Affordable Housing Institute : US

How would you house 145,000,000 additional elderly people in less than twenty years?

As reported some time back in the Boston Globe, that problem now confronts the world’s most populous nation, China.

CHONGQING, CHINA — One of the world’s oldest nations is getting older. China’s population of 1.3 billion is graying rapidly and the country, which now has about 146 million senior citizens, will have almost 290 million by 2025 — nearly the entire population of the United States — according to a study released last month [i.e. December, 2006 — Ed.] by China’s State Council.

 

For older readers, Chongqing in the Pinyin spelling of Chungking. 

 

Older high-rises in Chongqing

 

The exploding need for all-elderly housing is a late-emerging phenomenon.  In pre-industrial times, the elderly either died early (callous, but true) or were cared for by their children.

 

Life expectancy in China has crept up since reforms began in 1979, from 66 years to 72.

 

Likely it will go higher still — good for the people, bad for the housing crunch.

 

In China, where age and experience are revered, retirement has been seen as a “golden time” when a person could sit back and enjoy the rewards of a lifetime’s work, the love and care of children and grandchildren, and communal respect.  

Improved technology changes demography.  Better health care means living longer. 

 

Because of the tradition of families caring for older relatives, the government never created a strong safety net for seniors.

 

The growth in demand drowns the available supply:

 

It was only when children could not or would not care for their parents that the state stepped in to help in a very modest way. China’s old-age homes can accommodate just 1.5 million people — about 1% of the population 60 and over — according to the National Working Committee on Aging.

 

Only a 1 in 100 chance of drawing the right tile

 

Rapid urbanization means children moving to the city, away from the extended family. 

 

 

Increasing numbers of children are moving away from their hometowns.

 

A recent survey conducted in Beijing found that about half of the city’s seniors now live alone.  While most children still financially support their parents, it has become a strain.

 

It’s also a strain because the Chinese elderly to be served have no employable skills:

 

Some older residents in Beijing say they cannot venture far from their homes because they are illiterate and can’t read road signs along new streets.

 

Alone, often widowed or divorced, most seniors spend their days on wobbly stools and tables they set up outside corner dumpling restaurants, playing low-stakes games of Chinese-style three-card poker, checkers, chess, and mah-jongg. Many of them still wear the worn blue Mao suits that were the standard national uniform from 1949 to the mid-1970s, and the men smoke incessantly as they quibble over game rules and weather predictions.

 

All the cool cats wore them

 

After a half-century of Maoism and idleness, it will be hard for them to create their own self-sustaining communities.  The burden will fall on the working generation:

 

The ratio of workers to retirees in China will decline to about 2 to 1 by 2040, short of the 5 to 1 ratio that economists say is needed to support a US-style Social Security system where workers pay for retirees. The government is also loath to pay pensions from general tax revenue as that would greatly burden the treasury.

 

Nor do China’s elderly have assets:

 

But the truth is that poverty seriously threatens China’s elderly, as few have significant savings. In the Maoist years, rural communities toiling away in collectives received housing, food coupons, and clothes as compensation, so no one really made any money.

 

That last clause is a non sequitur.  The problem is not that China’s elderly lack money; they lack wealth.  During the Cultural Revolution and the Great Leap Forward, China impoverished itself in the name of revolutionary communism.  Now it is paying the price for a half-century’s non-investment:

 

Urban workers employed by the government and state-owned enterprise fared slightly better. They receive meager pensions, but now even those are under threat. The World Bank says China’s pension debt of about $1.5 trillion is woefully underfunded, in part because pension money is often misused by corrupt government officials.

 

Even with money, where will they live?  Where will the apartments come from?

 

Seniors who lived through China’s wild political swings over the past half-century are left feeling alienated and lost. Trained to create a communist utopia, they now find themselves in a post-industrial, knowledge-led economy, where cozy old neighborhoods are torn down to make way for huge shopping centers and office high-rises.

