Why the New York Times put the news that the renminbi is now a part of the IMF’s global currency reserve below the fold is beyond comprehension. Make no mistake, this news is huge. As an IMF-designated global currency, the renminbi now joins the likes of the U.S. dollar, the British pound, the Japanese yen and the Euro as a currency of influence, stepping up China’s power on the global stage. And all of this happened in a little over 20 years. In the early 1990s, China was still an economic backwater and was destined to stay that way with the re-entrenchment of conservative socialist values after the 1989 Tian’anmen protests and subsequent crackdown. Any attempts at reforming China’s economy were rejected by the conservative party ideologues then in power. But in 1992, in a courageous move, Deng Xiaoping single-handedly took on these conservative forces by launching a grassroots “Southern Tour” to win the hearts and minds of the people for economic liberalization. The success of Deng’s tour assured China’s course to capitalism. Fast forward to 2015, China has the second largest economy in the world and the renminbi is declared a global currency reserve. To achieve this stature – and to raise millions out of poverty – in the spanse of twenty-odd years is phenomenal.
Money, money, must be funny!
China’s economic miracle cannot be denied. But at the same time, the IMF’s designation comes with the imprimatur that China offers a stable business environment, akin to the U.S., the U.K., Europe,and Japan’s environments. But with its Party-controlled economy and a Party-captured legal system, it still seems dubious to place China on the same level as these other economies. Does China’s increased global status reflect a country ready to let go and allow the economy and the legal system to operate on its own? Or is it just another necessary notch in the Chinese Communist Party’s belt of success?
For now these questions cannot be answered. But make no mistake, China’s ascendancy to a global reserve is a game-changer. And while China Law & Policy hopes to explore these issues in future posts, for now, the New York Times‘ analysis, which discusses many of these questions, is a must read (should have been above the fold!).
Sure women might not demand that their names be on the deed even after giving money to purchase the house, but does that matter in the case of divorce in China? As Dr. Leta Hong Fincher points out in Leftover Women: The Resurgence of Gender Inequality in China, you bet that matters. Changes in the law in 2011 – requiring physical proof of monetary contribution – has diminished women’s ability to claim their rightful part of the marital property in the case of divorce. By why this change? And why now? Fincher expounds upon these questions in Part 2 of her interview with China Law & Policy and informs us why the rest of the world needs to wake up and care about what is happening to women in China.
Read the transcript below of Part 2 of this two-part series or click the media player to listen to the podcast.
****************************************************************************** EL: To switch gears a bit, you mention in your book some of the laws that impact this. You discuss the Supreme
Who gets the ugly couch in the case of divorce?
[People’s] Court 2011 Interpretation of China’s Marriage Law. You basically argue that this Interpretation – which in cases of divorce only allocates property to those whose name is on the deed absent some exceptions – denies women even more rights in the property market. Can you give a little bit more background on this Interpretation? Also, do you have any background on what caused the Supreme People’s Court to issue this Interpretation?
LHF: Effectively the Marriage Law was originally a real cornerstone of the Communist Revolution and it gave women rights to property, the right to divorce, all sorts of new rights. Over the years actually women’s rights to common marital property were strengthened. But in 2011, with this new judicial interpretation, effectively if the woman is unable to prove through legal, financial receipts that she put in a certain amount of money toward buying the home, she’s not entitled to that home in the event of a divorce. None of the women that I interviewed kept any receipts of their financial contribution to the homes. Moreover, money is fungible. So there many ways in which women’s money – if they are working women working for pay – there are many ways in which their pay is supporting the household. The man’s money may be going directly to paying off the mortgage so there is a receipt for the man’s contribution to the home.
This law is really detrimental to women’s property rights. Now, what I have heard anecdotally – I wasn’t specifically researching why the court issued this new judicial interpretation – but what I’ve heard anecdotally from some lawyers is that the Court was deluged with letters from parents of men who wanted to protect their sons when they got married. They didn’t want the wives of their sons to have any share in the home because the parents tend to put up so much money to buying these homes for their own sons. Because of China’s rapidly rising divorce rate, I’ve also heard that the Court simply wanted to simplify divorce rulings; just get these cases through the court fast.
But it has been an incredibly controversial interpretation and a lot of women across China are very upset about it but there’s no organized movement to protest it because organizing and protesting is so difficult [in China].
