Wharton's Joseph Gyourko recently led a discussion on risk in China's housing markets.
The front-page story on urbanization in China that The New York Times published on Sunday June 16 shows how the same facts and quotes can suggest different narratives.
Here is the narrative suggested by this story:
The Chinese government is forcing farmers to move to cities.
A few small changes in wording could equally well supported a very different narrative:
The Chinese government is experimenting with ways to pay farmers more money to get the land that it needs to make room for the hundreds of millions of Chinese who still want to move to cities.
Here’s the story’s first sentence:
China is pushing ahead with a sweeping plan to move 250 million people…
Here’s an alternative:
China has adopted a plan that would let its citizens continue to move into cities at the rapid rate observed in the last decade…
Here’s the start of the story’s 2nd paragraph:
The government, often by fiat, is replacing small rural homes with high-rises, paving over vast* swaths of farmland…
Then on the third page the story notes:
The coming urbanization plan would give farmers a permanent stream of income from the land they lost. Besides a flat payout when they moved, they would receive a form of shares in their former land that would pay the equivalent of dividends over decades…
So here’s what an alternative story could have said:
For the government to maintain its record of accommodating a growing urban population without allowing the development of illegal slums and informal settlement, it will have to find more land that it can convert to urban use. In the past, it simply displaced farmers who worked communal land next to cities. To avoid the protests that that this approach provoked, the new plan gives famers both an upfront payment and a stream of payments that are like shares in their former land that would pay the equivalent of dividends over decades.
The alternative story could then repeat verbatim a paragraph buried on the second page of the actual story:
The country’s new prime minister, Li Keqiang, indicated at his inaugural news conference in March that urbanization was one of his top priorities. He also cautioned that it would require a series of legal changes to ‘overcome various problems in the course of urbanization.’
The narrative about forced migration — with its charged language about “top down” approaches (not once but twice,) its reference to the “disastrous Maoist campaign to industrialize overnight” — has an obvious emotional appeal for a popular audience that is comfortable with narratives about good guys and bad guys.
The alternative narrative — one about governments all over the world that are trying to cope with the billions of people who want to move to urban opportunity — better captures the deepest and most important undercurrent in the global economy the we and our children will face.