The American Dream Is Alive and Well—in China

Home ownership has been called “the quintessential American dream.” Yet today less than 65% of American homes are owner occupied, and more than 50% of the equity in those homes is owned by the banks. Compare China, where, despite facing one of the most expensive real estate markets in the world, a whopping 90% of families can afford to own their homes.

Over the last decade, American wages have stagnated and U.S. productivity has consistently been outpaced by China’s. The U.S. government has responded by engaging in a trade war and imposing stiff tariffs in order to penalize China for what the White House deems unfair trade practices. China’s industries are said to be propped up by the state and to have significantly lower labor costs, allowing them to dump cheap products on the U.S. market, causing prices to fall and forcing U.S. companies out of business. The message to middle America is that Chinese labor costs are low because their workers are being exploited in slave-like conditions at poverty-level wages.

But if that’s true, how is it that the great majority of Chinese families own homes? According to a March 2016 article in Forbes:

… 90% of families in the country own their home, giving China one of the highest home ownership rates in the world. What’s more is that 80% of these homes are owned outright, without mortgages or any other liens. On top of this, north of 20% of urban households own more than one home.

Due to their communist legacy, what Chinese buyers get for their money is not actually ownership in perpetuity but a long-term leasehold, and the quality of the construction may be poor. But the question posed here is, how can Chinese families afford the price tag for these homes, in a country where the average income is only one-seventh that in the United States?

The Misleading Disparity Between U.S. and Chinese Incomes

Some commentators explain the phenomenon by pointing to cultural differences. The Chinese are inveterate savers, with household savings rates that are more than double those in the U.S.; and they devote as much as 74% of their money to housing. Under China’s earlier one-child policy, many families had only one heir, who tended to be male; and home ownership was a requirement to score a wife. Families would therefore pool their resources to make sure their sole heir was equipped for the competition. Homes would be purchased either with large down payments or without financing at all. Financing through banks at compound interest rates doubles the cost of a typical mortgage, so sidestepping the banks cuts the cost of housing in half.

Those factors alone, however, cannot explain the difference in home ownership rates between the two countries. The average middle-class U.S. family could not afford to buy a home outright for their oldest heir even if they did pool their money. Americans would be savers if they could, but they have other bills to pay. And therein lies a major difference between Chinese and American family wealth: In China, the cost of living is significantly lower. The Chinese government subsidizes not only its industries but its families—with educational, medical and transportation subsidies.

According to a 2017 HSBC fact sheet, 70% of Chinese millennials (ages 19 to 36) already own their own homes. American young people cannot afford to buy homes because they are saddled with student debt, a millstone that now averages $37,000 per student and will be carried an average of 20 years before it is paid off. A recent survey found that 80% of American workers are living paycheck to paycheck. Another found that 60% of U.S. millennials could not come up with $500 to cover their tax bills.

In China, by contrast, student debt is virtually nonexistent. Heavy government subsidies have made higher education cheap enough that students can work their way through college with a part-time job. Health care is also subsidized by the government, with a state-run health insurance program similar to Canada’s. The program doesn’t cover everything, but medical costs are still substantially lower than in the U.S. Public transportation, too, is quite affordable in China, and it is fast, efficient and ubiquitous.

The disparity in incomes between American and Chinese workers is misleading for other reasons. The “average” income includes the very rich along with the poor; in the U.S., the gap between those two classes is greater than in China. The oversize incomes at the top pull the average up.

Even worse, however, is the disparity in debt levels, which pulls disposable income down. A survey after the 2008-09 credit crisis found that household debt in the U.S. was 136% of household income, compared with only 17% for the Chinese.

Another notable difference is that 70% of Chinese family wealth comes not from salaries but from home ownership itself. Under communism, all real property was owned by the state. When Deng Xiaoping opened the market to private ownership, families had an opportunity to get a home on reasonable terms; and as new homes were built they traded up, building the family asset base.

Deng’s market liberalization also gave families an income boost by allowing them to become entrepreneurs. New family-owned businesses sprang up, aided by affordable loans. Cheap credit from state-owned banks subsidized state-affiliated industries as well.

