Professor Bernard's picture

China is Out, The Philippines are In!

By Bernard

Note. This letter was never published

To Bernardo M. Villegas

I found your article in Manila Bulletin, this Monday, December the 5th, very interesting:  Learning from China's success Story.  I’m a retired College Economic Professor from Canada and I moved to Changchun, north of China in 2003.  I live in Manila since January of this year.

I have seen and lived what happened in China.  Changchun is an industrial city with some cultural openness.  People are very friendly there, in this north industrial region.  They suffered from the Japanese occupation.  Then, the communist tried to restore its industrial basic, but the south had more success after 1978.

What you said is true.  The Chinese succeeded when they looked at what they are, what they have more than tried to follow some foreign policy.

I want to add another dimension.  China is still a feudal state.  The Empire is the new President and its council.  The mandarins are the leaders of the Communist Party of China.  In the 1960, they went krazy and the Cultural Revolution was extended to the whole country, even to some neighbour ones, like Cambogia with Pol Pot.

These mandarins control everything important:  the governments at all level, the banks, the major industries, the cultural life, the communications…

For exemple, there is a major real estate buble in China;  it is at least double the size of the recent american one,  maybe up to ten times bigger.  In Philippines and in Canada, for what I know, the cost of a small condo is about 50 months of a young teacher salary.  In a small chinese city, it will be at least 200 months and in the big cities, up to 1000 months of the young grammar school teacher. 

Why is it going on like that?  Because China is controled by these mandarins.  The house business is decided at the municipal level.  So, these people as a group, following the teaching of Confucius, not Marx, they control the local governement, the local banks and the local builders.  And there is no competition from other cities, each housing market being seperated:  you cannot move a building from one city to the other one!

I know a bit about the real estate business.  Manila is a very good market.  There will be a lot of new couples for the next thirty years at least.  They will need new houses for their future family.  So the market future is great.

In China, I recently was living in Wenzhou, Zhejiang province, (the Jews city of China) the center of those who benefited for the last thirty years.  The prices of condos are exorbitant and the construction is not at the level of Manila.  More than that, because there is no property tax, about half of the new built condos are empty.  Their owner just bought them of speculation, to put their money somewhere!

I decided to move in Manila because I think that the economy of China will collapse pretty soon.  In the Philippines, it is a new beginning.  China is on the edge of going down.  Their problem is that they have nothing to hold them when it will be going down.  Like for the Cultural Revolution:  no balance of power.

Next year, at the same time that Obama will look at the electorate, the Chinese leadership will be renewed.  Will the future leader, already vice-president, be able to keep the control?  Will the eastern cities be willing to let the development to go west?  And what will be doing these 200,000,000 of migrants workers, and their family living in these eastern cities, without a good job and no social services?  And what will happened to these 600,000,000 farmers going to their retirement without their children wanting to have their farm?

I bet my life on Aquino rather than Xi Jinping for the next four years.  For sure, I quit America because of W. Bush (USA), Harper (Canada) and Charest (Québec) and I was right.  I will not go back too soon either.  This was personal!