Chapter 240 When Will the Auction Take Place: What You Should Have Thought Of

With the ruble plummeting, Wang Xiao and Ivanov need to hurry back to Moscow to take charge.

Bullshit, there's no one in Moscow who can take charge of the overall situation right now.

To paraphrase Ivanov's words when he rejected Yura: "Even if I go back now, there's no way I can bring Lubula back."

Yura was extremely agitated, wishing she could reach through the telephone line, grab Ivanov by the neck, and shake him: "What are you doing in China? Does that place have any allure for you?"

Ivanov retorted bluntly: "Sales! What else can I do? If I don't do sales, you're going to sell steel for me?"

Yura asked impatiently, "How much steel can you sell?"

"One year!" Ivanov exclaimed triumphantly. "We've secured a huge order in China, so we don't have to worry about steel for the rest of this year. Oh no, that includes next year too; we've already exceeded our KPIs for next year ahead of schedule."

Ah ha, they're working everywhere.

Yura then launched into another sarcastic remark: "I told you, China just wants to buy all our good stuff cheaply, including steel."

Ivanov was not afraid at all: "Alright then, to prevent the loss of our Russian Federation assets, we will not take the steel from Kuznetsov. We will transfer it to Ukraine and damage their interests. I'm sure the Russian Federation government will be delighted. Moreover, I'm sure the steel in Ukraine will be cheaper."

He said this because after the collapse of the Soviet Union, Ukraine's economic situation was worse than Russia's.

During the Soviet era, Ukraine basically only had heavy industry, lacking even a semblance of light industry. Moreover, while the factories were located in Ukraine, the raw materials and fuel were sourced from other republics. This left Ukraine in a situation where even the most skilled cook couldn't cook without ingredients.

In Moscow's container markets, numerous middlemen are transporting goods to Kyiv for resale. This is because price increases in Ukraine are far more severe than in Russia.

Against this backdrop, Ukrainians will sell whatever they can, no matter how cheap it is.

"Hey!" Yura quickly intervened, "Don't say things like that, I was just joking, a joke, you know!"

Ivanov retorted without hesitation: "I don't understand, because this joke isn't funny at all."

Yura had no choice but to apologize, saying, "I'm sorry, my friend, I shouldn't have underestimated the results of your hard work."

Since the collapse of the Soviet Union, relations between Russia and Ukraine have never been truly good.

As long as the Crimean issue remains unresolved, neither side can afford to be friendly with the other.

Yura complained, "Ukraine is shameless for not respecting the Crimean people's own choice; they want to return to Russia."

Ivanov retorted, "Well, the Russian Federation is really shameless. Why doesn't it respect the Chechen people's choice and let them become independent?"

Yura jumped up and down: "That's different. Crimea originally belonged to us. It was that shameless guy Khrushchev who forcibly gave it to Ukraine."

Ivanov sneered: "Whose fault is that? Blame our President for being so eager to kill the Soviet Union. When he signed the treaty, he said the border in 1991 would be the dividing line. Now he wants to back out? Let's go to war! Anyway, our generals are eager to go to the battlefield and make a fortune."

“Hey!” Yura warned him, “Don’t say such terrible things. If our two countries go to war, it will break out into World War III.”

Ivanov unleashed his venomous tongue without holding back: "Then let's fight as soon as possible, while the earth still remembers the Soviet Union, while you haven't completely ruined it. Otherwise, if we fight later, it will just be African tribes fighting each other, and no one will care except the tribes themselves."

Wang Xiao listened from the side, thinking to himself, "It can't be that bad. Even thirty years from now, if you two start fighting, it'll still be a real headache." Even online novelists worry every day about being suspected of political innuendo.

A primary school student is just a primary school student.

She had only been lost in thought and making a comment when the two of them started arguing again.

Tsk, Wang Xiao was really worried that the Russian federal government would have its phone lines cut off because it couldn't afford to pay its phone bills.

After all, international calls are quite expensive.

As Yura continued his rant, he vented his anger on Lenin.

His reasoning was that if Lenin hadn't granted them the right to national self-determination, but instead only allowed them autonomy, Chechnya wouldn't have been able to cause any trouble.

Wang Xiao was stunned.

