Last month, a representative of the Communist Youth League told a gathering of Chinese reporters that the government was launching a propaganda campaign to convince young people to lower their expectations for success. The message: Let them rent. "Everyone worries about the 1980s generation -- the young generation," says Yang Xiao, a reporter with Beijing Youth Daily newspaper. "What if they become cynical or have no dream?"
Meanwhile, it's not only the young and restless in China for whom real estate represents a source of frustrated ambitions. Economists say one significant driver of China's soaring real estate prices has been wealthy investors in China snatching up property, because they have few other investment options. Current laws -- based on longstanding Chinese economic doctrine that regards capital inflow as good, outflow as bad -- forbid Chinese citizens from making most kinds of overseas investments. Meanwhile, stock markets in China are unstable and immature, and there are few tax incentives for philanthropy. As a result, the wealthiest in China are faced with a problem unimaginable a generation ago: what to do with their money.
The answer, for many, has been to invest in one of the few options available to them -- an asset whose value, within their lifetime, has only gone up and up: real estate. "Property is being held by many as a store of value, like gold," explains Patrick Chovanec, a professor at Tsinghua University's School of Economics and Management. "This bids up prices and also skews development toward high-end properties, as opposed to affordable housing."
Ms. Wang, the wife of a successful Beijing businessman who gave only her surname, has purchased four homes in recent years. There's the apartment she and her husband live in, and three others they hold as investments. All three are vacant; she's making no attempt to rent them out. No property taxes are assessed in China, and so there's no financial penalty for simply buying and holding. The rental market in Beijing, in comparison to the red-hot real estate market, is fairly weak, and besides, renting out those apartments -- putting them to use and risking some wear and tear -- could diminish their value. So they remain pristine and empty.
Ms. Wang's thinking is not unique. Many of China's wealthiest see empty apartments as their best investment option. China's nouveau-riche, which have benefited from the country's rising tide, are now bumping up against its limits. The economy hasn't diversified enough to afford them many options for building their wealth. Privately, some are beginning to grumble; as one corporate tax analyst in Beijing told me: "The government is to blame."