Xi Jinping Hates Villas – Here's Why That Matters to You | Digging into China

Hi, I'm Dong Xiong. Welcome to Digging into China, where we take a deep dive into what's really happening in China and share some unique insights. In China, there's always been this situation. Living conditions for most people are really poor, especially in the cities. The majority of urban residents live in these tiny pigeon coops. Even in first and second tier cities, plenty of people earning over a million yuan a year still can't get a decent single house. A single house in China has become something reserved for the ultra wealthy elite. Owning a big house stands as a clear symbol of real money and status, and the middle class is pretty much cut off from ever having one. But when you look overseas, in places like the United States, Canada, or even Japan, a single house is simply the normal standard for ordinary families. So why are living conditions in China so cramped and uncomfortable? Is it really just because the population is so large? That's the question we are digging into today. The reality is, on the issue of housing, there is a major misunderstanding that a lot of people hold. Many assume Chinese people can't live in big houses because the population density is sky high. But that isn't true at all. China has a huge total population, officially about 1.4 billion, second in the world. But the overall population density is actually quite moderate. It's reasonable to say that in places like Taiwan, Hong Kong, or Macau, high density explains why single houses are out of reach for most. Macau ranks number one in the world for population density, Hong Kong is fourth, and Taiwan sits around 17th. But on the mainland, even with 1.4 billion people, China's population density only ranks around 70th globally. Sure, some will say that's because huge areas like Xinjiang and Tibet are basically empty wasteland. That's fair. Most people do live in the eastern and southeastern parts of the country. Those western regions have very few residents. But even if you remove half the country's land area to exclude those sparsely populated zones, the effective population density still only reaches middle to upper levels worldwide, roughly 40th place, similar to the UK and far below Japan. And Japan has its own share of mountains, unusable land. Others might argue that overall land density doesn't tell the story. Chinese people are concentrated in big cities. So urban density is what matters. And what you look at city-level population density, China doesn't even qualify as particularly crowded. Before the numbers, let me ask, where do you think a famously packed megacity like Shanghai ranks globally in terms of urban crowding? Top 5? Top 10? Top 20? The answer may surprise you. It doesn't come close to the top ranks. In fact, Shanghai's urban population density is actually lower than that of Toronto, Canada's largest city, which is known for being spacious. Shanghai spans about 6,340 square kilometers with a permanent population of around 25 million, so roughly 3,923 people per square kilometer. Toronto's core area is 631 square kilometers with 3.3 million people, giving about 5,222 per square kilometer, around one and a half times higher than Shanghai. Yet Toronto has single houses all over the place. Of course, some will say the comparison isn't fair because foreign cities tend to be smaller in core area. Fair point. If you include Toronto's full metropolitan region like Mississauga and the surrounding areas, the total size exceeds Shanghai's and the density falls below it. Let's compare apples to apples with a density-built city like Tokyo. Tokyo's population density is much higher than Shanghai's, around 6,500 people per square kilometer, nearly double. Even so, Tokyo has large numbers of single family homes. And the issue isn't limited to the biggest cities like Beijing, Shanghai, Guangzhou, and Shenzhen. In smaller Chinese cities, single houses remain out of reach for most people too. Take Sucheng in Jiangsu province as an example. Its density is very low, 8,500 square kilometers with fewer than 5 million permanent residents, about 570 people per square kilometer. That's one-tenth of Toronto's density and even lower than Toronto's metro area. In Canada, that would be considered a wide-open country. Yet in Sucheng, single houses aren't common at all. So what's really going on? The answer lies in the Chinese Communist Party's approach to urban planning. The CCP has consciously chosen not to let ordinary Chinese live in single houses. The first clear restrictions on single houses date back to 2006, and a notice from the state on the Asset Supervision and Administration Commission that year, they began to talk about slowing the supply of land for single house developments, essentially flashing the first red light on that kind of construction. In the years that followed, the CCP issued repeated directives to cap housing sizes and control floor area ratios. Floor area ratio is the critical figure. Under current rules, only land with a ratio below 1.2 can support single houses or low-rise townhouses. Anything higher must be high-rise apartments. This policy has continued into recent years. Just a few days ago, Xi Jinping spoke with clear disdain about single houses in one of his addresses. Why does the CCP, and Xi in particular, take this stance? Is it simply to deny Chinese people a better life? Does a single house somehow threaten the party? As the saying goes, there is no action without the benefit. For the CCP, the benefit is money. In China, land long ago stopped being treated as a resource for living. It's become a fiscal and financial asset managed by local governments, or, more plainly, a tool for extracting from the people. This extraction plays out at both local and central levels. The local side goes back to the 1994 tax-sharing reform. Historically in China, the balance between central and local power has always been delicate. Too much central control weakens localities, as in the Song dynasty. Too much local autonomy threatens the center. Before 1994, the central government collected only about 30% of fiscal revenue. That was seen as dangerous. Political power may come from the barrel of a gun, but the gun is fed by money. Real power flows from the purse. With so much revenue staying local, the center's authority was eroding. If the trend continued, the CCP risked fate of the Soviet party, overthrown by regional forces. So they reformed the tax system to pull more revenue back to the center. But in doing so, intentionally or not, they left localities with land sales revenue. After the reform, money from selling land remained under local control. Local governments figured, if the center takes the taxes, we will generate our own income from land. That's how land finance emerged, a more lucrative business than many others. At its height, land sales accounted for 84% of local governments' general public budget revenue. Land became the golden goose. For years, local officials poured their energy into driving up land prices. Higher prices meant more revenue, higher GDP, faster promotion, and greater opportunities for personal gain. How do you inflate land prices? Several methods. Official city investment companies step in to set a floor price at auctions. Supply is deliberately restricted