Scott Sumner  

Chinese families move from nice neighborhoods to slums, for the schools.

Liability, Disclaimers, and Ad... Pritchett on Private vs. Gover...

Over at TheMoneyIllusion I used to do occasional stories on why China will not get stuck in the middle income trap. Here's another interesting piece of evidence:

BEIJING (Reuters) - Zhong Jian and his wife are willing to pay double the going rate for a tiny home in a Beijing neighbourhood so their 18-month-old daughter will be eligible to attend a top primary school nearby.

Because public primary schools in many Chinese cities have to admit children who live locally, parents like Zhong are driving up property prices in areas that have the most popular schools.

. . .

Zhong, a 32-year old electronics salesman, said he was ready to pay two million yuan ($328,200) for a tiny home with one room the size of about four king-size beds, in a shabby alleyway near the Beijing No.2 Experimental Primary School.

The home, which doesn't even have a bathroom, sits in a rundown Chinese-style courtyard with other small homes. That would have been more than double the cost for a similar home in downtown Beijing, one real estate agent said.

But the owner still wanted more, so Zhong had to say no.

Other parents said they were willing to pay high prices and endure less than ideal living conditions to get their child into a top primary school.

Chinese families put enormous emphasis on education. Many parents believe that choosing the right primary school for their child is vital to getting them into a good high school followed by a prestigious university.

. . .

Most buyers of school-area homes are relatively well-off parents who give up bigger and newer houses to live near good schools, which are often surrounded by small, older apartments, said HomeLink analyst Zhang.

The closest analogy I can think of is families that move into small apartments or condos in the less desirable areas of Newton, Massachusetts, where I live. They do so for the schools, even though they could afford a much nicer place in neighboring Waltham. Come to think of it, those families are often Chinese-American.

PS. Here the term 'slum' simply refers to the physical characteristics of the housing stock, not other implications (crime, poverty, etc) that are associated with the term in other parts of the world.

PPS. This post from Tyler Cowen also shows the intense Chinese interest in education.

Off topic: I have strongly disagreed with John Tamny on monetary economics, but this post on China's "ghost cities" puts things in perspective.

Update: Perhaps I should explain why this information sends important signals about China, in case it isn't obvious:

1. It suggests the Chinese revere education.
2. It suggest a culture willing to sacrifice to achieve success.
3. It suggests there are lots of well educated people in Chinese slums, which according to Bryan Caplan is not usually the case in developing countries.

Comments and Sharing

COMMENTS (15 to date)
Shane L writes:

That's a pretty cool indicator. It does make me think, though, that perhaps it would be better yet if schools were free to admit any students they liked. Seems like a lot of resources are wasted by ambitious parents forced to move house just to get their children to a good school.

Brett Champion writes:

The Chinese people can get as educated as they want, but until the Chinese government allows at least a minimum of real freedom, the economic rewards of that education will, to a great extent, accrue to other countries because many of the best and brightest of Chinese society will continue to seek their fortunes in lands that permit them to live their lives without fear of being dragged away in the middle of the night because they dared believe in the primacy of human dignity. A people will accept being told to sit down and shut up for only so long before they decide to make themselves heard in no uncertain terms. Unless the Chinese government undertakes real political reform, China is soon headed for a period of deep political upheaval that will cause a real setback for its economy.

Daublin writes:

As you say, this is the norm in the U.S. We have "public education", but the way you get access to it is that you buy an expensive home on the private market.

It's not clear this is better than straight-up private education, augmented by vouchers. If you can't afford a good private education, you're also not going to afford to live somewhere with a good "public" school.

Megan Mcardle has way to put it: "you're already sending your kid to private school. You're just confused because your tuition fees came bundled with granite countertops and hardwood floors."

dave smith writes:

Is this data or anecdote?

Ian Brown writes:

Anecdote; but an excellent one.

Jody writes:

It suggests that there is relatively less cost to living in a Chinese slum than in an American slum.

[Read as - I would like to see crime statistics comparisons between US slums and Chinese slums before drawing any conclusions]

DougT writes:

China has *always* revered education. Anyone even remotely familiar with Confucius and Mencius knows that. Brett is right, though: without the rule of law, the benefits of education will tend to accrue to the rulers. And without accountability, those rulers will become increasingly corrupt. After education, the item most necessary for Chinese entrepreneurs to succeed will be luggage.

