First Food Prices, Now Rents Rise Steeply

The new trend in Beijing isn’t falling temperatures but rising prices. Earlier this month we blogged about the rising price of food and now that is translating into other areas like rent.

The Global Times reported last week that rents are up over 20 percent from the same period last year. Overall inflation in China in November was a worryingly high 5.1 percent.

A post on the Wall Street Journal site today cites an in-house investigation by local magazine Caixin, which asked whether China was even more expensive now than the US. The WSJ post says:

“One of [Caixin’s] bloggers, Wang Pei, teamed up with a friend in Boston and set out on the streets [of Hangzhou] with identical grocery lists, including 19 food items and two types of gasoline… While not exactly a scientific study, Wang admits, the exercise reveals that a surprising 10 of the food items, including green beans and bananas, were more expensive in China.”

Yet according to the report, “The average per capita income in Hangzhou in 2009 was 26,864 yuan, or $4,024, according to the Hangzhou local government. Boston’s was $32,255.”

These figures indicate just how tough many locals have it, with low wages forcing them to live in extremely cramped conditions, with several people often packed into a single room. Their lives are set to get that much harder next year, when the Department of Housing and Urban will supposedly start fining landlords up to RMB 30,000 if they partition rooms for rental purposes.

The new regulations stipulate that their must be a minimum of 10 square-metres per person in any given rental residence, which will render vast numbers of Beijing’s residences illegal.

Given that no-one would willingly chose to live in horrifically overpriced and overcrowded conditions, it’s unclear how these new regulations will help unless underlying problems like low wages, poor housing and massively inflated rents are addressed. All the new regulations are likely to achieve – assuming they can be enforced, which seems doubtful – is pushing a whole lot of low-income people to the city’s periphery, placing further strain on Beijing’s already overburdened transport infrastructure.