“Quantitative Easing With Chinese Characteristics”

All this was done with the help of China’s federal government, which in recent decades has pumped massive amounts of economic stimulus into the economy. Unlike the U.S. Federal Reserve’s quantitative easing, which went straight into big bank reserve accounts, the Chinese stimulus has generated new money for productive purposes, including local business development and infrastructure. Sometimes called “qualitative easing,” this “quantitative easing with Chinese characteristics” has meant more jobs, more GDP and more money available to spend, which in turn improves quality of life.

The Chinese government has done this without amassing a crippling federal debt or triggering runaway inflation. In the last 20 years, its M2 money supply has grown from just over 10 trillion yuan to 180 trillion yuan ($11.6T), a nearly 1800% increase. Yet the inflation rate of its Consumer Price Index (CPI) has remained low. In February of this year, it was just 1.5%. In May it rose to 2.7% due to an outbreak of swine fever, which drove pork prices up; but this was a response to shortages, not to an increase in the money supply. Radically increasing the money supply has not driven consumer prices up because GDP has increased at an even faster rate. Supply and demand have risen together, keeping consumer prices low.

Real estate prices, on the other hand, have skyrocketed 325% in the last two decades, fueled by a Chinese shadow banking system that is largely beyond regulatory control. Pundits warn that China’s housing is in an unsustainable bubble that will pop, but the Chinese housing market is still more stable than the U.S. subprime market before 2008, with its “no-doc no-down” loans. Chinese buyers typically put 40 to 50% down on their homes, and the demand for houses remains high. The central bank is also taking steps to cool the market, by targeting credit so that it is steered away from real estate and other existing assets and toward newly-produced goods and services.

That central bank intervention illustrates another difference between Chinese-style qualitative easing and Western-style QE. The People’s Bank of China is not trying to improve banking sector liquidity so that banks can make more loans. Chinese economists say they don’t need that form of QE. China’s banks are already lending, and the central bank has plenty of room to manipulate interest rates and control the money supply. China’s central bank is directing credit into the local economy because it doesn’t trust the private financial market to allocate credit where local markets need it. True to its name, the People’s Bank of China seems actually to be a people’s bank, geared to serving the economy and the public rather than just the banks themselves.

Time for More QE?

 In early April, President Trump said in one of his many criticisms of the U.S.  central bank that he thought the Fed should be doing more quantitative easing (expanding the money supply) rather than quantitative tightening (shrinking the money supply). Commentators were left scratching their heads, because the official U.S. unemployment rate is considered to be low. But more QE could be a good idea if it were done as Chinese-style qualitative easing. A form of monetary expansion that would allow Congress to relieve medical and educational costs, grant cheap credit to states to upgrade their roads and mass transit, and support local businesses could go a long way toward making American workers competitive with Chinese workers.

Unlike the U.S. government, the Chinese government supports its workers and its industries. Rather than penalizing China for that “unfair” trade practice, perhaps the U.S. government should try doing the same. China’s legacy is socialist, and after opening to international trade it has continued to serve the collective good, particularly of its workers. Meanwhile, the U.S. model has been regressing into feudalism, with workers driven into slave-like conditions through debt. In the 21st century, it is time to upgrade our economic model from one of feudal exploitation to a cooperative democracy that recognizes the needs, contributions and inalienable rights of all participants.


This article was first published on Ellen Brown is an attorney, founder of the Public Banking Institute, and author of thirteen books including Web of Debt and The Public Bank SolutionHer latest book is Banking on the People: Democratizing Money in the Digital Age, published by the Democracy Collaborative. She also co-hosts a radio program on PRN.FM called “It’s Our Money.” Her 300+ blog articles are posted at

19 Responses

  1. An absolutely fabulous article!

    • The Chinese model reminds me of post war Britain upto the time Harold Wilson stepped down. Then maintaining a strong pound led to unemployment and strikes covering public utilities including coal mining and dockers in the ports. What followed was Tory Ted Heath taking us into the EEC and Thatcher attacking the unions by privatising the utilites.
      The economy now reflects the US State economy although perhaps less extreme with its health servics and social security system. It’s heart breaking.

  2. Ellen Brown:

    A good article concerning the home ownership here and in China.

    I just ordered your new book.

