SUN WUKONG Property capitalists hijack
China's protest movement
By Wu Zhong, China Editor
HONG KONG - As the Chinese Communist Party (CCP) has made clear, it sees
maintaining social stability and economic growth as the core of its governance.
It has spared little effort or expense in hammering home this policy principle.
But Beijing's painstaking efforts seem to backfire at times. Perfectly aware of
Beijing's deep concern with stability - almost its Achilles' heel - people who
want to quickly attract its attention can simply stage street protests. This
mentality is one reason behind the occurrence of certain "mass incidents", the
official term for demonstrations.
There is also a popular belief that "law becomes impotent in the
face of massive violations". Protests normally draw as many participants as
possible out of a belief that the more protesters there are, the less chance
there is of facing punishment. Small protests can quickly escalate into a "mass
incidents".
Most "mass incidents" in recent years have been sparked by official abuse of
power or injustice, such as land requisition without enough compensation or
forced demolitions. But in some cases, there is no just cause. Protesters see
potential benefit at the expense of others.
A latest example was demonstrations by home buyers in Beijing and Shanghai
against property developers' price cuts.
As China's property boom gathers pace, autumn has become a golden season for
pre-sales of incomplete apartments by developers. Housing sales are
particularly good in September and October as there are two long holidays, the
Mid-Autumn Festival and National Day, so much so that property developers call
them "Golden September and Silver October".
But the good times for property developers seem to be gone. In the past two
months, potential home buyers have disappeared. Disappointed by the sluggish
sales during the week-long National Day holiday starting on October 1, big
property developers began to cut prices in pre-sales of incomplete apartments
in big cities such as Beijing and Shanghai.
The cuts are huge: from 15% up to 50% in Beijing, and 20% to 40% in Shanghai.
Many analysts are now talking about a sharp downturn in the property market,
especially in major cities.
This is good news for potential homebuyers, it may also be good news for the
Chinese government which could hail the success of measures to cool the market.
However, it is not for those who recently bought incomplete flats. In a mature
market economy like Hong Kong, buyers may just curse bad luck. But in mainland
China, they take to the streets in the hope that the government will intervene.
In Beijing, since mid-October, groups of home owners have staged protests in
various housing construction sites against price cuts by developers. Soon the
protests spread to Shanghai and became violent after developers rushed to cut
prices. On October 22, protesters besieged a pre-sale office on a housing
construction site, smashing furniture inside. The protesters in these two
cities have the same demand: compensations for their "losses" from developers.
Apparently out of consideration for social stability, the authorities in both
Beijing and Shanghai have remained tolerant toward the protests, even the
violent ones, in fear that any heavy-handed crackdown would prompt more
homeowners to join the protests.
On October 22, a violent protest even prompted Shanghai authorities to rush to
order the property developer concerned to suspend price cuts immediately. Two
days later, Shanghai issued an ad hoc regulation putting a 20% ceiling on any
price cuts for incomplete flats.
But the protests have drawn little public sympathy. Media commentaries and
bloggers criticize point out that in a business deal, both buyer and seller
must strictly abide by the contract they have signed. "If the price drops and
you demand compensation from the developers, what will you do if the price goes
up? Will you pay more to the developers?" a commentary on the website of the
state-run Xinhua news agency said.
Some bloggers also say that if the home owners can get compensation by staging
protests, then small investors in the stock market who have bought shares at
high prices should besiege the China Securities Regulatory Commission to demand
a refund.
There are reasons for the government to be concerned. Housing may be regarded
as a commodity, but sharp fluctuations in the property market can have a more
acute impact on social stability. This explains the government's eagerness to
step in.
But if a healthy downturn in the property market satisfies the majority of
Chinese people, there is no need for the government to panic. It thus could
remain tolerant toward home owners' protests while taking measures to slow down
the pace of price drops.
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