December 21, 2024

The Education Revolution: In China, Families Bet It All on a Child in College

His wife, Cao Weiping, toils from dawn to sunset in orchards every day during apple season in May and June. She earns $12 a day tying little plastic bags one at a time around 3,000 young apples on trees, to protect them from insects. The rest of the year she works as a substitute store clerk, earning several dollars a day, all going toward their daughter’s education.

Many families in the West sacrifice to put their children through school, saving for college educations that they hope will lead to a better life. Few efforts can compare with the heavy financial burden that millions of lower-income Chinese parents now endure as they push their children to obtain as much education as possible.

Yet a college degree no longer ensures a well-paying job, because the number of graduates in China has quadrupled in the last decade.

Mr. Wu and Mrs. Cao, who grew up in tiny villages in western China and became migrants in search of better-paying work, have scrimped their entire lives. For nearly two decades, they have lived in a cramped and drafty 200-square-foot house with a thatch roof. They have never owned a car. They do not take vacations — they have never seen the ocean. They have skipped traditional New Year trips to their ancestral village for up to five straight years to save on bus fares and gifts, and for Mr. Wu to earn extra holiday pay in the mines. Despite their frugality, they have essentially no retirement savings.

Thanks to these sacrifices, their daughter, Wu Caoying, is now a 19-year-old college sophomore. She is among the growing millions of Chinese college students who have gone much farther than their parents could have dreamed when they were growing up. For all the hard work of Ms. Wu’s father and mother, however, they aren’t certain it will pay off. Their daughter is ambivalent about staying in school, where the tuition, room and board cost more than half her parents’ combined annual income. A slightly above-average student, she thinks of dropping out, finding a job and earning money.

“Every time my daughter calls home, she says, ‘I don’t want to continue this,’ ” Mrs. Cao said. “And I say, ‘You’ve got to keep studying to take care of us when we get old’, and she says, ‘That’s too much pressure, I don’t want to think about all that responsibility.’ ”

Ms. Wu dreams of working at a big company, but knows that many graduates end up jobless. “I think I may start my own small company,” she says, while acknowledging she doesn’t have the money or experience to run one.

For a rural parent in China, each year of higher education costs six to 15 months’ labor, and it is hard for children from poor families to get scholarships or other government financial support. A year at the average private university in the United States similarly equals almost a year’s income for the average wage earner, while an in-state public university costs about six months’ pay, but financial aid is generally easier to obtain than in China. Moreover, an American family that spends half its income helping a child through college has more spending power with the other half of its income than a rural Chinese family earning less than $5,000 a year.

It isn’t just the cost of college that burdens Chinese parents. They face many fees associated with sending their children to elementary, middle and high schools. Many parents also hire tutors, so their children can score high enough on entrance exams to get into college. American families that invest heavily in their children’s educations can fall back on Medicare, Social Security and other social programs in their old age. Chinese citizens who bet all of their savings on their children’s educations have far fewer options if their offspring are unable to find a job on graduation.

The experiences of Wu Caoying, whose family The New York Times has tracked for seven years, are a window into the expanding educational opportunities and the financial obstacles faced by families all over China.

Her parents’ sacrifices to educate their daughter explain how the country has managed to leap far ahead of the United States in producing college graduates over the last decade, with eight million Chinese now getting degrees annually from universities and community colleges.

But high education costs coincide with slower growth of the Chinese economy and surging unemployment among recent college graduates. Whether young people like Ms. Wu find jobs on graduation that allow them to earn a living, much less support their parents, could test China’s ability to maintain rapid economic growth and preserve political and social stability in the years ahead.

Leaving the Village

Article source: http://www.nytimes.com/2013/02/17/business/in-china-families-bet-it-all-on-a-child-in-college.html?partner=rss&emc=rss

Italy Bond Market as Euro Proxy

But a calmer market should not be confused with an optimistic one. Investors are still deeply worried about Italy’s mounting political and debt financing woes.

Even the seeming rallying point on Thursday — Italy’s ability to sell out an offering of 5 billion euros in one-year bonds — had a dark side. The interest rate was 6 percent, up from 3.5 percent only a month ago.

In fact, investors and analysts say, the very depth and sophistication of Italy’s 1.9 trillion euro ($2.6 trillion) bond market, the third-largest in the world after the United States and Japan, has made it a proxy of sorts for the euro zone’s deeper problems. Those include the possible exit of Greece from the euro and Germany’s resistance to assuming a larger financial burden in rescuing weaker economies.

Investors have been dumping Italian bonds that they own, and ramping up their negative bets by selling Italian bond futures as well.

The Italian bond market is the only large market in the euro zone outside of Germany to offer investors the ability to buy or sell futures contracts. That has allowed many investors to use Italian futures to place bearish bets on Italy, and as a proxy for the broader euro zone itself.

“The futures market for Italian bonds has become the main conduit now for all investor angst with regard to the euro zone,” said Yra Harris, a trader at Praxis Trading on the Chicago Mercantile Exchange.

