Chinese Box

If money is unlimited then why not waste it?

A recent post on the Wall Street Journal's blog points out some of the bizarre things you do if you think you have a "nearly unlimited amount of money"

On March 13, or the second-to-last day of China’s annual legislative session, the ministry gave the go-ahead for the magnetic levitation railway project that promises to cut the current one-hour journey by half when the fancy trains eventually hit the tracks.

the Railway Ministry has already embarked on a competing but much more environmentally-friendly high-speed train project, which upon targeted completion in October will reduce the twin-city journey to 40 minutes, just 10 minutes shy of its ambitious maglev counterpart. The route is also almost identical.

This month we're publishing my interview with Jing Ulrich who happily proclaims that China has a "nearly unlimited amount of money," a very common belief among the analyst community, as it seems to be backed up by published numbers, but there are a number of reasons this belief makes me antsy.

1) Creating two competing high speed train lines the faster of which costs RMB 40 billion (USD 5.86 billion) is stupid.

2) The Beijing to Tianjin high speed train is loss making.

"When constructing the Beijing-Tianjin railway, investment per kilometer reached RMB 180 million," he adds. "Currently the income of the railway can't yet cover the operation cost and interest on loans. Debt risk has become the biggest problem facing the construction of high speed railways in China."

3) The Ministry of Railways is nearing bankruptcy:

The Ministry of Railways has been spending record amounts of money, issuing debt valued at RMB 10 billion in 2009 — the largest single issuance in China that year — and RMB 8 billion in 2008, another record. But RMB 2 trillion is still needed in the next three years. "The total debt will reach RMB 2.5 trillion by 2012, which is a very big number," says Adfaith's Wang. 

If Chinese travelers aren't interested enough to pay the high ticket price, the companies could enter a debt spiral. "If most passengers won't take the high speed railway because of its expensive price, then income won't make up the cost of debt," said Zhao Jian, an economics professor of Beijing Jiaotong University in an interview on CCTV in September 2009. 

So yea, I think there has to at some point be an end to the conviction that the government has unlimited amounts of money. But what do I know, I have no fancy economic degrees.

The perils of an old flat in China

So I'm finally done with all the moving, but I had one remaining surprise waiting for me. The managers of my old flat were demanding RMB 2000 for repairs and payment of fees (out of my RMB 2600 deposit). I spent 3 hours arguing with them before they agreed to give me back RMB 1600... I still feel I might have been cheated.

The biggest problem we had was that we were living in a really bad flat. We were only paying RMB 2600 a month for it at first (up 200 RMB for the olympics), but the kitchen sink was half broken and the bathroom was barely working (using hot water made a sound like a jackhammer). There were also brown spots on the wall, and the paint chipping off. This was all true as soon as we moved in, and now that we were moving out they wanted us to pay 1200 RMB so they could get it fixed. This was about 2 hrs of the 3. 

The fees were a bit of a mess, they called "someone" who said we hadn't paid our water bill in 2 years (we had only lived there for a year and half, but lets forget about that). Every 2 months we got a bill posted to our door, for what I thought was water and gas, but she was telling me it was only the gas bill, and for the water bill you had to go somewhere special to pay it, but most people paid it at the end of their time living at the flat (this is such complete nonsense I could barely handle it). The charge to us was 600 RMB for 2 years. I thought it completely possible that we had unknowingly only paid the gas bill, so I forked over 500 for that, but now I'm not so sure. Our current agents said the water bill is posted on the door, and then you go to the bank to pay it, which is exactly what we did.

Anyways, the moral of the story:

Keep all receipts relating to your flat.

Keep a meticulous record of everything broken in the flat

Call your landlord regularly to complain about broken things

Don't rent from an agent if at all possible.

A bad flat might cost you more in the end. (though I guess this only cost me an extra 50 RMB a month or so, but three hours of haggling is exhausting)

The Perils of a New Flat in China

So I just moved into a new flat, full hundred dollars more rent than my previous one (500$ instead of 400$, plus a one time 500$ agent fee). It looked fantastic when we first saw it, but with 4 days to make closer inspection we've found a number of completely baffling faults in it:

1. The handle to the kitchen door extends past the door jam, making it impossible to close.

2. The shower is pointing directly at a wooden door, which now has massive water damage (it can only be partially covered by a shower curtain.

3. There is a socket, and a drain for a washing machine on one of the balconies, but the drain only goes down about 3 feet and then stops... completely... It is a fake drain.

4. No one can hear anything you say on a cell phone in the flat, despite you being able to hear what they say, and the phone saying you are receiving full service.

There is also the baffling, though in no way harmful, fact that the steam from the bathroom ventilates onto one of the closed in balconies.

I've met a few architects in China, who regularly complain that working in China is just a long process of sending back subpar materials. The process of changing flats has just been eye-opening in the baffling amount of things that one wouldn't imagine being a problem in any other flat.

Someone has been by 4 times to get the internet running, hopefully they'll be successful by tomorrow, and I can start posting from my nice new home office.