From a recent Foreign Policy article by Robert Fogel:
"In the big Chinese cities, living standards and per capita income are at the level of countries the World Bank would deem "high middle income," already higher, for example, than that of the Czech Republic. In those cities there is already a high standard of living, and even alongside the vaunted Chinese propensity for saving, a clear and growing affinity for acquiring clothes, electronics, fast food, automobiles -- all a glimpse into China's future. Indeed, the government has made the judgment that increasing domestic consumption will be critical to China's economy, and a host of domestic policies now aim to increase Chinese consumers' appetite for acquisitions.
What you've posted here is pretty much what I'm accustomed to reading. The story usually goes... look, people in big Chinese cities are adopting the same consumption habits as North Americans (albeit, usually they've found some individual to go on about how much they love their iPhone). Then it says that the Chinese authorities want to rebalance their economy towards domestic consumption, says they've taken a bunch of steps to make that happen, but doesn't bother to specify what they've done. If it does bother, the steps they've usually taken are something like tax incentives to purchase vehicles or white goods. Measures designed to look like they're doing something, but in reality are only pushing forward a little consumption.
Despite anecdotal evidence to the contrary, over recent years China's economy has continued to shift away from domestic consumption, relying ever more on exports and infrastructure investment to fuel growth.
China requires structural reform to address this problem (liberalization of exchange/interest rate policy, large scale privitization etc.). Structural change is politically and economically difficult, perhaps China manages this well, perhaps not. What I still haven't seen is any theory on how they plan to transition while continuing to grow quickly.
Interesting, Fogel indicates:
[i]In 2040, the Chinese economy will reach $123 trillion, or nearly three times the economic output of the entire globe in 2000. China's per capita income will hit $85,000, more than double the forecast for the European Union, and also much higher than that of India and Japan. In other words, the average Chinese megacity dweller will be living twice as well as the average Frenchman when China goes from a poor country in 2000 to a superrich country in 2040. Chris Patten, the last British governor of Hong Kong, reckons China has been the globe's top economy for 18 of the past 20 centuries.
I suspect the reality will be somewhere in the middle of Fogel's projections. The only point I entirely agree with Fogel is on education, where he states that China has made an enormous investment in high quality education, basically guaranteeing the human capital necessary to continued prosperity.
Thus, I see the Mainland's impact on Vancouver Real Estate limited only by Immigration Canada's quota system. It certainly bodes well for Vancouver, that's for sure.
I'm glad you qualified this Fogel quote because it really is a laugher. Something akin to me saying I'll invest $10,000 in Apple stock today an retire a millionaire in 2040.
Can't say as I know much about the Chinese education system, although I'm a little skeptical seeing one of the top reasons cited for Chinese immigrating here is for schooling, which as a product of the system, I'm not that huge a fan of.
As I said, I'll take or leave the mainland Chinese investment in Vancouver RE. It probably does put some upward pressure on prices (probably not as much as everyone seems to think though). But on the other hand the money coming in is funding the retirement of a lot of born-and/or-bred Canadians and provides a good living for some in the construction trades.