The perils of overnight wealth

konjaku: in this article we meet Huang Yao, a Dawangjing villager who used his compensation money to buy a sports car, which he planned to use as an illegal (unregistered) taxi. There was, at least temporarily, a population of relocated persons with nice apartments, plenty of money, but nothing to do.

A Social Crisis –The “Relocated Rich” Squander their Money and try to Conceal their Poverty

2010-06-06

http://www.wolai.com/news/2010-06-06/50610/1/

Source: Liaowang(Outlook) News Weekly

Acquiring sudden wealth through having one’s house demolished and receiving compensation, overturns the traditional way of attaining riches. If the government does not energetically give effective guidance to the peasants, they will impulsively spend all their money, and return to a state of poverty.

When this reporter met Zhang Jianha on 5-28, he had just moved into the new residence he received from the demolishing and relocating process. He had recently bought a Volkswagen Passat sedan, and was planning to take his family on a trip by airplane to Yunnan. “It seemed as if in the course of on night, everything changed and I suddenly did not have to worry about money. He said excitedly, ” When I received the compensation fund of several million yuan for the demolition of my old house,  my first thought was that, though money itself is only a number, this would now allow me to live with dignity.”

Zhang Jianha  is a peasant from Daxing district (Beijing city) Huangcun town. Because of demolishing and relocating, he and the residents of his whole village went  through tremendous changes. The villagers turned into townspeople, and then became rich.

In recent years, with the rapid acceleration of urbanization, there are many peasants like Zhang Jianha in villages within the city, who have received either a huge compensation fee or a residential property from the government when their homes were demolished because of development, and ascended to the ranks of the wealthy.

Because they attained wealth so rapidly and easily, transforming their traditional lifestyle and seriously affecting their ingrained value system, a small minority have turned either to a life of idleness, or spend their days competing with each other over who can be the most extravagant.

“Although they are the relocated wealthy, they have not yet transformed into real urban dwellers. ” Director of Social Studies at Beijing’s College of Petroleum Engineering Li Xianfeng told this reporter. How to guide the peasants to use their compensation funds rationally, how to help them merge into urban life and become true urban dwellers –this is an important problem the government needs to solve.

On 5-18, when this reporter went to Daxing district (Beijing city) Huangcun town to the newly built residential neighborhood replacing the demolished homes, he saw a number of brand new luxury cars parked there.

Mr Zhang, who had just moved in, told this reporter because of the demolition he had received some 2 million yuan in compensation. At most people received 8 million.

With such large sums, many people began to plan how they would spend their money. A Mr Wang said, “I thought I would buy a good car. The standard price of the car I wanted was 200,000 yuan. I requested they lower the price to 150,000, and they reduced it.”

Some people did not buy a new car just to show off. On 5-19, this reporter was in Chaoyang district at the west entrance gate of Dawangjing village, and interviewed Huang Yao, driver of an illegal taxi who was waiting for customers. Huang Yao said his village was demolished last year, and he received a new residence and compensation of about 4 million yuan. With no more land, he was unable to just stay idle, so he bought a fast sports car to use as an illegal taxi. However, with gas prices rising, expenses incurred in driving the car increase daily, and business is not good.

“Even though my car is fast, having such a car is not really suitable for an illegal taxi. People look at this powerful car, and don’t dare get in. They look at me as though I am crazy.” Now he faces a dilemma. If he sells the car, it can only be for a depreciated value, and he’ll lose as much as 100,000 yuan. If he doesn’t sell it, it will continue to be a money guzzler.

According to the research of this newspaper, the “relocated rich” lack a rational plan as to how to manage their future. Some are tricked into participating in fraudulent schemes, and lose all their compensation money. In other cases family members get into a conflict over the distribution of the compensation money, even to the point of the disputing parties ending up in court. In some households the underage members of the “relocated rich” household have their heads turned by the sudden influx of money. They spend extravagantly, and lose interest in school and studying.

Academy of Sciences Sociology professor Zhao Chunyan explained that the “relocated rich” is not a phenomenon limited to Beijing. In other cities with an urbanization process including Shanghai, Guangzhou, and Shenzhen, this same problem begs for serious attention. “If a person uses his or her own knowledge and skills to realize his or her goal to become wealthy, that is one thing. But when someone who depended on tilling the land becomes wealthy overnight, this overturns the traditional meaning of wealth and the social value system. When those who have had little experience with money suddenly become wealthy, it is only natural that they are completely at a loss as to what to do. They have no technical skills other than experience in tilling the land, and the possibility that they will use up the money and return to poverty is extremely high. With no land, they will become a burden on society, and have a negative impact on social stability.”

We can draw lessons from the past. From 2003 to 2006, in order to build the Beijing Capital international Airport, 6 villages in Shunyi district were demolished (Longshan, Tahe,  Taoshan, Pingjiaying, etc). The peasants of these villages, after they acquired their compensation fund, squandered it without any idea of how to use it, and returned to poverty.

After Demolishing and Relocating, There Needs to be a Follow-up Procedure

The Deputy Director of the Daxing District Social Construction office Shang Jiangang spoke bluntly: ” the ‘relocated rich’ may show off or compete with each other over who can be the most extravagant, but the fault lies with the government for not inculcating them with the proper guidance on how to organize their finances.” Most important is the lack of follow up after they have been relocated. One proposal is to give out the compensation money in stages, rather than in one lump sum. The government should introduce the principles, “be a producer first, then a consumer. Ensure you have a regular income, then spend accordingly.” Shang Jiangang said, ” The peasants have moved up in the world, but their mentality hasn’t changed. How about transforming their way of thinking to understand that they still have responsibilities to bear for the rest of their lives? Also, if the government adjusts their compensation over time to keep pace with inflation, this will win their trust. The pressure on the government to undertake these things is great.”

On 4-10, a special teacher was invited to the Daxing district Beizangcun town Women and Children Community Center, to give a series of lectures to over 200 women assembled there on “The Science of Household Financial Management.” The Daxing District Communist Party District Committee Secretary Zhang Deguang said the party had initiated a program, starting one year ago,  to ensure that peasants who had lost their land would smoothly make the transition to urban residents. ” When peasants enter the world ruled by the market, they are exposed to greater risks, and the net cost to start a business is high. We cannot afford to stand by and let them fail, when they attempt something.”

At present, in Daxing district there is a subsidy for specialized vocational training, and a one-time award grant given to employers who hire from the labor force in this district. There is also a special fund of 50 million yuan, to use to accelerate employment. The Daxing district also has an effort to collectively organize property assets and to bring these under unified management, in the transition from collectively owned land to land put on the market. In this process, in accord with the new reforms, the peasants who have lost their collectively owned village land become shareholders in the new development, guaranteeing that over the long term they will have a share in the profits. Zhang Deguang said that allowing the peasants to manage their own wealth is the cornerstone to long term social stability and prosperity.