Is ‘engineered’ divorce key culprit in China’s real estate price rise?
1.06 million couples registered for divorces in the fourth quarter of 2020 in China
In the world over, key attempts of the governments are to protect their citizens from the lethal coronavirus. In China, the major effort of the Xi Jinping regime is to save young couples from resorting to divorces, a menace which has made the country infamous for its societal problem.
According to China’s Ministry of Civil Affairs, 1.06 million couples registered for divorces in the fourth quarter of 2020 in the country. This is a data of just one quarter of the year as the Chinese government, known for suppressing facts, has not shared details of the whole year.
But media reports suggest that lockdowns, isolations, job cuts, weakening of the economy in China have hit young people hard young, resulting in an increase in impulsive divorces across the country. As per South China Morning Post, 8.6 million divorces took place in 2020 in China, outstripping the Communist regime’s plan to reverse the demographic crisis that threatens economic growth in the country.
To stem the tide of divorces, China unveiled a rule on January 1, 2021, which seeks couples to first wait for 30 days before ending their marriages. This is called the cooling-off period. The cooling-off period doesn’t apply to those divorces involving domestic violence. But eruption of violence and murder among couples during this period has raised questions about the practicality of this rule.
In the four months between January to April, the number of registered divorces has been 2,96,000, a claim that has been made by the Chinese government’s mouthpiece, the Global Times. This suggests a decline in divorces. However, observers say facts on the ground are different.
They link decline in divorces in the last four months to the current economic situation of the country which is smarting under the Covid-19 pandemic impact. It has hit the real estate and other sectors of the country. But foremost, any up and down in property sales has a link with fluctuations in young couples’ married life in China where a family with wife and husband can own only two properties. If they go for a third property, they have to undertake a divorce route and report to authorities that they are not living as wife and husband.
As the Chinese economy is in tailspin with factory output slowing down, retail sales declining and private investments in apparel, technology and medicine sectors ebbing a lot, young working couples are avoiding divorces, they usually resort to circumvent restrictions imposed on flat and property ownership. Therefore, the economic situation is the real cause behind the decline in divorces and not the cooling-off period, suggests some observers who are familiar with the Chinese society.
In China, there are two ways to get divorced—one, through divorce registration filed with civil affairs authorities, the other is through court judgment and mediation. The statistics reflect divorce registrations filed with civil affairs departments, which constitute the majority of divorces. The divorces filed with civil affairs departments are often found to be engineered ones and they are enacted to fulfill young individual’s objective to have more properties in cities like Shanghai, Beijing, Guangzhou and Chengdu.
In the world, China is a lone country where a spike in divorces has a link to speculative rise in property cost. These are called tactical divorces and they have become useful tools for couples to exploit policy loopholes.
To plug the loophole, China’s Communist regime has cracked down on housing speculation. It unveiled new rules under which the number of homes that are owned by divorced couples within the last three years will be counted and this count will be compared with the number of homes they used to own when they were married.
Yet this didn’t stop divorces nor stopped speculative rise in homes’ costs in 2020, even as China had imposed lockdown in some provinces. According to the UK based Daily Mail, register offices in Dazhou, a prefecture-level city in Sichuan province recorded more than 300 divorce applications in March 2020.
Wuhan, the Chinese city, considered as the birthplace of the deadly Coronavirus, witnessed divorce rate doubling during the 70-day-long shut down, said the Global Times in its report on April 14, 2020. Data released by China’s Civil Affairs Ministry in February 2021, showed that there were more than a million filings for divorces in the last three months of 2020, up 13 percent compared to the same period a year earlier.
According to the Civil Affairs Ministry, Beijing recorded a 36 percent rise in divorces, to nearly 27,000 cases. Divorce rate rose 26 percent, to over 11,600 cases in Shenzhen, while in Chongqing, there was a 15 percent rise to 35,000 cases. As many as 40 couples filed for divorces each day in the last two weeks of December last year.
And in the same period, the cost of an apartment in Shanghai or Guangzhou saw a 10.3 percent jump last year in the average price of lived-in homes. Even prices of secondhand properties in first-tier cities like Beijing, Shanghai, Guangzhou and Shenzhen rose 1.3 percent in January 2021.
Overall, Chinese couples are smart enough and they know how to evade rules without damaging their familial accord. So far as divorces, which are engineered through mutual understanding between wife and husband, are beneficial, they will continue to do so without any remorse. In one extreme case, a family in China’s Zhejiang province was found to have separated and remarried 23 times in one month to claim higher compensation in a resettlement project.