worth this salary now, Zhouping Shuimu, why are they still getting such salaries?"
In fact, this is because of the quantum effect caused by the booming real estate market. The bank's lost funds flow into the market through a few hands. These people start to invest wildly in other fields in China. Because they know themselves that the real estate market is about to collapse. Their repeated investment waves are quickly digesting these funds. They invest in the Internet, high technology, entertainment, and many other areas. But the least wage they pay must be enough for employees to pay monthly rents or mortgage payments. Therefore, precisely because of the high housing prices, it has promoted the relative increase in the wage levels of urban populations. Don't believe me? Calculate the average income of the white-collar class in your city once they've paid their monthly rent. How much money do they actually have left? I don't need to elaborate further on this point. Everyone knows it. So I can say that once the real estate market collapses, the next to collapse will be your salary.
Many white-collar workers I know have already purchased houses. Their calculations are simple: "Two people together, after various taxes and insurance, earn 12,000 yuan a month. Paying 3,000 yuan for rent is nothing, right? I can even buy another one!" Yes, it's nothing. But because the houses are expensive, everything else is expensive too. Food is expensive, transportation is expensive, tuition fees are expensive, and medical expenses are even more expensive!!! So after paying the rent and deducting living expenses, you basically can't save any money. Even if you save a little, it can't keep up with the normal inflation rate. The question is, if this status quo could be maintained indefinitely, theoretically, there should be no problem. The money you earned over these twenty years is exactly enough to compensate for the losses caused by the two mistakes of the government.
But the problem lies here. With the end of the WTO's five-year buffer period, a large number of foreign-funded telecommunications, banks, medical services, insurance companies, etc., will enter China successively. At that time, no one can stop you from depositing money in Citibank or HSBC. May I ask, at that time, who would willingly deposit money in the Chinese state-owned banks with so many bad debts? Even if the government takes all kinds of measures, it might still lead to a bank run, so it's hard to predict what will happen at that time. But one thing is certain: the pressure on these state-owned banks in China will become extremely enormous. Loans will become even harder because the banks simply have no money to lend! Meanwhile, a large number of foreign companies with highly qualified talents entering China will certainly bring strong market shocks, cause the closure of existing companies, and lead to white-collar unemployment. That is to say, once foreign companies join the competition, 99% of the existing white-collar workers in China will face employment pressures in the larger environment!
Moreover, once foreign banks accumulate funds and start investing in real estate, since they follow normal operational procedures, the houses they build will be cheaper, which will inevitably lead to a significant drop in national real estate prices. As I mentioned earlier, once housing prices fall, the wages of the company you work for will also fall immediately, which is very rare! However, the repayment price of the house you previously bought will not decrease or reduce, so you will be unable to afford the high loan payments. In that case, your house will be confiscated by the bank, and your deposits will be directly frozen. Therefore, the most likely outcome for white-collar workers in urban China in the future is similar to the fate of state-owned enterprise employees decades ago. Working hard for twenty years, only to end up with nothing!
How to avoid bankruptcy?
By reading this far, you should realize that not buying a house is a good way to avoid bankruptcy. However, I must warn you, in order to prevent the housing market from falling, they have another trick: promoting the idea that if you don't buy a house, you're not a man! Believe it or not, this really works. Nowadays, the first sentence people utter is: "Do you own a house?" As if not owning a house makes you a eunuch. I'm so angry I don't even have the strength to curse anymore. Some people even posted on the Baidu forum under the name "Shuimu Zhouping": "Where will you live if you don't buy a house?" I'm puzzled. Is living necessarily tied to buying? In China, a piece of land that doesn't belong to you, what difference does it make whether you buy or rent it? (Laugh). Not to mention the bandit-like property management and forced demolitions that treat people as non-humans! Isn't this purely "The Emperor's New Clothes"? However, since the publishing industry and media in WTO agreements are still not open to foreign entities in China, public opinion saving the market will become the last card in the hands of the government and developers.
Therefore, when faced with sweet talk, we should still use our brains more often. The nonsense about real estate we hear will only increase and become more outrageous! For example, recently, some experts have been promoting the idea that housing prices are not expensive by saying: "Even if someone earns 50,000 yuan a year, two people together earn 100,000 yuan a year, and in five years, they can earn 500,000 yuan. So housing prices are obviously not expensive." I'm surprised that some people actually agree? Perhaps for those experts who have evolved to the point where they don't eat, drink, sleep, dress, move, or support their dead parents, it might make sense. So, everyone, please be vigilant.
Closing remarks:
White-collar workers who have already bought or are planning to buy houses will inevitably collapse along with the collapse of housing prices. It will be a slow process, taking at least two years or up to ten years. But this is an irreversible trend. Therefore, the claim that 99% of urban white-collar workers in China are facing bankruptcy is not an exaggeration! Every cent you pay to the bank today is helping cover the holes created by the government and real estate speculators, with only a small portion being actual rent. Once the broader environment changes, and you lack the funds to fill these holes, you will be kicked out by the market and the bank, making room for a new batch of people to continue filling them. Don't believe it? Let's wait and see! -- PS: Why do I say 99%? Because, based on my understanding, 99% of people start buying houses once their monthly salary exceeds 5,000 yuan, or even 3,000 or 4,000 yuan. Young couples blindly buying houses this way will undoubtedly lead to a miserable life. I feel sorry for them. Of course, if you are among the 1%, please encourage and help them. Sharing happiness alone is not as enjoyable as sharing it with others.
Four Big Deceptions Facing the Chinese
The First Big Deception: Real Estate
What does buying a house mean? It means you own a house of your own. Yes, that's what you think, but in China, you can't actually own the house; you are just renting it. Because the house is yours, but the land isn't. You only have the right to use the land for 70 years (if you go back 70 years from now, it was the Anti-Japanese War era, who has seen houses from that time?). Typically, houses will encounter demolition or renovation every 30 years or so. This means that you spend money to buy a house, but in reality, you only get the effect of renting. And this isn't the worst part. The worst part is, decades later, when you realize you've been deceived! A group of thugs rush into the house you've spent your entire life savings on, paint a big "tear down" sign, and throw all your belongings out like garbage, ignoring your desperate pleas, and even giving you a bad reputation in newspapers, letting the public ridicule you. Only then will you understand what despair truly feels like!
There is a famous joke about China's real estate market written like this:
Once upon a time, there was a landlord with a lot of land, who hired many laborers to work on it. The landlord built a batch of dormitory buildings for the laborers to live in. One day, the landlord's strategist said to him: Master, the laborers have accumulated some money in recent years. They live in your houses and pay rent every month, which is not profitable. Since they will live there forever anyway, why not sell the houses to them and call it "public housing sale"? Tell them the houses will belong to them forever, and you can recover the money they have saved in recent years. The landlord said: That's a good idea, but what about the rent? The strategist replied: Continue collecting it, but give it a Japanese name called "property fee". The landlord quickly implemented it, earning a lot of money. The laborers were so happy!
After a few years, the landlord's village developed into a town, with more and more rich people, and no place to live. The strategist said to the landlord: Master, the laborers have accumulated more money in recent years. Let's build new houses for them and call it "urban renewal". They hand over their money to us, we demolish the old houses and build new ones, and let them buy them back. We can build more and sell them to others. The landlord implemented it, and this time, some laborers were unhappy. The landlord's servants came in handy, and the laborers had to swallow their anger. The landlord earned a lot of money again.
After a few more years, the landlord's village developed into a big city, with more rich people, and the landlord's land became more valuable. The strategist said to the landlord: Master, let's demolish the laborers' houses and build villas here. Sell the land and the newly built houses to the rich tycoons, and we can make