In what has become a highly volatile trading environment, investor fears can shift sharply, turning sellers into buyers, especially if it becomes clear that the European Central Bank has started buying bonds. That is why, after Italian 10-year yields touched a dangerously high level of 7.4 percent on Wednesday, word that the bank had started buying the bonds sent yields as low as 6.7 percent on Thursday.

Market jitters were also calmed by indications that Italy was moving closer to appointing a new government with a revamped legislative initiative, making it more likely that the European Central Bank will follow through with additional Italian bond purchases. And further soothing came from the resolution of the Greek political drama, with the appointment of Lucas Papademos, the former vice president of the European Central Bank, as the country’s new prime minister.

Still, European officials are keeping the pressure on Italy. At a news conference Thursday, Olli Rehn, the European Union commissioner for economic and monetary affairs, insisted that Italy’s meeting its fiscal targets and adopting structural reforms was a “sine qua non for restoring confidence in the Italian economy.”

At the root of this confidence drain is the substantial size of debt that Italy must raise from local and foreign investors next year alone: about 350 billion euros. That is about the size of Greece’s total debt.

Over the years, Italy has become a very efficient debt-raising machine, with more than 50 percent of its financing needs met by local banks and investors.

But a substantial amount still must come from foreign investors, which in the past have largely been major European banks. Now these banks are selling their positions to avoid the prospect of having to book losses from their reduced value. And if they are continuing to participate in new bond auctions, as with Thursday’s one-year offering, they are demanding much higher interest rates.

Meanwhile, the negative betting continues. According to officials at Eurex, Europe’s main derivatives exchange, the market for Italian bond futures has increased substantially of late, to as much as one billion euros a day. That is more or less the same size as the market for buying and selling Italian bonds directly.

Many people entering into these futures trades are doing it for hedging purposes or to protect their portfolios if Italy defaults.

But as broader worries about Greece are added to the concern that Italy may no longer be able to finance its debt burden, traders have started to sell Italian bond futures directly — a bet that the euro zone itself might collapse and that Italian bonds will continue to lose value.

Louise Story contributed reporting from New York.

Article source: http://feeds.nytimes.com/click.phdo?i=16ed1dce76936e7b5ef36c0d4a2bfbd6

You’re the Boss Blog: Pet Chauffeur Tries to Adapt to Tough Economy

The recession has not been kind to the pet industry. While their finances are in flux, pet owners are less likely to splurge on toys or grooming, and fewer vacations spell empty kennels at the boarding house. In fact, prospective owners are less likely to take on the financial burden of a new dog or cat to begin with.

As you can see in the video above, David Lang, owner of a Manhattan business called Pet Chauffeur, is keenly aware of these challenges. Fifteen years ago, Mr. Lang noticed that the subway system’s vast ridership included few dogs. Passengers can bring small pets on board in carrying cases, but owners of larger dogs cannot travel with their pets by subway, bus or taxi. Sensing he could fill a void, he founded Pet Chauffeur, a taxi service for animals, in 1996.

From his home office on East 36th Street, Mr. Lang coordinates a fleet of four orange-and-blue minivans and a staff of 12 dispatchers and drivers. Customers have the option of riding along with their pets, but many choose not to, leaving the drivers to learn their dogs’ idiosyncrasies first-hand. And dogs are not the only animals getting a lift: Pet Chauffeur has transported everything from leopards to bulk shipments of lab rats. But dogs are the most frequent riders, and Mr. Lang says the most popular destinations are veterinary clinics, grooming salons and boarding kennels.

The bulk of Pet Chauffeur’s $1 million annual revenue comes from its business in New York City, but its vans have traveled as far as Florida, and the company also coordinates the shipping of animals by air. Because many of his customers live in Manhattan’s tonier neighborhoods, Mr. Lang hopes to sell ad space on his vans to luxury retailers. “I got vans running up and down Fifth Avenue all day long,” he said. “Who wouldn’t want their perfume on top of a Pet Chauffeur?”

Despite these plans, Mr. Lang is wary of expansion. He used to run a boarding service and a pet supply retail Web site, both of which failed to weather the recent recession. He now concentrates all of his effort on transportation and has adapted his company to the new economic context in two ways: first, he targets high-end customers. In 2008, he came to the conclusion, “now’s the time to get rid of the people who don’t want to pay for our service anyway, and up the price, and go with the high-end people that want our service.”

Pet Chauffeur’s other post-recession adaptation is to collaborate with competitors. If Mr. Lang is unable to arrange a pick-up for a customer, he will refer that person to companies like Tim’s Pet Minivan or Tony’s Canine Cab. Because the pet taxi industry represents such a niche service, Mr. Lang said, he’d “rather see someone go with the other guy than not go at all.” Mr. Lang added: “Anyway, we’ve got the best service, so they’ll come back to us in the end.”

Article source: http://feeds.nytimes.com/click.phdo?i=33e44855f6e4a00aaf1f1979ed69f256