Andy Xie is Wrong - Housing Prices are not Going to Fall

By Yang Hongxu (杨红旭)
Translated by Zhu Na
July 30, 2012
Economic Oberserver Online
Original article: [Chinese]

Recently, Andy Xie (谢国忠), an independent economist based in Shanghai, urged his readers not to buy a house in China and urged those with an empty residential property to offload it as quick as they can. One of the arguments that share Xie used to back his call to stay away from the Chinese housing market was that when population begins to fall, housing prices also drop.

Some predict that by 2020, China's population will begin to shrink.

Yang Hongxu doesn't agree with Xie, he makes the following points:

Firstly, there are differing estimates as to when China's population will peak. A senior official at China's statistics bureau believes that China's population won't start to decline until 2032 population and after that will only fall a little. Yang argues that Xie's 2020 estimate is off.

Secondly, China's situation is different from other more developed countries. To a certain extent, rapid urbanization can set off the impact caused by a slowdown in population growth and even population decline. Yang argues that urbanization, unlike in developed economies, is obviously a major driving force behind economic growth in China.

For example, the proportion of Japan's population that were of an age to start buying a house peaked in 198, and in that year, its urbanization rate had already reached 80 percent. However, in 2008, when China reached a similar demographic milestone, our urbanization rate was only 46 percent.

Yang closes his argument by noting that over the next 10-20 years, rural residents are expected to continue to flood into China's urban areas, creating a huge demand for housing.

China's Legal System is Too Soft on Civil Servants

By Lu Ning (鲁宁)
Translated by Tang Xiangyang
Aug 2, 2012
Economic Oberserver Online
Original article: [Chinese]

China's legal system is too soft when it comes to the country's public servants.

Chinese media recently reported (see the Economic Observer's article here) that 61 civil servants in Funing (阜宁) County of Jiangsu Province had been re-employed by the government in 2009, despite being put on probation after being found guilty of illegal conduct.

The Funing County government responded by saying that these officials "were qualified to be given jobs in accordance with our policy." However, is it possible for company employees to be re-hired by the same company after they've been sentenced? Will the employees get paid even though they don't do any work?

It seems civil servants remain "superior" to ordinary people even after they've been found guilty of committing crimes.

Aside from lax laws, the regulations that apply to public servants are also very timid when it comes to punishment. The regulations state that civil servants will be fired if they are found to have "seriously" broken the law, but there is no detailed explanation of what kind of crimes should be treated as "serious".

What Does an Airport Tax Have to do with the National Interest?

By Chen Tairan (陈泰然)
Translated by Zhu Na
July 30, 2012
Economic Oberserver Online
Original article: [Chinese]

On July 31 the head of Civil Aviation Administration of China (CAAC) came out and claimed that the main reason why China continued to make all airline passnegers pay a compulsory airport construction fee was that was in the national interest.

But what does the airport construction fee have to do with national interest?

What is exactly the nature of airport construction fee? Zhao Zhiquan (赵志全) a representative of National People's Congress once pointed out, "If the airport construction fee is a tax, then officials should explain to tax payers why it is charged and how the funds raised are spent. If it's a donation, then it should be voluntary. If it's an investment, then there should be some return. If it is a fee similar to a road toll, then it should be charged for a fixed number of years and more importantly, the operator of the vehicles should pick up the tab, not the passengers."

Imposing fees on tax payers through the State Council and Ministry of Finance, and then passing the fees collected to commercial airport operators, what kind of logic is this?

Given that the primary goal of flight service providers should be putting the interests of their passengers first and as the underlying principle for listed companies should be to put the interests of shareholders first, this leaves us wondering where the national interest fits in.

Cui Yongyuan Picks Up the Bill

By Liu Hongbo (刘洪波)
Translated by Tang Xiangyang
Aug 1, 2012
Economic Oberserver Online
Original article: [Chinese]

Cui Yongyuan (崔永元), a well-known Chinese TV personality, treated some migrant workers to dinner this week (China Daily report here). According to media reports, the people he invited to dinner had helped with the rescue effort during the floods that inundated parts of Beijing after heavy rain on July 21. Some of these non-Beijing residents had been refused payments that had been awarded to other rescuers because they were not from Beijing.

Some people have said that Cui was just trying to show off. I think he was just trying to say thanks to those migrant workers.

Everybody has his own way of viewing migrant workers. While the government chooses to view them as "non-residents", Cui wants to say they are equal to everybody.