She had never seen anyone who would kill the enemy and then stab themselves a thousand times.

If there were only the right to autonomy, not the right to national self-determination, the Soviet Union would still be thriving, and the Russian Federation government would have no part in it!

Undoubtedly, Ivanov responded in the same way, and Yura finally quieted down.

Wang Xiao made a quick decision: "Go to sleep early, we have to catch a flight tomorrow."

Frankly, she had no desire to hear Ivanov reminisce about the Soviet Union. In a novel, his repetitive refrains would definitely be considered filler.

Ivanov gave a muffled "Mmm": "I know."

Sigh, that vulnerable posture made Wang Xiao feel sorry for her.

It is said that a woman's sexiness comes from madness, while a man's sexiness comes from vulnerability. Ivanov, in this sense, can easily arouse people's pity, protectiveness, and even destructive desires.

Uh, hold on, hold on, let's be rational and not make things more complicated.

Perhaps it was because she didn't leave immediately that Ivanov got the wrong idea.

He looked up at Wang Xiao earnestly: "Wang, do you think there will be another Soviet Union?"

"I don't know," Wang Xiao said seriously. "Maybe we won't need the Soviet Union. Once productivity develops to a certain level, we'll directly enter a communist society."

Ivanov laughed, a laugh tinged with an indescribable sadness: "Communism, will it really come?"

"Of course." Wang Xiao patted his head, thanking him for sitting on the sofa, otherwise she really wouldn't have been able to touch it.

"Because when productivity develops to a certain level, if humanity does not want to become extinct, it can only take the path of communism."

Otherwise, the Earth would probably be blown to bits.

January 19th, Wednesday, Laba Festival.

Early in the morning, Wang Xiao finished drinking Laba porridge at the hotel and then flew to Beijing.

Yang Tao was waiting at the airport early. When she saw her boss, she tried her best not to tremble.

But the harder she tried, the more heartbroken she became, and she shrank back into fear.

She knew her boss was going to be furious, because no matter how hard she tried, she hadn't been able to acquire even a single piece of land since she came to Beijing.

But she swore she hadn't been lazy; she had racked her brains trying every possible way to acquire the land.

Honestly, she's really envious of Hong Kong and Taiwan now. They can just put a piece of land up for auction, whatever the estimated value is.

Why make a development company negotiate with N people when a problem could be solved with just an auction?

And you think you've negotiated things well, but then the very next day, inexplicably, someone else has taken the land.

Yang Tao felt that all her efforts to improve her alcohol tolerance over the past few months had been in vain. She had spent a lot of money, acquired no land, and gained nothing except for vomiting countless times.

So, when picking up her boss, she didn't dare to even breathe loudly.

If Wang Xiao hadn't asked her, she wouldn't have even had the courage to report on her work.

Wang Xiao pinched the bridge of his nose: "What do you think is the biggest problem?"

Yang Tao stammered, "I feel like they are all circles, and no matter how hard I try to get in, I can't get in."

To put it bluntly, acquiring land through agreements is not about the financial strength of the acquirer, but rather about personal connections and relationships.

She also asked a development company (the land use rights holders for various plots in Beijing are also development companies under the jurisdiction of each district and county), why not just auction them off? Negotiating with each company one by one is too inefficient.

She was told that it was to screen suitable participants. They couldn't just give her land because you had money; that would be detrimental to the area's development.

But she didn't believe that nonsense at all.

She is more convinced that this is leaving an opening for rent-seeking by those in power.

Now, facing her boss, she recounted her experiences, speculations, and insights in detail.

From a business perspective, although she failed to acquire land in Shanghai, she prefers Shanghai.

Instead of pinching his brow, Wang Xiao started massaging his temples.

"Have you ever wondered why such an obvious way of acquiring land, with huge opportunities for rent-seeking, would exist right under the emperor's nose? Never underestimate the intelligence of politicians. What you can think of, they can think of too, and they will most likely think of it even further than you."

Yang Tao opened her mouth, but in the end, she closed it in dejection.

She didn't know.

She couldn't think of any other reason besides the officials' greed. It was only after she went out to discuss business alone that she truly realized just how despicable these people were.

Wang Xiao could only offer a different perspective: "Then tell me, what are the advantages of developing industry in China right now?"

