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Fish on the chopping block

October 9, 2012

Exaggerating the phenomenon of sudden wealth through relocation leads to illusion


Source:People’s net (Renmin wang)


When Xintang village within Guangzhou city was demolished and the inhabitants relocated, the village families all became millionaires. At most, one family received 5000 square meters of land, appraised at 50,000,000 yuan. According to estimates, the total net cost of reconstruction reached 46.55 billion yuan, over the limit set by the government. (2010-8-19: Guangzhou Daily)


These days, when demolition by force is usually accompanied by low compensation, the idea of relying on demolition to become suddenly wealthy, perhaps inspires many who are going to be relocated with the belief that they will achieve “compensation according to their rights.” Despite the fact that compensation amounts are supposed to be linked to market prices, and despite the fact that there are constant appeals to safeguard the private property of citizens, the reality is that it is an unbalanced game that does not favor those who are being relocated. Becoming wealthy through demolition and relocation is highly unlikely.Even if one occasionally hears scattered stories of such a thing occurring, it is very rare. In the demolition process the citizen’s private property does not enjoy adequate safeguards, and often they are poorer than before.


These fairy tales of sudden wealth rose up during the demolition and renewal of old villages in Shenzhen, and continued with tales about Xintang village in Guangzhou. There some two thousand villagers all “had their ship come in” and became millionaires, breaking all previous records. Even if true, this is not going to happen to everyone. Further, the media and public opinion in retellings exaggerated the facts, and turned the truth about compensation rights into a carnival act. The Xintang incident was interpreted as ” a victory for the common people,” beginning a trend of similar interpretations. This kindled the resolve of any number of households resisting eminent domain(“nailhouse owners”,dingzihu 釘子戶; i.e.,  homeowners who refuse to relocate to make way for a development project).), to hold on to their stubborn dreams.


Indeed, if the high prices paid in the Xintang precedent prove anything, it is that high priced compensation is “bad implementation but not bad money.” The key is this: can the process of becoming wealthy through demolition and relocation be reproduced indefinitely?


What is true and false about the phenomenon remains a topic for discussion. Villagers may receive in compensation “a smaller area of land, worth much more money.” This looks like a pretty good deal, but what they receive is still lower than the market value. In regard to Shenzhen Dachong village, the standard of 11,000 yuan for every square foot is still on the low side, in this “era of 20,000 yuan.” Also, because the villagers get real estate property as compensation, on paper they are millionaires, but if they want to convert their compensation into cash, they have to give up their just acquired residence, and no one can say that is not a heavy burden. Then, they probably want to buy a new home, but to do this they must spend a huge amount of money. Besides, villagers who have long ago stopped cultivating their land and “become city dwellers,” are still not enjoying the real benefits that accrue to urban residents, such as social security, as well as certain rights and advantages in living conditions. The effect of all of these conditions is difficult to measure, and difficult to remedy.  As a Xinhua report on 6-5 stated, many relocated households which receive a large amount in compensation, cannot resist “impulse spending,” and return to a state of poverty. It is not easy to truly measure the gains and losses in this process.


The phenomenon of sudden wealth through relocation would be difficult to clone. There are the strong, there are the weak, and the amount of compensation is entirely based on what the government decides. As developers know, the amount of compensation is linked to the “overlord’s price”( state-controlled) and not the market price. The property rights of the common people are like a fish on the chopping block, with those in power holding the knife. Since there is no discussion of how to reach a level of social equality, how can there be a discussion of prices according to the principles of justice? In this environment, when people hear about becoming suddenly wealthy through relocation, they prick up their ears  and pay attention.When we consider that Shenzhen and Guangzhou are quite rich in material resources compared to the rest of the country, we should regard this as something that seems precious, precisely because it is so rare.


Exaggerating sudden wealth is to fall prey to an illusion. One cannot expect it, but rather should stand firm to obtain what is appropriate. It is of vital importance that we try to bring the process of compensation more in line with market prices.


Editor: Zhang Jing.



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