    Bill Madden

    Ellen Brown posted: “Home ownership has been called “the quintessential American dream.” Yet today less than 65% of American homes are owner occupied, and more than 50% of the equity in those homes is owned by the banks. Compare China, where, despite facing one of the most ex”

  3. […] The American Dream Is Alive and Well—in Chinaby Ellen Brown […]

  4. The article highly praises China’s higher level of “home ownership.” But we were recently in China and they told us that after 70 years, the land your house is on goes back to the government after 70 years. But home owners in the US can pass their homes and land on to their heirs. Can they sell their property or pass it on to their children in China?

    This is from “China Smack”

    “Worries about 70 years”

    Chen Zhuoy, who just recently purchased a commercial residential property in Beijing, originally didn’t think about what happens in 70 years, until she inadvertently saw the “Beijing State-Owned Construction Land Supply Procedures (Trial Implementations)”. Clearly stipulated in this 2005-issued local legislation, “at the expiration of paid land-use, land-users who need to continue using the land should submit an application with the land administration department one year before the expiration of the land-use term, and those who did not apply or who applied but were not approved shall have their land-use rights returned without compensation to the government at the expiration of the term.”

    Hiram Broyls

  5. Reblogged this on The Most Revolutionary Act and commented:
    China’s central bank is directing credit into the local economy because it doesn’t trust the private financial market to allocate credit where local markets need it. True to its name, the People’s Bank of China seems actually to be a people’s bank, geared to serving the economy and the public rather than just the banks themselves.

  6. Thanks Ellen for that excellent explanation of some of the differences between the two economies. Australia is kind of in between, we do get a lot of government support here, however home ownership is almost unattainable now because of incredibly high land prices. Another problem faced by people who would like to own their own home is that we are not allowed to start off small, i.e live in a shed until we can afford to build a home. So for most people these days renting is the only option.

    • Yes, and renting a place to live is a kind of slavery IMO. People should get equity for the rent they pay. It is an unfair system. The landlords and owners of corporations, creators of money out of thin air (banks), and inheritors (inheritance is the source of most wealth) demand interest and return on their accumulated wealth without work, you better believe it.

  7. If you must pay an annual property tax in order to remain in your house, you do not own your house. An owner of a “fee simple absolute” title is simply the highest tenant in the pecking order. This is why the government is always careful to speak of “home ownership” and not “house ownership.” In America, when nearly all people buy a home, they buy an interest in the use of land and buildings and not the land itself. God said He gave the earth to men as a gift, but the United States government wants to prohibit men from enjoying that gift.

  8. […] Home ownership has been called “the quintessential American dream.” Yet today less than 65% of American homes are owner occupied, and more than 50% of the equity in those homes is owned by the banks. Compare China, where, despite facing one of the most expensive real estate markets in the world, a whopping 90% of families can afford to own their… — Read on […]

  9. Hi Ellen, I am listening for connections between various sources of information. Yesterday the guys who help me at the sawmill were discussing your commentary (unfortunately probably from Forbes rather than TruthDig). I will send the article on to them.

    Anna Von Reitz has an interesting discussion of sovereignty and incorporation in this link:

    I heard recently that the Sec of the Treasury is now a woman, Munchin was fired?

    So your suggesting that the potential next QE could have a different impact fits with other things I am hearing but can not verify.

    Anna’s piece is interesting because my wife sits as the head trustee of a property like the one Anna describes without the irresponsible trustees, but the real question for me is if incorporation yields all assets to the sovereign base from which the charter came, what is the form of the benefits that the sovereign actually acquires?

    There is still a lot that is not well described or that I am not able to comprehend given the verbiage being used???? Thanks for providing this window on the economic world. My window remains tightly closed because of the current local systems in place.

    Alan C. Page, Ph.D., Research Forester – MA License #184 Green Diamond Systems 125 Blue Meadow Road Belchertown, MA 01007

    Phone: 413-323-4401 Cell: 413-883-9642 Blog: [Common Good Dialog]( Website: [Common Good Forestry]( Website: [Common Good Forest Products](

    Sent with [ProtonMail]( Secure Email.

    ‐‐‐‐‐‐‐ Original Message ‐‐‐‐‐‐‐

  10. […] The American Dream Is Alive and Well—in China […]

  11. Looks like you missed something. I heard You state was using China was using public banking. Care to comment on this massive default??? Thank you in advance

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