Yang Tao replied without hesitation: "Large population, cheap labor, and a large consumer market."

Wang Xiao pressed further, "Anything else?"

Yang Tao's mind went blank again. Frankly speaking, the advantages of domestic industry are basically in labor-intensive sectors, which rely on the demographic dividend of cheap labor.

Wang Xiao frowned and shook his head: "Can a factory be started as long as there are people? Even the simplest processing industry can't be run without a factory building."

As she spoke, she could barely contain her anger, “You should know which countries and regions are currently the main recipients of foreign investment in China.”

“Hong Kong and Taiwan capital accounts for the vast majority! In addition, Japanese capital is also an important source of foreign investment, and now there is also Singapore. The share of European and American countries is small.”

"What characteristics make countries and regions that make up the majority of the population unsuitable for developing labor-intensive industries? Besides the population costs you mentioned, haven't you considered land costs? Land prices in these places are notoriously high!"

"The consumer market you mentioned is large, but people may not even value it. To this day, many Hong Kong and Taiwanese businessmen in mainland China are still engaged in processing imported materials. They have their own sales channels, and many of them do not even enter the mainland market."

"Why is the government still using negotiated land acquisition methods? Doesn't the government know that land can be sold for a higher price through auctions? Shenzhen auctioned land back in 1987!"

"The reason for not auctioning land is not because the government doesn't like having more money; it's because what the government wants to earn has never been the money from selling land! The government needs to attract foreign investment to develop industry with low land prices. What the government wants is the development of the industrial system and employment, and the tax revenue generated thereafter."

“From the reform and opening up to the present, the key to attracting foreign investment in China’s industries has always been cheap labor and land costs.”

She shook her head. "I'm very disappointed, extremely disappointed. You worked in the trade city and were Mr. Chen's assistant, you should know this."

"You shouldn't make the common mistake of intellectuals: when faced with a problem, you don't think twice and assume that you are the only smart person in the world, and that all government officials are idiots."

"With such arrogant and ridiculous thoughts, you'll fail at everything you do."

"Who gave you the audacity to despise your client?!"

Yang Tao was so desperate she wanted to jump out of the car and escape. She weakly defended herself, saying, "I didn't say these things to anyone else."

Wang Xiao was utterly speechless: "You think you can hide it well in front of officials? Who gave you that confidence? Someone like you can be seen through at a glance."

Yang Tao was both ashamed and embarrassed, her face turned bright red, and she was almost in tears.

However, her boss showed no mercy.

Because if it were a male subordinate, Wang Xiao would criticize him just as mercilessly.

She never felt that women should be given special treatment in normal work; everyone is a member of society in the workplace.

Experience has shown that as long as the employer doesn't openly oppose but secretly encourages it, and assigns tasks based on who makes the most noise, female colleagues won't easily cry in public.

Yang Tao bit her lip hard and stubbornly held on. Even though her voice was choked with emotion, she still continued to express her opinion: "But those are industrial land, what about commercial land and residential land? Why do they need to be designated? They can be auctioned off."

Ivanov was immediately impressed by the girl whose face turned as red as a peach.

Good heavens, to be able to refute the king's criticism is truly commendable.

Wang Xiao wasn't angry. If she couldn't understand something, asking directly was better than talking behind her back or even being outwardly compliant but inwardly defiant.

"You can't expect mature urban planning to be applied to development zones in current domestic cities."

"Industrial land, commercial land, and agricultural land are not strictly classified in our country at present."

“The development zone mainly occupies farmland, and the distinction between industrial land and commercial land is very blurred.”

“Look at the development zones now, the mainstream is to do whatever they attract. If I attract a company to set up a factory today, that’s industrial land. If I attract a company tomorrow to build a modern office building next to it, and a shopping mall will also move in, that’s commercial land.”

"Including state-owned enterprises and collective enterprises, they set up their own stores to sell goods. In terms of usage, is it commercial land? But they are using the factory area, which was originally industrial land."

"There is also the housing issue. To reiterate, the country does not want to make money by selling land; what the government hopes to do is improve the living conditions of residents."

