Policy implications for market-oriented reform in China

Updated: 2015-07-29 13:59

By Fu Jing(China Daily)

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My 83-year-old landlady, a former European institution secretary, left her two-bedroom apartment in downtown Brussels three years ago for a nursing home after which my family moved in. Recently, she paid the first visit in three years to check her property. She felt satisfied with everything: the rooms were clean, we were doing fine with the neighbors and we had been depositing the monthly rent and other charges on time.

But when we said goodbye to each other beside the building's typically narrow European elevator, she politely asked two questions in broken English: "Did my lawyer write saying you need to pay 11 euros more from next month?"

Since she wants to live a quiet life in the nursing home, she has entrusted a lawyer to deal with me following the signing of the lease contract. It is summer now and the lawyer sent me a message a few days ago saying he is on holiday. She then said: "There is an index in the contract." I knew she was referring to a clause in the contract that allows her to increase the rent in line with Belgium's annual inflation rate. It is not a big sum. I nodded my head.

When I first met my landlady to check out the apartment, she told me that she needed to move to a nursing home and with the rent she gets she can live a happier life. I signed an agreement with her shortly.

After I agreed to the 11-euro increase, she asked earnestly: "Is it possible for you to pay before the 6th of every month, so I can pay the nursing home ... ?" We moved into the apartment on July 10, 2012, and had agreed that the rent would be deposited in her bank account on the 10th of every month. Since I have to follow a strict monthly financial regimen, I am not sure whether I can meet her request. But I said I would, if possible. She left happily after shaking hands with me.

In writing this experience, I aim to highlight two policy implications for China's decision-makers as the country intensifies market-oriented reform.

First, who are the players in the rental market? In my case, it is a tenant and a landlady, with a lawyer acting as a bridge between them. The lawyer built this bridge during my first two years in Brussels.

More and more houses are being rented out in China. In the majority cases, property owners directly deal with clients. But a lawyer could do the job better, especially if the landlord or landlady is a senior citizen.

Media reports say noted scholar Jiang Ping has moved into a nursing home and another scholar Qian Liqun has decided to follow in his footsteps. Since China is home to a rapidly rising aging population, it is important to build a market chain to make every player, especially senior citizens who own property, happy.

Second, the market should decide the rentals, albeit according to regulations and with government intervention when necessary. Apart from the rental market, China is also facing challenges in stabilizing other prices. While manufacturers and sellers cheer the rising prices, consumers complain against the upward price trend. As a result, many people see China as an "expensive" country.

Despite facing the difficulties of financial and debt crises, the eurozone, with 19 countries and 300 million consumers, has kept its inflation rate below 2 percent since the birth of the euro. This is of great help to ordinary people, though some may argue it suggests an inactive market.

Making necessities "affordable", preventing price volatility and ensuring that market players play by the rules are important jobs of governments. As China is hammering out its 13th Five-Year Plan (2016-20), let us hope the leaders will list "stable prices" as a policy target.

The author is China Daily chief correspondent in Brussels. fujing@chinadaily.com.cn

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