Mortgage changes Chinese consuming psyche   2002-10-14 09:31:44 Today's installment of CHANGING CHINA series is a follow－up story on the real estate sector in this country. With residential housing going commercial nearly a decade ago, mortgages have become an important part of the story. This year, the Chinese government has decided to upgrade the Qinghai－Tibet highway, an important gateway to Tibet. So for tomorrow's CHANGING CHINA installment, we'll be talking about the government's increasing investment in building the infrastructure of the country's western region. Pawn shops, one of the earliest kinds of financial service. If you have something to put up as collateral, you can get a loan. But although this kind of shop does have a long history in China, people have always had reservations about using them unless their finances are in really bad shape. But the theory behind pawn shops is becoming much more popular today. In the past, the prevailing concept in China has been "spend less than you earn." A person in debt was often looked upon as a loser. But the past two decades of economic reform and ensuing prosperity have brought subtle changes in people's consumption patterns. It means that few people are objecting to the notion of "spending the future's money to achieve the current goal." To a large extent, this change in concept has grown out of the increasing public demand for expensive commodities such as housing. They're too large to be bought as a single purchase, so loans have come into fashion. National commercial banks now offer a variety of such services and they're generating a strong appeal among customers. Gu Binyan is one. Her family of three live in a two－bedroom apartment in downtown Beijing, one that's too small for putting up the couple's parents when they come to visit. Gu's parents－in－law live in another city and have for a long time wanted to come to Beijing to settle and be with their family. Earlier this year, Gu and her husband decided to get a mortgage for an apartment they could live in, but there was a problem with the deposit they needed to put down. Gu Binyan said, "The deposit for the apartment is too much for us to bear at the moment. Fortunately, we happen to have another small bit of property in the outskirts of Beijing. I then thought of the possibility of getting a loan by using this as collateral." Like many others, this was Gu's first experience of mortgages and raising collateral, and the process was more complicated than she expected－－meeting lawyers, processing various certificates, having her property valued, registering with the real estate administration and so on. It took her more than two months to complete. But she says she's happy about the result. Gu Binyan said, "Being able to get the loan has been immensely helpful to me in this case. In the past I would never think of borrowing money for such a big new purchase. But then, times have changed." Stories like Gu's are no longer a novelty in China as more and more people experiment with individual financial services. Experts say this is an encouraging phenomenon. Yu Hongjun, professor of Guanghua Management School, Peking University, said, "Popularizing financial services such as mortgages and using collateral is of great importance because real estate has always been a major driving force in a nation's economy. Its development should spur on about 30 related sectors, creating many more jobs. Debtors also then have to work hard to pay off the loans. All in all, the economy's supply and demand will be boosted." Being in its initial stage of development, China's individual financial service market has huge room for development, but it's already leaps and bounds from the old days when getting a loan was despised. Within a decade, mortgages have evolved from an alien term to a household word. As Gu Binyan gets the money out of the bank on Monday, she'll be taking out her first loan, but with an open mind －－ she doesn't expect it to be her last.