Steve Sailer writes:

Clearly, they don't have enough diversity in China.

foobarista writes:

If they "run-down courtyard houses", they mean hutongs, they may be crappy buildings, but they are emphatically not in "bad (poor) neighborhoods". The only hutongs left are in central Beijing, within walking distance of Tiananmen Square.

We aren't talking about Compton or East Oakland here...

Scott Sumner writes:

I agree with all the pro-voucher comments.

Brett, Agreed, but believe it or not there is far more freedom of speech than in the old days. I've been to China and the newspapers are allowed to criticize the government, as long as they don't touch the three Ts (Tibet, Taiwan, Tiananmen). And of course you can't advocate overthrow of the CCP. But you can criticize corruption, economic policies, etc. Again, I agree with you, but things are gradually getting better over there.

Dave, Anecdote, but very likely true.

Jody, The crime rates would be lower than American slums, especially violent crime.

Doug, Too much goes to the rulers, but almost everyone is seeing rapid increases in real income.

Steve, When China get rich and its population falls, they'll be bringing in lots of south Asians to do the tough jobs.

foobarista, I've been to the hutongs in Beijing, and they are certainly slums by US standards, and to some extent by Beijing standards. Many don't have indoor plumbing, you have to use lousy public outhouses a block away. But they do have great market value. On the other hand townhouses in Harlem, NYC have great value, don't they?

Foobarista writes:

@Scott, I lived in Beijing for awhile, and spent a fair amount of time downtown. The hutongs may not look wonderful, but they aren't "slums" population-wise. There are very few poor people there; what few there are tend to be retired old people who have a sort of tenant tenure (and are waiting to be bought out by developers). You certainly don't have the drug addicts and desperate types you have in American slums in the hutongs. (You can find them in other parts of Beijing, away from the central city.)

Also, many of the courtyard houses in the hutongs have been extensively rehabbed and house some of the richest families in China or made into clubs and restaurants, although this isn't typically visible from the street.

Vast hutong neighborhoods were torn down in the past 20 years, but many of the ones that are left have been awarded a sort of national registry of historic places status, so they're more likely to be rehabbed than torn down nowadays.

Floccina writes:

They seem excessively interested in schooling. If it is excessive that very thing could hold them back.

BTW I had a friend who was a college professor from Korea and he told me that he moved his family here to the USA for a few years to get his children away from going school + tutoring from 7:00 am to 10:00 pm. He was in education psychology and he thought that what they do in Korea is excessive and not productive.

Scott Sumner writes:

Foobarista, I said they are slums in the sense of low quality housing, and the article seems to confirm what I claimed. I've walked through many hutongs, and while a few have been turned into luxury homes, especially near hou hai lake, many are still low quality. I specifically said they did not have the social problems you associate with slums in other countries, so I agree with you there. I was merely describing the quality of the housing stock.

Perhaps I shouldn't have used the term 'slums' as it has connotations, and even with my disclaimer about social problems being lower than elsewhere, it might be misinterpreted.

Floccina, I'm not sure what "excessively interested in schooling" means. There are different attitudes toward schooling among different ethnic groups. I've met people who think Asian Americans are excessively interested in schooling and African Americans are not interested enough in schooling. (Not saying those views apply to you.) But I wonder if there is a tendency for people to assume that their own culture has the correct attitude toward the optimal amount of schooling. That's not to say you are wrong, it's just that I find it hard to find an "objective" position on the issue. So I remain agnostic on this question.

Floccina writes:
Here the term 'slum' simply refers to the physical characteristics of the housing stock, not other implications (crime, poverty, etc) that are associated with the term in other parts of the world.

IMHO the best thing we could do for the bottom income people in the USA would be better crime control. Starting with legalizing all drugs. Make the street safer but the left seldom talks about that. If white middle class males were victims of homicide at the rate that young black males are something would be done about it.

Mark V Anderson writes:

Floccina -- Be careful what you ask for. You are probably right that if the middle class was subject to the crime level of slum-dwellers something would be done about it. Maybe a police state.

Although I do think that the most important aspect of a safer communities is that these communities won't stand for more crime. The residents themselves stand up for themselves, and shame the bad guys. Neither of those things happens in crime-ridden slums, and there might not be much outsiders can do about it when the city dwellers themselves don't do anything.

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