to create scarcity. Education and healthcare resources are tied to real estate projects. But a key piece is making sure developers profit. If developers don't make money, land prices stall. The simplest path? Allow and encourage developers to build only high-rises pigeon coops. The logic is straightforward. On the same plot, single houses command higher per square meter prices than apartments, perhaps up to five times higher at the extreme. But high-rise apartments let you sell far more total floor area. Taller buildings mean more profit, which feeds back into higher land prices. By around 2005, cities that embraced land finance early like Shenzhen and Shanghai understood this. They once approved some low-ratio residential in central areas, including single houses. But they quickly realized the return was poor. After that, no more low-ratio approvals in prime locations. Single houses vanished from city centers. It's not impossible for Chinese people to live in urban single houses. It's that the government blocks it because it reduces land revenue. So why do governments still sell some land for single houses if it's less profitable? Because they are sharper at the business than people often realize. They exploit the widespread desire for a big house. In outlying areas where hard-to-sell land, they permit single-house developments to attract buyers and clear inventory. That's why single houses tend to appear in remote suburbs. Any recent approvals for single-house land are in the least desirable parts of a city. Downtown golden zones, single houses are out of the question. Local governments also leverage land financially through city investment companies. Around 2010, they began using land sale proceeds as collateral for bank loans. Higher land prices bring immediate cash plus future upside. It makes falling prices even more intolerable. So they double down on high rises to sustain values. The central government watches this with approval. It aligns with their broader interests. Consider the difference. Packing people into high-density pigeon coops versus allowing single houses. Beyond comfort, what else changes? One major shift is consumption patterns. Single houses mean more rooms and more appliances. Money once spent on housing goes to refrigerators, washers, air conditions. Travel habits change too. Single houses mean lower density and longer distance. In a coop, a supermarket might be 2 km away. Easy by bike. In a house, it could be 5 or 10 km. You need a car. This is obvious in car ownership stats. Despite heavy car promotions in recent years, China still has only about 250 cars per 1,000 people, 1 car for every 4 on average. Compare that to countries with similar per capita GDP. Mexico has 391 cars per 1,000, 1 for every 2.5 people. Russia around 397, same ratio. Malaysia 542, 1 for every 1.85. China trails even Thailand and matches much poorer Ukraine. In earlier decades, channeling money towards appliances and housing instead of cars, and funneling it upward through land finance suited the central CCP's preference for endurance and sacrifice. The thinking is that working people shouldn't enjoy much beyond the basics. After food and shelter, hand over the rest to the state for development. Whether it truly serves development isn't the point. For the top leaders, they see themselves as the masters, not the livestock. High-density coops also save government money. More houses and cars mean more highways to ease congestion. Expensive. Coops and public transit cut transport infrastructure costs while speeding commutes. Double benefits, right? Single houses spread people out, requiring more hospitals and schools per area. More expense. Coops concentrate population, so fewer facilities meet basic needs. Crowded hospitals and packed schools aren't solely because of population size, they stem from this coop-based planning. High density is engineered. Scarcity is manufactured. In a planned system, even sand in the desert becomes precious. The CCP squeezes people relentlessly, treating them like work animals. People notice long hours and weak labor protections, the obvious things. But housing is another form of the same squeeze, just less discussed. The CCP intentionally confines people to pigeon coops for maximum extraction, turning urban homes into 80 to 120 square meter boxes that barely cover necessities. That's the model of extreme efficiency. Work hours aren't capped at 8 hours a day, they are pushed to human limits. Housing standards aren't about comfort matching income, they are about the bare minimum people can endure. Early in his tenure, Xi spoke of the Chinese dream. Many imagined it as driving a decent car, living in a big house, enjoying a lifestyle like that in developed countries. When it doesn't materialize, people blame incomplete development or lower per capita GDP compared to the US, Japan, or Canada. But consider this, as long as the CCP remains in power, that version of the Chinese dream cannot be achieved in China. In this deeply extractive system, rising per capita GDP won't translate into single houses or widespread car ownership. It simply fuels more land finance and higher housing prices. By 2021, per capita GDP growth had stalled, and so had home prices. Fortunately, it stalled then. Had GDP risen another 30%, since living space wouldn't have grown 30%, prices and land revenue would have. A decade ago, one could argue the middle class couldn't afford urban single houses because per capita GDP was too low to support mass car ownership or single house construction. But data from Malaysia, Russia, and others show higher car ownership despite similar GDP levels. Today, the Chinese middle class still lacks single houses in the course. The dream has been taken by the very CCP that claims to help realize it through land finance. Yet the saying holds, retribution comes even if delayed. Chinese people may not yet resist through protest or overthrow, but economic pushback, mutually damaging, has happened. The CCP's harsh squeeze turned into a boomerang. When real estate stalled as the growth engine, they pivoted to consumption stimulus, car subsidies, appliance incentives, hoping to lift the GDP. But decades of coup planning now frustrate that goal. People in pigeon coups, even with money and willingness, see little point in buying extra cars or appliances. Why fill a two- or three-bedroom apartment with multiple TVs and ACs? Parking is already impossible. Why add more cars? Birth rates have also plunged to historic lows. Many causes, but a small living space is surely a big one. Most homes are designed for two children at most. Three or four child families are squeezed out by the space itself. The government wants more birth to sustain the population pipeline. But with current housing, it's structurally discouraged. The economy in this state, birth rates at the bottom, the CCP's days may be numbered. When it falls and land finance ends, people will see clearly. The longed-for Chinese dream, a single house, a car, was always within reach. The only real barrier was the CCP itself. Remove it, and the dream becomes attainable. Thank you so much for watching. If you find this video helpful, please like it, drop a comment below, and hit the subscribe button right here. It really helps I'll be back with more content soon. Until then, be well.