"In 1987, Shenzhen started auctioning land and building commercial residential areas. Who were the buyers? Hong Kong people. Because ordinary people on the mainland generally couldn't afford it. They only earned a few hundred yuan a month, how could they afford a house that cost several thousand yuan per square meter? Everyone was more focused on housing allocated by their work units."

"The commercial housing in other cities in China is basically for foreign sales, targeting overseas Chinese, Hong Kong, Macao and Taiwan businessmen and foreign businessmen, which is also the reason."

"Other new residential housing projects are still mainly welfare housing built by employers and housing built through collective fundraising."

“Auctions can easily drive up land prices, making it even harder to control the cost of building houses.”

"You're right that land auctions are becoming the mainstream. But the timing isn't right yet."

Yang Tao couldn't help but ask, "When will that be?"

Wang Xiao looked at her and suddenly asked a seemingly unrelated question: "Do you know how much the amount of currency in circulation M0 increased in 1992 compared to 1991? And how much increased in 1993 compared to 1992?"

Yang Tao was dumbfounded. She really didn't have a finance background, and she didn't even know what M0 meant, let alone the data.

Wang Xiao rubbed his temples again; the higher the expectations, the greater the disappointment.

Yang Tao was the first college student she heavily relied on. She probably had too much of a bias against college students in the early 1990s and overestimated Yang Tao's ability to collect and analyze information.

"M0 refers to cash in circulation; simply put, it's how much money is circulating in the market."

"The increase in 1992 was 36.4% compared to 1991, and the increase in 1993 was roughly the same as that in 1992."

What happens if there's more money circulating in the market?

Fortunately, Yang Tao did graduate from university on her own merit, so she's not stupid and can answer: "Prices will rise, there will be inflation."

Wang Xiao nodded: "Yes, the government did several things last year. It liberalized the prices of grain, steel, and some state-allocated coal, raised the ex-factory prices of logs and cement, and negotiated prices for some crude oil. In addition, there was tax reform and exchange rate unification. Plus, the government agencies and public institutions carried out salary reforms, which was announced in a document issued by the State Council last month. If government agencies and public institutions are affected, shouldn't enterprises follow suit? All of these combined have increased the costs for enterprises, which is reflected in rising prices."

Xiao Gao sighed, "Things are so expensive these days; prices have really gone up a lot."

Wang Xiao shook his head: "It will rise even more later because the effects of these factors have a certain lag."

She turned to look at Yang Tao again: "So tell me now, what is the country's main task this year?"

"Stabilize...stabilize prices." Yang Tao had worked in the commercial city for two years and knew all too well how terrifying soaring prices could be.

Look at Russia, look at Ukraine; if the government could stabilize prices, things would be very different now.

As soon as she said it, she realized that the government would not auction off land to further stimulate price increases until it had controlled inflation.

Thinking about this, she felt a little desperate. How long would this last?

Wang Xiao had already discerned her unspoken message: "Have you analyzed why the land speculation frenzy occurred in Hainan, and not elsewhere? Think about tax reform as well. Answer me after you've figured it out."

In short, it completely blew Yang Tao's brain out. Her head was spinning; she couldn't understand why her boss would bring up these two things together.

What is the connection between these two?

Wang Xiao wanted to sigh again: "Think about it again, why did a local government-led car smuggling craze occur in Hainan in the 1980s?"

Yang Tao suddenly had a flash of inspiration: "Because Hainan has no money!"

When Hainan was developing, it had nothing but national policy support, so the government took the lead in large-scale car smuggling.

Lei Yu, the person primarily responsible for this matter, was found after investigation to have not profited a single penny for himself or his relatives, so he was only demoted. He was later promoted and is now the Vice Chairman of the Guangxi Zhuang Autonomous Region.

Because of his extraordinary life experiences, Yang Tao's teachers talked about it when he was in college.

By the 1990s, Hainan was still short of money and could no longer smuggle cars, so it turned to land speculation.

Why aren't other places like Hainan? One reason is policy; Hainan, benchmarked against Shenzhen, receives more policy support. Another reason is that other economically developed regions have more ways to make money and don't need to rush to sell land to raise funds.

So when will the government proactively drive up land prices to make money? When the government is short of funds and wants to raise money.