EL: I guess in looking at the Supreme People’s Court interpretation and how that has a negative impact on women, one of the things though that has happened recently is that China has had its first gender discrimination lawsuit in employment. That seems like a positive development in terms of women’s rights. So how do you gel the fact that in a country where the court can reject cases, so they allowed obviously this case to be heard and even though it settled, they did allow it and its been published in the newspaper. How do you gel that kind of a development with the leftover women and the 2011 Marriage Law Interpretation?
LHF: Well, Chinese society is certainly not static and there are some legal success. That gender discrimination lawsuit was very important and it set an important precedent. But the fact is that there are so many other systemic ways in which women’s rights and gains are being reversed in the past two decades. One successful lawsuit here or there doesn’t fundamentally change the situation for the vast majority of women. Most notably there is still no specific law on domestic violence. Feminist lawyers and activist had been lobbying for over a decade to pass a law. And they’ve drafted the language, it’s all ready, but it simply hasn’t been passed.
EL: To go back to that because your book ends where you do discuss some individuals that are trying to change things a little bit, incrementally, but I have to admit it didn’t seem like there was going to be a lot of change from them even though they’re brave in what they are doing. It sounds like, based on what you say you don’t see a lot of change happening soon. Is that correct? Or if you do see any change, where do you see it coming from?
LHF: I certainly don’t see change coming from an organized nationwide women’s rights movement simply because
Will there be an organized and vocal women’s rights movement in China?
the political atmosphere is too severely oppressive for that to happen. But what does give me hope is that individual women can make choices in their own lives to avoid getting trapped in a very discriminatory system.
For example, there are women in their late 20s who have told me that they refuse to ever get married because marriage is a bad institution for women in China. They see this as an empowering choice. That doesn’t mean that they’re never going to have a lover or a boyfriend or maybe they’re lesbian. But there are individual ways in which women can act to empower themselves. But once they enter the institution of marriage it is very, very difficult. Marriage as an institution doesn’t protect women’s rights.
Contrary to the myths that are spread by the propaganda of the state media that single women in China are extremely miserable and lonely, I see the reverse. Single women are the ones who tend to do better. They don’t have husbands holding them back, telling them what to do; they have a lot more freedom. Women who are married, if there is any problem at all in the marriage, they’re extraordinarily vulnerable.
EL: And just in closing, you’re book is a fascinating book and I do recommend for everybody to read, especially if they really want to understand China today and women in China today. But why do you think the rest of the world should be paying attention to this issue if at all?
“Working women are a great revolutionary force”
LHF: Well the thing is that, let’s put aside the issue of fair treatment for women. Obviously women are being treated unfairly in China and are being discriminated against. But, as an economic issue, it’s very important. China’s obviously becoming increasingly a driver of global economic growth. The fact that women are basically being told by the government that they should stop working so hard and return to the home is going to end up having very damaging long-term economic consequences for China.
There’s already a declining labor force participation among women, particularly in the cities according to the latest census results; there’s a dramatically widening gender income gap. These are the most talented women in the country and if you’re telling the most talented female workers in China – it’s okay just leave the workforce – that’s going to hurt China’s economy. Of course if China’s economic development is hurt, if it is destabilizing, that’s going to affect the rest of the world. So it is something the rest of the world should be interested in.
The opening of China to market forces in 1978 unleashed tremendous benefit for the Chinese people – raising hundreds of millions out of poverty, establishing China as the world’s second largest economy. But it has witnessed a lot of bad – enormous environmental degradation, rampant corruption, and severe income disparities. Unfortunately, one negative effect has gone less noticed: the declining status of women in Chinese society. In emancipating women from traditional roles, Mao Zedong once proclaimed that “women hold up half the sky.” But as Dr. Leta Hong Fincher has revealed in her new book, Leftover Women: The Resurgence of Gender Inequality in China,today, women don’t even hold half of the deed to marital property.
In an interview conducted in July 2014 with China Law & Policy, Fincher explained how women – through the pressure to marry at all costs – have been excluded from one of the largest accumulations of wealth in the history of the world: China’s hot real estate market. And as Fincher shockingly explains, this phenomenon is not merely an accident of China’s growth. It is very much an intentional government policy. (Note that posting of this interview was delayed as a result of CL&P’s backlog)
Read the transcript below of Part 1 of this two-part series or click the media player to listen to the podcast.
Length: 14:05 minutes
Please come back tomorrow to read or listen to Part 2 of this interview.
