My point is that trajectory is more relevant to these discussions than current state of affairs. The quality of life of the average Chinese citizen (and more so the upper-middle class Chinese citizen) has increased DRAMATICALLY in the last 40 years. So when people talk about China's potential, they aren't talking about the situation in the next 5 or 10 years. They're talking about who is going exert massive international influence in the next 50 years. So you're right, most westerners aren't buying speculative property in Beijing (despite the fact that housing in central Beijing is nearly as expensive as New York City), but I'd wager there's a good chance of that changing in the next 50 years.
Western countries have a much better record in this regard.
I bet China eventually scraps the lease system and replaces it with a universal property tax, which would solve the other problem of keeping local governments funded long term (right now they just make money on sales), while naturally deprecating the property on a yearly basis, and also making pure speculation much more difficult.
But who can say. If china switches to a property tax system (not just the nominal one easily gamed in shanghai and chongqing today), it would break a lot of buying assumptions.
I have some confidence of this if I purchase property in a Western jurisdiction, but in China the situation is a bit more fluid. I have zero leverage and have no doubt I would get trampled if convenient.
This is the perception they have to overcome, and to be honest, I don’t think they care to; do they really need or want my capital invested in China, especially in property?
Signals from ruling class appear to indicate otherwise.
Also, even if housing forsake prices in Beijing are at New York levels, rents are just at Wichita levels. No foreigner is going to buy into that level of crazy, especially when buying property in china accords them no residency benefits (they will never get hukou, heck, green cards basically don’t exist).
I think pollution in China will likely be a non issue in 10-20 years or so. Pittsburg used to be like Beijing, but as the National economy shifted away from industries causing pollution, it disappeared entirely. China is in the midst of this process.
We were told in 2010 that the government would solve China’s pollution problem probably by 2015, 2020 at the latest. Ya, well, that isn’t going to come to pass.
Why are rich parents sending their kids to the US? There's a shortage of jobs for college graduates in China and many parents are hoping that a degree from a western college will give them a better chance at finding a job either in the US or China.
As for buying property. The biggest reason is probably diversification and the fact that the Chinese see property as a good investment. Housing prices in China have sky rocketed and many Chinese families have more than one house that they just leave around with no one living in them. Just like how stock investors invest in foreign stocks, Chinese landowners are diversifying their property.
Foreign investors don't want to buy property in China probably because of the pollution problem and the fact that they think that the housing market there is a huge bubble.