Hung Huang is chief executive of China Interactive Media Group, a Chinese publishing company.
After trying for five months, I finally got a buyer for my mom¡¯s old apartment in Shanghai.
My agent said I was very lucky. She said that real estate prices in Shanghai had dropped 30 percent, and that it was incredible that I still fetched a price close to my asking price. But then, she is the agent. This week, things went south. The gentleman who paid a $100,000 down payment for the apartment is short of cash. He is Canadian Chinese, and his investments in North America were wiped out in the financial crisis. So he cannot afford to buy the apartment. In fact, he decided to walk away from the deal and his down payment. I am not sure what will happen.
While trying to sell the apartment in Shanghai, I was also trying to buy an apartment in Beijing about a month ago. I was flabbergasted to discover that prices for apartments had at least doubled or tripled since I last considered buying. My husband finally decided that it was much better to keep the cash on hand so we could travel and have a nice lifestyle, rather than buying a very overpriced property. A week ago, the agents who were helping us look for apartment in Beijing all began texting us like crazy: ¡隆茫owner in a cash pinch, ready to sell at 2/3 prior price quoted.¡隆脌
But still, the financial crisis touches probably the top 20 percent of the Chinese population. So far we haven¡¯t seen the ¡隆茫Main Street¡隆脌 effect it has in the West. We don¡¯t really have 401(k) savings to worry about, and folks in the countryside are still living hand-to-mouth.
China¡¯s Main Streets will feel the pain only when exports drop, and then when unemployment soars. And if that happens, there are two possible reactions. Optimists will say that the Chinese government will then be forced to focus on political reform. But it is also possible that conservatives will argue that if China becomes more politically isolated, it will be more protected from international financial crises in the future.