To understand this question, you need to understand the political logic of the property tax so that you can understand the real difficulty in imposing it.
You see, in reality, many of the houses in good parts of large and medium-sized cities are occupied by older workers, or government employees, who are not paid in nominal cash. But for historical reasons, they have houses in good locations. So it's a paradox that if you're going to tax real estate, these people are going to have to pay a lot of taxes. But their nominal cash income is very low, how to collect this tax? What should I do with it?
You see, it's not at all clear whether this is an economic issue or a political issue. Therefore, the international and domestic political relations and political considerations have an important impact on the economic and financial relations and policies, and none of them are economic and financial issues that are considered apart from the political institutional environment.
The Interesting about political sensitivity
Finally, I want to tell you a particularly interesting phenomenon, which is that in real life, you will find that Chinese people's political sensitivity presents a kind of imbalance between generations and geographical distribution.
First, older people are more political.
Second, people farther north are more concerned about national affairs.
Ask a 60-year-old man in Beijing who is sure to recite the politburo standing committee's resume better than his family tree. But if you go to shenzhen and ask a twentysomething, he's much less politically sensitive.
The rate of inflation in our country is very high
The inflation rate in our country is very high, but from the figure it looks low, only about 2%.
How do you explain this? This requires a thorough understanding of the CPI, the consumer price index.
1. How is CPI measured?
Generally we are measured by the consumer price index (CPI), a country's inflation rate if this number is too high, such as general to 5% of the time, we will feel there are signs the expansion of the first whiff of stock, if more than 10%, is considered to be very serious, the percentage of seventeen, that basically is called hyperinflation.
Well, let's look at how this consumer price index is measured. In general, compiling such a price would cover a wide range of businesses and services. They are generally divided into eight categories: food, tobacco and wine, clothing, residence, articles of daily use, services, transportation, communications, medical care, other supplies and services.
2. What the CPI going up?
You can look at the classification, and you think about how the data was collected, and you see that there's a problem.
First, China is big, with 1.4 billion people spread across the country. And the situation across the country is very, very different. Therefore, when we think about CPI, we should not focus on the feelings of individual places, but on the overall situation of the country.
For example, rents do go up fast these years, don't they? It puts a lot of pressure on people's lives, especially recently when something like renting an apartment for a long time is getting a lot of publicity. I looked at the data. In the first half of this year, the average rent in Beijing and Shanghai increased by more than 20%. But if you think about it, where are the rent increases? In those large and medium-sized cities which have developed well, there are many small places, and the rent is not rising, even in many third-and fourth-tier cities, the rent even tends to decline.
Do you remember the psychological bias I told you about in the course? Our attention is limited, such as the smog problem, you must feel that Beijing's smog is the most serious. In fact, statistically speaking, xi 'an and shijiazhuang are far worse places than Beijing. But our eyes are all occupied by Beijing.
The same is true of CPI. Life in big cities is under great pressure, prices are high and young people are under great pressure. This is a global phenomenon. And China's excessive concentration of resources in large and medium-sized cities makes this phenomenon even more serious. Meanwhile, those who are active online are mostly young people in first - and second-tier cities. Therefore, such a sample, will make us feel more strongly about rising prices.
In order to solve this problem, you need to look at the CPI in a single region. If you look at the CPI in the whole country, sometimes your feelings will be averaged out by other places.
Second, and more important, some prices are rising fast while others are rising slowly, and the CPI reflects changes in average prices.
Ok, we can divide them into four categories:
The first category is the service category, the price is generally rising, because the main cost of the service is labor, the price of labor is rising.
The second category is rent, mainly rent, which is rising in large and medium-sized cities, because the population and the industries are gathering in large and medium-sized cities, and everyone needs to live in the houses, pushing the rent up.
The third category is industrial goods, which actually account for a large proportion of life, but prices generally do not rise.
To give you an example, the price of a passat in 2010 was probably a little over 200,000, and now passat has been updated for several generations, or a little over 200,000. If you look at that model at the time, the price has gone down. This is because the technology of industry keeps improving, the process is improving, and the cost is falling.
Think for yourself, how much was a clunky, brick-like phone in the '90s? At the top, I remember, it was more than $30,000. Our home color TV, refrigerator, washing machine, in fact, the prices of these industrial products are falling.
The fourth category is agricultural products. Agricultural products are special. Their prices fluctuate a lot, but in the long run, their average growth rate is not fast. Because agricultural technology is advancing rapidly, and the demand for agricultural products is not growing fast.
So, on balance, where is the main rise in CPI? Mainly services and rent.
And I should add that our national statistics may be a little off, understating inflation. The price of medical education, for example, is regulated, so hidden price increases are not fully reflected in the statistics. And the Labour market, such as Mrs Moon and the nanny industry, may be subject to statistical inaccuracies, either because of regulatory distortions or because statistical methods have not kept up with The Times. At the moment, there is no solution.
My overall understanding is that China's CPI Numbers may be slightly understated, but not by an order of magnitude, because of the service and rent component.
On the whole, China's inflation rate has been very well controlled, which should be appreciated. The work of the central bank in the first ten years is indeed very good. It is not easy to control inflation at this level in a high-growth developing country.
Is money overissued?
When I talk about the inflation rate, I can't help but say one more thing. A lot of people will come to me about the issue of excess money, which leads to high housing prices and also to the inflation rate. This problem is relatively complicated, so I must find a time to ask two specialized experts to tell our classmates. Because this problem is so much noise in the market, it is the basic concept of the problem.
Last week, even one of my doctors came to me and asked me, why is M2 so high in China? I also told him it wasn't a money overissue. I almost broke down in anger.
Here, I will give you two points, and we will have a long talk later.
First, you can't just look at M2, the growth rate of broad money, but the growth rate of GDP. China's GDP growth rate has been maintained at a high level. If the M2 growth rate cannot keep up, it will be a monetary tightening, which will lead to a depression.
The second, and more important, is what the definition of money is. In fact, the definition of money has changed a lot in the particularly developed markets of direct financing, especially in the context of so much financial innovation in recent decades. Do you think only central bank printed paper is money?
In America, for example, do bonds count as money? Do all sorts of highly liquid financial assets count as money? If you take these into account broad money, and you look at excess money in the United States, or in other countries, you get a completely different explanation.
People who know a little about the financial market are looking at social financing, the total amount of social financing. Why? Just because in recent years, with more and more financial innovations and great changes in the traditional monetary definition, M2 is a relatively outdated variable which cannot be summarized in the whole picture.
Sometimes, I always feel that there are some experts and media in our market, too few books, too little data, too much thinking and too fast conclusions. Hopefully, you'll be able to learn frame thinking a little faster than they do, and then get closer to the truth earlier.
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