*********************************************************************************************************** EL: Thank you for joining us today. Let’s start with the title of your book – Leftover Women. Can you explain more what this is; when the concept first came about?
LHF: The term leftover women or shengnu (剩女) was defined by the All-China Women’s Federation in 2007 to mean an urban professional woman over the age of 27 whose still single. And the same year, China’s Ministry of Education adopted the term as part of its official lexicon. Ever since 2007, China’s state media has very aggressively disseminated the term through its news reports, columns and commentaries. And you also see a lot of cartoons insulting single, urban educated women in their 20s; basically sending the message that these women are too ambitious they should stop focusing on their careers and they should instead look for a good husband before time runs out and they remain single forever.
EL: So you mention the state-run media promoting this and that also that this was a term created by the All-China Women’s Federation which is a government-backed organization. So is this an intentional concept that the Chinese government is pushing on women and if so, why?
LHF: I think there is no question that it is a deliberate campaign. If you look at the news reports that Xinhua put out in 2007 and 2008, there are quite a few of them that re-appear over and over and over again over the years and are still re-appearing even in 2013 with only slight changes in the wording. And maybe they will change the picture.
“Participating in the establishment of an industrialized nation makes us proud”
So there’s no question that the Propaganda Department wants to get these reports out and is pushing them out continuously. When I looked into the origins of the term, I noticed that in January 2007 China’s State Council issued a population decision which was a very important statement about what they called unprecedented population pressures facing China in part because of the sex ratio imbalance which they described as a real threat to social stability. And they said that China has a problem of so-called low quality of the population which would make it very difficult for China to compete in the global marketplace. So they set a key goal of so-called upgrading population quality. This term “population quality” or [renkou] suzhi (人口素质)can refer to a complex mix of superior genetic make-up, education, a more nurturing environment. The women who are being targeted in this leftover women media campaign are precisely the women who are considered to be of highest quality. So I argue that this campaign is in part an effort to get these highest-quality sort of speak women to marry and have a child for the good of the nation.
EL: In your book, you talk about the leftover women and then you tie that concept to the current property market. You argue basically that because of the fear of being leftover, the women end up losing the opportunity to gain from one of the largest accumulations of wealth in Chinese history which is basically the current urban real estate market. Can you explain that tie a little clearer?
LHF: First of all, there are a lot of complicated dynamics that go into home buying in China. So marriage is inextricably connected to home buying in contemporary China. Along with very intense marriage pressure there is also intense pressure to buy a home. The norm is that the man is supposed to be the official homeowner and there’s a lot of propaganda, real estate developer advertisement and online matchmaking advertisements all perpetuating the notion that a man must own a home in order to attract a bride. And they also spread the notion that Chinese women will refuse to marry a man unless he owns a home.
So one of the consequences of this is that Chinese parents tend to only buy homes for their sons and not for their
Home buying in China
daughters. Women are shut out of property accumulation first of all because their parents tend not to support them in anyway. These homes are too expensive for young people to buy on their own. If your parents are not helping you then you’re really stuck. So the women that I’ve interviewed who are in their 20s and have a boyfriend and they’re thinking about marriage, they often will take their life savings and transfer it to the boyfriend to finance the purchase of a home which is then only registered in the man’s name. These women who are extremely educated and very, very intelligent and sophisticated and they actually want economic independence and they say that they actually want to own their own home. But then I ask them, well then why when you are buying this marital home, why aren’t you putting your name on the deed?
A lot of them say that it’s simply because they are at the age where they’re considered leftover. Which can start as early as even before 25 years old. Some women can already start feeling that way. So they’re very anxious to get married. They’re own parents are pressuring them to get married. They’re certainly coming under a lot of pressure from the media. They’re coming under pressure from their teachers, the educational system, and their own doctors who tell women in their 20s that they really need to have a child in their so-called best child rearing years which is before the age of 30. Even doctors tell them that if they wait until past 30 to have a child, there child will have a birth defect.
So there is intense pressure on these women to marry because they genuinely believe that time will run out for them. These women, when it comes down to it, are very often unwilling to walk away from an unequal arrangement even if they really want that. And in most cases they do want equality. But the pressures against them are just so intense.
Getting Married in China – bliss until you realized you are not on the deed!