 

In Chongqing, this is a cozy low-density neighborhood

 

The high-rises are a consequence of population growth and urbanization. 

 

This sense of community keeps China’s retirees feeling alive, and in the early mornings groups of seniors often meet to do tai-chi and other forms of exercise in parks and town squares. It is also common to see elderly couples waltzing in public places as a battered cassette recorder spills out music from another time.

 

Community is essential, and the most effective elderly communities are in elderly housing, which China desperately needs to create.

 

How do you build 145,000,000 elderly apartments in twenty years? 

 

High-rises in Shanghai; shades of New York’s Co-op City

 

Start by making it an economic proposition. 

 

To do that, you have to protect the rights of private property, and as the Washington Post reports, China has finally brought itself to do that:

 

BEIJING, March 16 — China’s legislature passed a controversial law designed to protect private property rights Friday in what legal experts called a milestone on the path toward a market economy.

 

If China’s leaders mean it, there will be no turning back.  Once people have a taste of investment, they never lose their appetite for it.

 

The legislation stopped short of abrogating the principle that all land belongs to the state, a fundamental part of the communist system put in place after Mao Zedong’s rise to power in 1949.

 

Rolling over in his grave?

 

It took Britain’s Labour Party eighty years to abandon Clause Four, calling for state ownership of critical industries.  But abandon it the Labourites did.  China will change the economics first, saving the words as a fig leaf for the faithful.

 

Sure, we’ll let you think all land belongs to the state

 

But it broke ground by establishing new protections for private homes and businesses and for farmers with long-term leases on their fields.

 

Just vote Yes

 

These goals had long been sought by the entrepreneurs who now account for more than half of China’s production, by the swiftly climbing number of urban families who have bought their own apartments and by the millions of farmers whose croplands have come under growing pressure from real estate developers.

 

If you’d bought one of these, you’d want to know it was yours, wouldn’t you?

 

You cannot have production without private capital, and the biggest creator of private capital is home ownership. 

 

Jiang Ping, former president of the China University of Political Science and Law and a scholar who advised officials drawing up the law, told the official New China News Agency that it is significant because it helps codify a property law system that has been evolving through regulation in recent years as the country moves away from socialism.

 

Once people have put down their hard-earned cash, they want to protect it. 

 

“Only when people’s lawful property is well protected will they have the enthusiasm to create more wealth and will China maintain its economic development,” Jiang said.

 

The grass-roots clamor overcame the elite’s communism:

 

Because the new law seeks to balance protection for private and state-owned property — a significant change in China, where people still learn communist theory in school — a group of former officials and influential academics tried to organize opposition to its passage.

 

After countless meetings and adjustments, Hu’s government decided that the debate had gone on long enough and that the law should be passed without further delay.

 

It was not simply the protraction of debate; markets were moving — or not moving — and the government had to put the legal infrastructure in place if it was to unlock any of the other activities.  So they provided a political machine that Lyndon Johnson would have envied:

 

Two members of the National People’s Congress executive bureau were assigned to each provincial delegation to ensure that members understood the importance of passing the law and to try to make sure that no opposition developed, according to a Chinese journalist who covered the session.

 

The legislative body, which traditionally gives overwhelming approval to government measures once they are decided on by the Communist Party, endorsed the law Friday with only token opposition. Officials said 2,799 voted in favor, 52 opposed and 37 abstained.

 

97% of you got it right

 

A positively Chicago-esque 97% in favor.

 

The opponents praised the new protections for farmers in the law that passed Friday, particularly the right to sue to protect fields against expropriation.

 

Fellows, welcome to eminent domain litigation.

 

But they expressed fear that the law will also be used by dishonest businessmen and officials to solidify the state enterprise takeovers that have blossomed over the past two decades, often in crooked deals.

 

May I interest you in a Takings Clause?

 

“Nor shall private property be taken for public use without just compensation.”

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