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It’s raining this morning in Toronto. The sun really hasn’t come up and out yet. And I’m spending the morning drinking coffee and reading a City Journal article from this past summer called “Hongcouver.”
The article talks about how the Chinese – first from Hong Kong and then from mainland China (PRC) – have dramatically reshaped the economic and cultural landscape of Vancouver.
I, unfortunately (it’s a great city), don’t spend a lot of time in Vancouver and so I don’t have an accurate sense of the local sentiment towards all of this change. But there’s no question the city has changed.
Here’s a snippet from the above City Journal article:
As for the notion that Chinese money tended to be ill-gotten, Yu pointed out that the property boom was propelled by the structural disparity between prosperous Hong Kong, a dynamic economy, and the comparative backwater of Vancouver, still “living on the fumes of empire.” For the price of a Hong Kong flat, a Chinese immigrant—even, say, an accountant—could buy a splendid home on Vancouver’s West Side. “The Hong Kong Chinese who came could buy their way into any neighborhood. [They] knew that money was a tool,” Yu told me. “They weren’t going to accept a second-class citizenship in Vancouver. They could say, ‘I don’t care about your British Imperial manners, I am going to buy your house.’ ” The irony was that the Hong Kong arrivals—“more sophisticated than the people they were displacing,” with “better schooling, better English accents,” Yu said—were themselves the products of a system of law and finance instituted by the British with the establishment of their Hong Kong colony in the 1840s, after Britain thrashed China in the First Opium War.
A lot of this was fuelled by the now defunct Immigrant Investor Program. The intent of the program was to allow “experienced business people” into the country in order to contribute to economic growth. If you had business experience, a net worth of at least C$1.6 million (that was gained legally, of course), and were able to invest C$800,000, then you could get permanent residency.
Between the mid-1980s and the end of the 1990s, approximately 30,000 Chinese came to Vancouver via this investor-class visa. And between 1987 and 1997, it is estimated that this group of Chinese possessed about $35 to 40 billion in disposable income. No wonder they bought real estate.
But the interesting question is whether or not Vancouver is better off now than it was in the 1970s before all of this migration really took hold.
There many who would argue that it is not. Vancouver now has the most expensive real estate in Canada and prices have completely detached themselves from local income levels – as they have in many international cities.
But there’s also a strong argument to be made that this influx of money has made the Vancouver economy more dynamic. Unemployment in the city was cut almost in half between the early 1980s and 1991 during the first wave of migration. It went from 13.6% to 7.7%.
In a way, it’s not all that different than what’s currently happening in San Francisco with tech and housing. I’m not saying there aren’t problems to be solved. But I think many of us can agree that the answer is not to eradicate the tech sector.
That’s throwing the baby out with the bathwater.