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As China Ages, a Push to Add Elevators Offers a New Kind of Economic Relief

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GUANGZHOU, China — When China faced previous economic slowdowns, it favored pharaonic, multibillion-dollar construction projects to quickly pump money into the economy. A bullet train network that now connects 700 cities. Ultramodern expressways longer than America’s interstate highways. And 81 of the world’s 100 highest bridges.

Now, a top Chinese official has a new idea to rev up growth during the coronavirus pandemic: elevators.

China’s premier, Li Keqiang, and his allies in the government want to retrofit as many as three million older, walk-up apartment buildings, projects that usually cost less than $100,000.

The downsized ambitions reflect the evolution of China, from a youthful but impoverished country to a graying but increasingly middle-class one.

Although China still likes grandiose infrastructure projects, they no longer have the same economic effect. High-speed rail lines and superhighways already link every large city, so new ones connect smaller and smaller communities in China’s mountainous interior — at exorbitant cost. And the country’s debt has spiraled so high that it has become a serious drag on growth.

While elevators may pack a smaller economic punch, they provide a social benefit for a rapidly aging population. A wealthier Chinese society is also demanding more from its leaders.

ImageMany staircases inside older buildings in China can prove challenging for older adults to climb.
Credit…The New York Times

Kong Ting endured nine months of pregnancy in a 10th-floor walk-up apartment in Guangzhou, the semitropical hub of southeastern China. Several times a day, she trudged up and down the building’s 162 stairs. “The hardest part was carrying food and drinking water,” she said.

Every day, she sat on the building’s third-floor patio and complained to the neighbors, many of them older. Last year, most apartment owners in the building chipped in $4,300 apiece, collected a large municipal subsidy, and added a small elevator to the side of the building.

Buildings all over China need a similar upgrade.

As China’s economy started to open up after Mao’s death in 1976, young migrants moved en masse from the farms to newly built factories popping up everywhere. Over the next 25 years, Chinese cities swelled by almost as many people as the entire population of the United States.

To house the new city dwellers, municipal governments and state-owned enterprises hastily built no-frills apartment towers of seven to 10 stories across the country. The Soviet-style, hulking complexes soon dominated the landscape, particularly in manufacturing hubs like Guangzhou.

Credit…The New York Times

Almost none had elevators. China was still a poor country. It had few factories to manufacture elevators. Imports were expensive.

The lack of elevators is now a major problem in a rapidly aging society.

Through the 1960s, Mao encouraged families to have lots of children. The slogan became “the more people, the stronger we are.”

Starting this year, babies born in the 1960s are turning 60, an age by which many Chinese retire. They have few children or grandchildren to help them, since China began imposing its stringent “one child” policy in the 1970s.

“If we do not prepare ahead of time, we may have a greater challenge than expected” as the number of older adults in China rises steeply, said Lu Jiehua, a professor of demographic studies at Peking University.

Without elevators, many longtime tenants become trapped in their homes, reliant on food deliveries and unable to meet friends or go for walks.

Credit…The New York Times
Credit…The New York Times

Jiang Weixing, a white-haired woman in her 90s, sat in sunshine in a wheelchair outside a Guangzhou clinic on a recent afternoon. She waited briefly with two younger family members for a special wheelchair-accessible taxi that took her home after a medical treatment.

Until the recent addition of an elevator to her high-rise building, Ms. Jiang almost never left her apartment. Doing so required two or three people to carry her down many flights of stairs.

Elevators, or the lack of them, have become another cause of surging economic inequality in China.

Guangzhou, a fairly affluent and socially progressive city, can afford to subsidize the projects and has already added about 6,000 elevators to older buildings — almost as many as the rest of China combined. In Beijing, the prosperous municipal government pays almost the entire cost of elevator installations, offering a $93,000 subsidy to apartment buildings within the city limits.

Credit…The New York Times

Many less affluent cities have no programs for elevator installation or tiny ones. In far southern China, Zhanjiang offers a meager $3,000 subsidy for each apartment building.

The projects also are not universally appreciated, particularly by residents on bottom floors. Elevators usually block one or more of their windows and scarcely benefit them.

Chen Xin, a 52-year-old owner of a ground-floor apartment in Guangzhou, initially resisted an elevator project in her building that involved bricking up her front door, forcing her to come and go through a side door onto a patio. Ms. Chen agreed after residents of higher floors paid her $3,500.

To avoid arguments and court cases, Guangzhou imposed rules on the projects. If the owners of two-thirds of the units in an apartment building and two-thirds of the square footage in the building vote in favor of the elevator, the project must be installed.

Guangzhou’s approach is spreading. Hefei, a metropolis of eight million people in central China, announced on Sept. 1 that it was adopting a similar rule.

Credit…The New York Times

From an economic perspective, a national elevator policy, which Premier Li proposed in May in his annual speech to the country’s legislature, could help mitigate the economic effects of the pandemic on China’s blue-collar workers.

Constructing elevator towers of concrete or glass and steel up the sides of apartment buildings is labor intensive. It could provide jobs to some of the tens of millions of still-unemployed Chinese migrant workers.

But the plan’s supporters may lack the political muscle to make it truly national.

Building elevator shafts on the sides of buildings is a task dominated by small, private contractors in China. The contractors then buy elevators from a multinational — usually Otis Elevator, Schindler, Kone, Mitsubishi Electric or Hitachi — or one of several smaller Chinese manufacturers, like IFE Elevators in Guangzhou.

Credit…The New York Times
Credit…The New York Times

While China’s top leader, Xi Jinping, has called for greater reliance on domestic demand to stimulate growth and has separately called for addressing poverty and improving housing for the elderly, he has not specifically backed a national elevator agenda.

His main constituencies — the military, security agencies and very large state-owned enterprises — have little to gain from elevator projects. They have focused on building rail lines and highways that allow China to rush troops to remote hot spots, like the border with India.

Housing experts in China insist that the country will resolve its elevator shortage. “Everyone invests together, and then solves the issue,” said Huo Jinhai, a senior engineer at the Ministry of Housing and Construction.

And the plan has a powerful backer: the Ministry of Finance.

Credit…The New York Times

Such support is rare. The ministry has kept central government spending on a very tight rein even as most local and provincial governments have plunged deep into debt.

One of the ministry’s most famous budget hawks is Jia Kang, its longtime research director. When he finally retired, the ministry set up an influential advisory group nearby for him to run, the China Academy of New Supply-Side Economics.

In his new role, Mr. Jia has emerged as an outspoken advocate of spending money — on elevators. His support is born of personal experience.

Mr. Jia, 66, and his wife, Jiang Xiaoling, 63, bought a tiny ground-floor apartment years ago and then, as their savings grew, purchased a somewhat larger third-floor apartment nearby. They walk back and forth between the two apartments many times every day, and want an elevator installed so that they do not need to trudge up the stairs.

“In recent years,” he said, “my wife frequently complains, ‘Why do we tolerate these conditions?’”

Credit…The New York Times

Coral Yang contributed research.

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The Trump campaign celebrated a growth record that Democrats downplayed.

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The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.

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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.

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The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.

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Ant Challenged Beijing and Prospered. Now It Toes the Line.

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As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

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