Getting Married in China? Don’t Get Sucked into the Property Bubble

It’s an age-old story of expat life in China.  The young foreigner arrives on China’s shores, looking to make a life for himself.  After securing a job, learning Chinese, and settling in, maybe he finds a girlfriend.  Sooner than he expects, maybe after only a few months, she begins to discuss marriage, throwing up the first roadblock in their relationship.  

Maybe our adventurous foreigner is truly head-over-heels in love and jumps into marriage, or maybe he delays for a few years.  In any case, when the time for marriage does come, another complication is presented . . . her family is demanding that he buy a house or apartment, in addition to a car, before the marriage ceremony – otherwise they won’t consent to the marriage.  

I use “he” in my example above because this scenario is most applicable to male foreigners in China.  Foreign women who date Chinese men will be expected to conform to the traditional Chinese female role, just as foreign men are expected to conform to the traditional male role.  And it is traditionally the groom’s responsibility in China to provide his bride with a bedrock of stability in the form of property – whether or not that groom or bride is a foreigner or Chinese.  

As in many countries, marriage in China is a blend of Western and traditional Chinese cultural institutions. Centuries-old Chinese conceptions about what it means to be properly married often collide with Western practices that take into account the practicalities of modern life.  China is a country in rapid transition, and the generation gap is quite wide.  While younger Chinese may not hold to traditional conceptions about marriage, their parents likely do.  And because Confucian filial piety pressures still hold weight, the twenty-somethings in China still obey much of what their forty-something parents tell them.  

In addition, some traditional conceptions are changing more rapidly than others.  For instance, traditionally in China when a girl gets married she is viewed as leaving her birth family to become part of the groom’s family. This is one reason why there is a gender imbalance in China today.  Because girls are traditionally viewed as a net loss for her family, boys are preferred.  And as a consequence of China’s One-Child Policy (which has recently been overturned, but the effects of which will remain for some time) in rural areas, there have been reports of female infanticide and sex-selective abortions in favor of boys.    

However, obviously most families do not abort or kill their daughters, so another consequence of the One-Child Policy has been an elevated appreciation and status for girls within many families. Traditionally-minded families with daughters as the only child care a lot about the status of the man their daughter will marry. If your future wife’s family is traditionally-minded, you will be pressured to provide for her in the form of property.  

The likelihood that a foreign expat will have traditionally-minded in-laws varies from region to region.  People might adhere to some more Western values in the cities than in rural areas, for example.  Nonetheless, even if your significant other’s immediate family in the city does not require that you invest in property, her extended family still living in rural China might.

To continue with our prototypical expat story, let’s say his bride to be has a very traditionally-minded family, and let’s say our expat has succeeded in making enough money in China to invest in some property.  Should he do it?  

The answer is an unequivocal no, for two reasons: the overall quality of Chinese housing and China’s property bubble, which are interrelated.

The poor quality of housing in China has been widely reported on.  While housing developments in other countries have lifespans of one or more centuries, Chinese housing officials revealed in 2010 (link 1) that many residential buildings in the country might not last 20 years. In fact, on average, modern Chinese residential developments only remain livable for 35 years.  

High-rise apartment buildings collapse unexpectedly more often in China.  The latest incident was in October in Wenzhou (link 2), when 22 people died after their apartment block fell apart around them.  While such incidents are extreme cases, at the very least you might  find that the new apartment you’ve bought quickly develops cracks in the walls due to cheap plaster and that the walls are poorly insulated or that the finishing was poorly designed in the first place with uneven tiles, rusted and ruptured plumbing, or broken handles and faucets.  While the value of the property you buy may appreciate in value, it may not appreciate enough to cover the costs you put in for renovations to offset rapid deterioration.  

One also has to take into consideration the quality of the apartment building itself, since you will most likely buy an apartment as opposed to a house, which is in the hands of building management officials.  And the sad fact is that in the face of such problems like collapsing elevators or falling ceiling tiles or dead light bulbs, the consequence of poor construction in the first place, many managers are reluctant to invest in upkeep.  Even if they agree to fix the recurring problems, you’ll be faced with continual noise pollution from the constant refurbishment and construction.  

And why are building managers in China reluctant to invest in upkeep?  Because many buildings in China are not designed to last 70 years (the maximum amount of time that one can own property legally in China – since the owned property is technically leased from the government), let alone 35 years (the average amount of time that property does survive).  And this is because much of China’s economy has been fueled in the recent past by its housing sector.  The market in home construction and outfitting is estimated to make up about 15% of China’s G.D.P., Chinese households hold 74.7% of their assets in real estate (link 5), and China’s construction industry accounts for one-third of the country’s total energy consumption.   

The overall trend since the middle of this year in China’s housing market has been continually rising prices despite an excess of supply (link 4).  This is due to consumer confidence in the Chinese government’s efforts to reduce that supply.  This effort, however, has largely been fueled by debt-based growth policies designed to offset the effects of the stock market collapse last year.  The government, since the middle of this year, has reversed course and attempted to cool down expansion by imposing restrictions on bank lending and purchases in booming major cities.  Meanwhile, investors continue to speculate in property in an effort to recoup their stock losses.  Prices continue to rise and new, empty developments continue to spring up at a faster rate than they’re demolished.  

What this all means is that if you choose to bet your savings on buying property in China, you’re essentially betting that China’s government will succeed in its balancing act and prevent the housing bubble from bursting. Millions of Chinese have made that bet (link 3), and they will undoubtedly pressure you to do the same, particularly if you plan to marry.    

If you are unwilling to make that bet, then you should resist the pressure of your in-laws and invest in property in other countries, particularly in your country of citizenship since you’ll be able to acquire genuine title in your name.  It might take longer to accumulate the savings, but in the end, it’s probably a safer investment. Another alternative within China is to invest in mutual funds through Chinese banks.  

If you are planning on marrying in China, you will likely face this kind of decision. Whatever you decide, you must recognize the risks inherent in jumping headfirst into China’s property bubble.    

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