EL: I guess in reading your book, that was the hardest part for me to understand, that you have these very well-educated women. Most the of the women you interview are at least college educated if not PhDs. Very urban and sophisticated. They seem like this modern woman. It just seems so hard to comprehend that you have so many so willing to give up their equal economic rights in a relationship because of this concept. Is it just this media campaign – I guess if you can talk more about how strong this media campaign is. Or is it also something with the education system itself, that women aren’t questioning this propaganda. I just think if you were in a Western country, there would be more questioning of it.
LHF: Well it’s certainly not just [media]. I talk about the leftover women campaign. But when it comes to home buying, that’s simply one factor that’s shutting women out of property ownership. The fact that homes are so expensive is a huge factor as well. If homes were not so expensive then these women would be able to save up enough money on their own. Most of the women I interviewed wanted their own homes. So if they were able to afford it on their own, they would buy their own homes.
So part of it is China’s privatization in housing and the subsequent real estate boom has created these tremendous
new pressures on everybody in Chinese society: on the parents, on men and women. Even if the woman actually transfers her life savings over to the man to finance this loan [to buy the house], usually the man’s family ends up putting in more money than she does simply because the man’s parents have been saving all their lives. So then it may come down to the fact that the man’s family says: “well we put in more money therefore you have no right to put your name on the deed.” It may be the man’s parents who are really fighting with her and maybe her boyfriend would support adding her name to the deed. But it’s a very complicated transaction involving extended families pitted against each other.
But because of this fear that women over a certain age in their mid to late 20s are not going to be able to find a husband, it often winds up being that the parents of the daughter may actually help her finance the purchase the home but they don’t want the daughter to insist on adding her name because they’re afraid that her boyfriend or fiancé will walk out on her.
So even the parents of the daughter are urging her to stop being so assertive and not fight with the boyfriend and to
What’s wrong with being single? These ladies look like they are having fun!
just give in. In fact a lot of these young women again argue a lot; they can get into very heated arguments with their fiancés over the issue of putting their name on the property deed. So it is not as though they just blindly go into it and willingly give away all of their money and don’t think about it. Although that said there are some women who do that.
But it’s just a multi-layered form of discrimination against women. It also has to do with state regulations on the purchasing of property. For example, one woman I interviewed who was a PhD candidate, extremely educated, she desperately wanted her name on the property deed but her boyfriend and her own parents were telling her that it’s not worth putting her name on the deed because then if they want to buy a second home, then they would have to pay a much higher down payment. So that was the reason she gave for leaving her name off the deed. But she felt very bad about that. Then when I asked her well can you afford to buy a second home, are you going to buy one, she said no we can’t afford to buy it. So there are just many layers of obstacles for these women.
For a split second last week, I was transported from the doldrums of the current economic malaise back when the good times rolled and people didn’t worry that next week their paychecks might bounce – in other words, I attend a panel discussion on China’s current luxury goods market. If you thought everyone was suffering the same in this economy, think again – according to the panelists, China’s luxury goods market is red hot and is continuing to grow.
I don’t have a specific panache for luxury goods (hell, I don’t even own a designer handbag), but decided to attend the Fashion Institute of Technology’s panel discussion entitled “Fashion, Beauty and Status: One Year on the Front Lines in China’s Luxury & Apparel Markets” at the recommendation of the China Law Blog’s post about one of the speakers. What did I wear? Business casual which was way out of touch with most of what the much more fashionable audience was wearing, an audience that topped over 150 people, reflecting the very real importance of the Chinese market to high-end fashion.
The talk itself, moderated by FIT professor Lawrence Delson, featured three experts in the field: Byron Lee of the Hong Kong Trade Development Council, Michael A. Zakkour of Technomic Asia, Prof. Mark Greiz of FIT and MG Consulting. (copy of Zakkour’s presentation can be found here)
All three speakers harked on the expansiveness of the Chinese luxury good market, a market increasingly driven by the young and by the female. According to Zukkor who conducted a study on China’s luxury goods market, China’s growing middle and upper middle class, with 300 million consumers, is driving the growth in the luxury goods market and the need for more “affordable luxury.” With a “spending mentality,” speaker Bryon Lee stated that by 2015, China will be the world’s largest luxury good market. According to Zukkor, women in China spend $2,000 a year on handbags and their average yearly salary is $18,500; in the US, where the average woman’s salary is $150,000, women spend only a bit more: $3,000 a year on handbags. (note: the average salary for women in the US seems to be a bit high and might just represent the average income of upper middle class women).