Yang Tao's speech quickened: "On January 1st of this year, the 'Decision of the State Council on Implementing the Fiscal Management System of Tax Sharing' came into effect. Local governments can no longer be responsible for all fiscal revenue. The proportion of fiscal revenue to GDP will increase, and the proportion of central government revenue to national fiscal revenue will also increase."

This is actually normal.

The central government is poor, while the local governments are wealthy. Central ministries can't even pay salaries, so ministers have to lead the way in begging for money in the localities.

You can only say you're begging for alms, never say you're borrowing money.

Because borrowing should be repaid.

When have the loans borrowed by central government ministries been repaid to local governments?

If you can't pay your debts and have to beg for alms to make ends meet, how can your ministry maintain any authority in front of local governments?

If this goes on for too long, it will become too big to handle and cause problems.

But money is like water; when the main river is full, the tributaries dry up. When the central government has more money, the local governments naturally have less. And the more profitable a region is, the more it has to hand over money, much like the most successful child in a large family.

Over time, even the landlord's family ran out of surplus grain.

If local governments want to further expand development, they will inevitably turn their attention to land, just like Hainan.

To put it bluntly, this is also a process similar to a game between the central and local governments.

Thinking about what would happen next, Yang Tao sighed, "Perhaps the central government will follow the example of last year's document that suppressed land prices in Hainan and suppress housing prices in other places."

Wang Xiao thought to himself, "That's right. Why is it that during the era of skyrocketing housing prices, the more policies the central government introduced to suppress housing prices, the more rapidly housing prices rose? One reason is that local governments couldn't let land prices come down."

They're all drowning in debt. How are they supposed to make a living if they don't sell land?

She glanced at Yang Tao and said seriously, "You should have figured out what we've been talking about today on your own. You're a university student, and you should maintain your academic advantage. The common point of the '92 group is their strong ability to grasp policies. You're just like them, you've received higher education, you gave up a secure job to enter the business world. You shouldn't be doing worse than them."

Yang Tao blushed deeply again, wishing she could disappear into the ground.

Ivanov looked at her and remarked that she was indeed lucky.

If it were someone else, Wang Ke might not have tolerated her like this.

Firstly, Zhang is one of Tang's men, and Zhang is doing very well in Shanghai.

If Tao is kicked out in Beijing, then who will take his place?

Those who refuse to replace Tang are clearly hurting his feelings. Tell him directly that the boss wants to suppress him and prevent his influence from growing too large.

However, if the Beijing project is also handed over to Tang's people, then Tang's influence in the group's real estate sector will be too strong. In addition, given his advantages in transportation, he could easily become too powerful to control.

This is not a good thing for him or for the group.

Wang has never been one to willingly work for others.

Secondly, Tao is probably grateful that she is a college student.

In this era in China, university graduates are guaranteed job placement by the state. They are automatically appointed as cadres upon graduation.

Nowadays, Chinese people prefer to hold onto stable jobs, and relatively few college graduates are willing to apply for positions at their company.

Therefore, even if it costs a fortune to buy bones, Wang wants to create an image that makes it easier for college graduates to develop within the group.

In this way, the group can more easily attract more highly educated talents, which is beneficial to the group's development.

My God, what a lucky girl, to still have this opportunity.

But isn't luck a kind of ability?

What Wang Xiao didn't tell Ivanov was that she didn't kick Xiao Tao out of the game directly because she was a woman.

Yes, she admitted she was biased.

Men are always more likely to get the opportunities that society gives them.

So when she has the power to make decisions, why can't she give women more opportunities?

However, it can only be a little more.

She still needs to make money.

The car stopped, and Wang Xiao frowned as soon as he got out.

Oh my god! Nobody told her that the weather in Beijing could be this bad in January 1994.

It wasn't raining or snowing; she would rather it be a mix of rain and snow, at least it could wash away the severe smog.

Seeing the boss frown, Yang Tao subconsciously explained, "It's Shougang. Shougang is in the west of Beijing, so when the wind blows in winter, the sky in Beijing becomes unbearable."

Ivanov winked at Wang Xiao and chuckled, "Wang, it seems China has its own new Kuznetsk."

Wang Xiao grinned and said, "You really overestimate us. There are even more places than Kuznetsk."

