[Continued from yesterday’s Part 2 and the preceding Part 1.]
By: David A. Smith
As so happens when I write about China, the process of laboriously sorting through my thinking means the posts expand, and my post about Chinese emigration, using as a source an article from the Wall Street Journal (August 15, 2014), brought us to the point of realizing that the emigration of large volumes of Chinese entrepreneurs to other more law- and property-friendly countries is a smart-people’s referendum not only on the relative freedom and opportunity of the respective countries’ economies, but also on the value propositions of their respective housing markets, a value proposition the US government monetizes via the buy-a-visa-for-property EB-5 visa program.
Because I vacillate on the policy soundness of EB-5, I haven’t written about it; certainly it has some positive effect on US real estate values.
Asians welcome
In the global market for high-end real estate, Chinese buying has become a key driver of prices. According to the US National Association of Realtors, Chinese buyers snapped up homes worth $22 billion in the year ending in March.
While that may sound a large number, it is one one-thousandth the value of all US housing, which is $25 trillion.
Australia called a parliamentary inquiry to find out whether local households were being priced out of the market by Chinese money. (The conclusion: not yet.)
While there will be upward pressure on prime Sydney or Brisbane locations, Australia is an enormous country, largely empty of people, with an immense and sun-blessed coastline. If I were the Australian prime minister, I would be doing everything I could to capture Chinese cash into Australian urban real estate, because with it I would be luring Chinese entrepreneurs.
No scaremongering here, cobber
In his book Restless Empire: China and the World Since 1750, the historian Odd Arne Westad writes that overseas Chinese “were, and are, the glue that holds China’s relations with the world together, in good times and bad.”
Isn’t Chinese behavior odd, Arne?
Entrepreneurs – and their close cousins, the sailors and importers – are every nation’s window on the world.
The Chinese diaspora has some 48 million members—about double the number of Indians living outside their country—and wherever they alight, they tend to rise to the top, be it Silicon Valley or the high-tech corridors of Southeast Asia.
In America, Chinese they become Chinese-Americans, and then they become Americans.
Foreigners sometimes have a hard time understanding why Beijing expends so much effort countering threats, real or imagined, from Chinese opponents overseas. But China’s leaders are haunted by history. To an extraordinary degree, the destiny of modern China has been shaped by the Chinese who left.
And America’s destiny is shaped by those who came, and who continue to come.
The overseas Chinese of Southeast Asia provided critical support for Sun Yat-sen’s 1911 revolution, which toppled the Qing.
History will record the Communists as the imperial dynasty that supplanted the Qing, and will see Sun Yat-sen as China’s only flicker of democracy.
On the eve of transient democracy: Sun Yat-sen, 1912
Without fee-paying Chinese students, many colleges in the post-recession Western world simply wouldn’t be able to pay the bills. Chinese students are by far the largest group of foreign students on US campuses, and their numbers jumped 21% last year from the year before—to 235,597, according to the Institute of International Education.
America’s universities – for that matter, probably the world’s – will welcome such students, because they pay full rates.
Their numbers are increasing at a similar pace in Australia. In England, there are now almost as many Chinese students as British ones studying full-time for postgraduate master’s degrees.
Too little remarked has been the impact, economic, sociological, and political, of educating the world’s elite in Western universities. Aside from doing a tiny bit to balance the flow of trade, it also exposes emerging-world youth to Western society, democracy, discourse, and values.
Peace, man
In education, the next big wave coming from China is high schoolers. Rich parents are opting out of an education system that prepares children to take high-stakes tests for college entrance but neglects the creative side. Besides, once they’ve been through the mill, the students have a tendency to kick back when they get to [Chinese] college.
The Chinese government has no desire to slow the flow of students. Its attitude is simple: Why not have the Americans or Europeans train our brightest minds if they want to? President Xi’s own daughter went to Harvard.
While the Chinese are exporting money, they are importing values and knowledge … and on the whole, the world is much better for the exchange. And whether the students pick up Western morals, they certainly pick up the Western quality of life, and that means our universities are incubating the next generation of Chinese immigrants.
In addition to seeing how clear the air is, these Chinese tourists will also see what housing costs, and what you get for your renminbi, especially in terms of what better housing brings – economic opportunity, school choice and quality, and community. They will meet Chinese whose have become Americans and ask themselves, Can China duplicate this in my lifetime? To do that requires reorienting away from industrial production, dramatically reforming urban governance, opening up free speech and removing Internet censorship – and answering their children, who once exposed to a free internet will never willingly embrace a restricted one.
Nope, we’re not going to let you see that either
China’s housing ecosystem thus is a product of its urban ecosystem, which in turn is a product of China’s political ecosystem. To change one, you must change them all. Premier Xi’s anti-corruption drive is an excellent place to start (and remember, he has a Harvard-educated daughter feeding him dinner-table Americanized insights), but he has a long way to go and the body moves much more slowly than the head.
I can look back more easily than I can turn back
The head, however, has turned outward:
The outflow has only just begun. The Hong Kong-based brokerage firm CLSA forecasts that departures from China will double to 200 million by 2020.
We need to welcome them.
Retired from playing poker with Deng
In his memoirs, Zbigniew Brzezinski, the former national security adviser, recalls a meeting between President Jimmy Carter and Deng. Human rights were on Mr. Carter’s agenda, and he started needling the Chinese leader about Beijing’s tight emigration policies. “Fine. We’ll let them go,” Deng snapped. “Are you prepared to accept ten million?”
Yes, we are – or at least, I am.
All this crystallized for me why, in this supposed age of a rising China and a declining US, we Americans should worry a bit less. No matter how huge China’s GDP gets, the US retains a deep, enduring competitive advantage: America makes Chinese Americans. China doesn’t make American Chinese.
In the 1950s Nikita Khrushchev was fond of boasting, we will bury you.
Nowadays others may be forgiven for thinking, we will buy you.
“We will bury you” – shoe slapped on lectern for emphasis
Having seen the 1980s Japanese buying waves, when Theory Z was the rage and the sale of Rockefeller Center was regarded as the fall of an icon, I’m more sanguine about America’s prospects, and the world’s prospects.
Z for Zero?
China also isn’t particularly interested in making American Chinese. It isn’t in China’s operating system to welcome, integrate and empower immigrants to redefine the very meaning of Chinese-ness. That means that China lags behind the US in a crucial twenty-first-century way: embracing diversity and making something great from many multicultural parts.
When all is said and done, a leadership that loses its intelligentsia’s confidence loses its legitimacy.
Liberty!
And then it loses its power.