With those numbers, it is obvious that any successful luxury goods business must include China. But those venturing to sell their goods in China must note the difference in sales and marketing vis-à-vis the West; to think that China is just an oriental version of the United States, London or even Prague would be a mistake. According to Zukkor, the channels by which to get your goods into China are very different; there is no wholesale-retail model. Instead, there are three ways for a foreign designer to reach the Chinese market: (1) through a distributor who will place the product in department stores and shopping malls; (2) by setting up your own brick and mortar store; and (3) through e-commerce.
Zukkor noted that Chinese customers’ e-commerce activity is very different from consumers in the West. Unlike in the West, Chinese consumers don’t just “browse” the internet; rather they research and shop through the internet and their access to the internet is increasingly on mobile devices. Many women will research their handbag purchase for two to three months before purchasing the product.
But no matter which method you use to access the China market, Mark Greiz stressed the importance of marketing to the Chinese market. Unfortunately for the audience, Greiz’s presentation, which proved to be the most practical, was cut short because of time limitations (FIT would be well advised to so a second presentation just on marketing).
By providing various examples of successful marketing in China (L’oreal) and some unsuccessful examples (Quicksilver, American Apparel), Greiz highlighted the need to “localize” the brand: hiring local staff (L’Oreal’s China staff is 90% Chinese), using the Chinese language in marketing (this was a huge failure for Quicksilver who didn’t translate their US ads), and creating story for your brand that speaks to the hearts and mind of the Chinese consumer (American Apparel failed to explain to Chinese consumers why he should pay $40 for a t-shirt). Greiz also stressed the need to have a very strong online presence to your brand.
Lee, Zakkour and Greiz painted a very rosy picture of doing business in China, contrary to many of the warning stories that you read in the Western press. But many of those stories focus on China’s lack of rule of law in enforcing contracts. So I asked the panelists – given the negative stories you hear about doing business in China, specifically with China’s legal enforcement issues, what should people be worried about. And this is where I realized the difference between lawyers and business people – all of the panelists focused on the practicalities of the China business environment. In terms of IP issues, Zakkour did acknowledge that China did have issues with the law on the books versus the law in reality but stated that it was more of a problem for “sensitive” industries, not luxury goods. Zakkour did note that China is a “first to file” country for trademarks making filing a very important step in any Western company’s foray into China. The moderator of the talk, Prof. Delson, was perhaps the most practical of all, noting the importance of maintaining good relations with government officials, especially if you are doing business in a second-tier or third-tier city (i.e. not Beijing or Shanghai).
But what the panel didn’t deal with is whether the future they project for China’s luxury goods market is in fact sustainable, or perhaps more aptly, obtainable. In one slide, Byron Lee showed the increasing disparity between wages for urban/middle class consumers and rural/lower class consumers, which was projected to grow further.
Furthermore, David Barboza, in this Monday’s New York Times, reported a bleak outlook for China’s middle class. Instead of showing any growth contrary to the FIT panel, Barboza noted that China’s consumer spending, as percentage of its GDP, has dropped in the past 10 years, from 45% of GDP to one of the world’s lowest: 35% of GDP. The fact that Chinese citizens have to bear their health care costs themselves, that real estate prices have increased to the point beyond most average person’s reach and that inflation is rapidly rising, Chinese people have remarkably high savings rates. Furthermore, to sustain cheap loans to Chinese businesses, Chinese banks provide such low rates of interest on savings accounts, rates that do not even keep up with inflation, that average Chinese citizens are losing money. But they are left with almost no other investment options and most still keep their money in savings accounts.
In his presentation, Zakkour acknowledge the high savings rate of older Chinese people, saving up to 50% of their incomes. But on a “happier” note, Zakkour stated that younger people – in the 28 age range – only save 4% of their income, providing for excessive income for luxury good purchases. But 4% seems ridiculously and irresponsibly low. Perhaps with the one child policy, the youth are relying on their parents’ savings. But the one child policy would also require these kids to save for their parents; no longer are the expenses of elderly parents shared among multiple siblings; instead there is only one child who must make enough to provide for their parents in their retirement in addition to saving for herself.
“Fashion, Beauty and Status” provided important lessons to selling luxury goods in China and offered a road map for those ready to enter the market. But as with all things China, it’s unclear what the future will be, even as the luxury goods market seems to be doing well today. Those who want to do business in the luxury goods market should be sure to know that there is still some risk.