Yang Tao instinctively defended Beijing: "I heard Shougang is moving soon, and Beijing is also dealing with environmental pollution. I just don't know where it will move to. I guess it can only be moved into the mountains. Otherwise, it will definitely affect the residential areas."

Wang Xiao glared at her fiercely, his tone unfriendly: "Why move to the mountains? It would be better to move to the island, where you can use water transport and it won't affect the residential areas."

Yang Tao was bewildered by the stare.

She felt that her boss was glaring at her, as if there was something else going on, not just because she had said the wrong relocation location of Shougang.

But what mistake did she make? She really didn't know.

————————

Well, I only have one day off. Well then, have a great weekend!

Note: Here's a little-known fact. On September 9, 1987, the Shenzhen Municipal Government, for the first time, transferred the land use rights of a 5,321-square-meter residential plot to a company for 1.06 million yuan, with a 50-year term, through an agreement. On December 1 of the same year, Shenzhen held its first public auction for land use rights, and a real estate company won the land use rights for an 8,588-square-meter plot for 5.25 million yuan. The biggest challenge facing this reform measure was its constitutionality, as the Constitution explicitly stipulates that land cannot be leased or transferred. The decision was final. The following April, the Constitution added a clause stating that "land use rights can be transferred in accordance with the law." Subsequently, the Land Administration Law was also amended accordingly.

Strictly speaking, both auctions should be invalid.

This was also a gray area in the early days of reform and opening up. From a legal perspective at the time, many of these behaviors were illegal and criminal. If you wanted to catch them, you had to catch them every time.

Furthermore, from 1987 to 1999, Shenzhen sold over 80 plots of land through auctions and tenders, each approximately 10,000 square meters in size. In contrast, the annual area transferred through negotiated agreements was over 1 million square meters. The difference is significant. Land auctions were even suspended in 1995 and 1996. No tenders or auctions were held in 1997. In 1998, Shenzhen's land transfer revenue reached 10.8 billion yuan, but the two tenders and two auctions that year only generated a total of 330 million yuan. Before 1999, 90% of Shenzhen's land was transferred through negotiated agreements at non-market prices.

Furthermore, regarding industrial land, the vast amount of construction land needed for industrialization and urbanization was primarily derived from cheap farmland. During the 1990s, urban and rural construction land increased by 26.4 million mu (approximately 1.67 million hectares), with 81% of this new construction land originating from the occupation of arable land. During the 10th Five-Year Plan period, the nation added 32.85 million mu (approximately 2.87 million hectares) of construction land, occupying 16.41 million mu (approximately 1.17 million hectares) of arable land. In fact, it was precisely the "cheap" rural land and the primarily cheap rural labor force that saved on industrialization costs—this low-cost advantage that Chinese industries maintained for a long time attracted global industrial transfer and procurement, gradually making China the world's "factory."

Local governments, accustomed to "casting a long line to catch a big fish" when acquiring land cheaply, often used low land transfer prices, even zero land price or free land development fees, to attract foreign investment and generate tax revenue. This practice had become a common way for them to "generate wealth through land." Their usual method was to tailor land incentive policies according to the investor's investment scale, annual output value, and spillover effect. Investors with larger investment scales, higher annual output values, and greater spillover effects could obtain more land incentives.

Since the mid-1990s, the battle for low land prices during China's industrialization process has been ongoing. Shanghai, long a leader in the national economy, launched the famous "173 Plan" around 2000, during the peak of investment attraction in the Yangtze River Delta region, to compete with its neighbors for investment. This plan designated a 173-square-kilometer area in the neighboring districts of Jiading, Qingpu, and Songjiang in southern Jiangsu and northern Zhejiang as a "pilot zone for reducing business costs," offering various preferential policies. One such measure was the repeated reduction of industrial land prices, with the transfer price per mu (a Chinese unit of area, approximately 0.165 acres) once reduced to 50,000 to 60,000 yuan, far below the cost of land development.

On December 27, 2006, the Ministry of Land and Resources issued the "National Minimum Price Standard for Industrial Land Transfer," which took effect on January 1, 2007. This move signifies that industrial land in China must be transferred through bidding, auction, or listing, and both the reserve price and the transaction price must not be lower than the minimum price standard corresponding to the land grade of the location.