China's Ghost Cities and Malls(sbs.com.au)
sbs.com.au
China's Ghost Cities and Malls
http://www.sbs.com.au/dateline/story/about/id/601007/n/China-s-Ghost-Cities
7 comments
My wife is from Dalian. I've spent a lot of time there, -nice city.
I just returned from Shanghai and Sanya. There are a lot of dark apartments in Shanghai at night. I know a few Chinese who own multiple apartments, some more than 10, most of these are empty. There are limits to how much they can invest overseas, and I believe investment in real-estate is greatly increased by this.
I feel they have a real-estate bubble of incredible proportions. Everyone talks real-estate too much, and there are too many advertisements for new developments. I don't think this will end well.
I just returned from Shanghai and Sanya. There are a lot of dark apartments in Shanghai at night. I know a few Chinese who own multiple apartments, some more than 10, most of these are empty. There are limits to how much they can invest overseas, and I believe investment in real-estate is greatly increased by this.
I feel they have a real-estate bubble of incredible proportions. Everyone talks real-estate too much, and there are too many advertisements for new developments. I don't think this will end well.
I live in China right now, Shenzhen. It's amazing to see how many real estate agencies there are here. Every single street corner has one, they're more prevalent than any fast food chain. Inside each agency, there are maybe four to a dozen people working. All trying to sell apartments.
One of my friends is a real estate agent. She told me recently that she and a friend had purchased a condo.
Me: Oh, so you're going to move in there soon?
Her: No, no.
Me: Oh, you're renting it out to tenants?
Her: No, no. If someone lives in it, then the value goes down. So we're going to keep it empty and then sell it next year or in a couple of years.
This cannot end well.
One of my friends is a real estate agent. She told me recently that she and a friend had purchased a condo.
Me: Oh, so you're going to move in there soon?
Her: No, no.
Me: Oh, you're renting it out to tenants?
Her: No, no. If someone lives in it, then the value goes down. So we're going to keep it empty and then sell it next year or in a couple of years.
This cannot end well.
My understanding is that there's no property tax in China [1] which makes holding empty property a lot more attractive than it is here.
[1] I lived in China for years, but I learnt that here: http://yglesias.thinkprogress.org/2010/06/china-eyes-propert...
[1] I lived in China for years, but I learnt that here: http://yglesias.thinkprogress.org/2010/06/china-eyes-propert...
Serious question: how do I buy a Chinese credit default swap?
I don't believe it is possible. I've considered alternate ways of leveraging this. Right now the Australian dollar is supposedly propped up high by selling commodities to China: http://www.ibtimes.com/articles/128654/20110330/australian-d... That seems one way for a non-Chinese investor to put chips on that number.
Geez investing is so cynical. :/
Geez investing is so cynical. :/
Anybody know what Michael Burry's up to these days?
You could also short our two big mining companies, BHP Billiton and Rio Tinto.
But most of China's raw materials importing is driven by their huge expert market, how would a collapse of domestic spending affect that? Isn't it everyone else that's buying Chinese goods that's driving the demand for resources?
China already has a large and fast-growing domestic market.
Insofar as they want to build apartment blocks and manufacture cars for Chinese consumers, the Chinese need steel. For that they need iron ore, and for iron ore Australia and Brazil are the main sources.
Insofar as they want to build apartment blocks and manufacture cars for Chinese consumers, the Chinese need steel. For that they need iron ore, and for iron ore Australia and Brazil are the main sources.
> I feel they have a real-estate bubble of incredible proportions.
It's bad, but I think it seems worse than it is. Reason is that in East Asia buildings that have been lived in are considered "used" and therefore less valuable than a new one. So whereas in the West an investor would get himself a little pocket money by renting his building out, in the East they keep it empty to keep its value up.
It's bad, but I think it seems worse than it is. Reason is that in East Asia buildings that have been lived in are considered "used" and therefore less valuable than a new one. So whereas in the West an investor would get himself a little pocket money by renting his building out, in the East they keep it empty to keep its value up.
What occurred to me while reading the article was this: There is a value in cities, and much of that value is density i.e. concentration. Not just of people but of industries: NYC and fashion, publishing, finance—everything, really. Silicon Valley and technology. And so on. I've recently read—wish I had the reference at hand—that even smaller cities provide concentration value.
As I drive into NYC and the skyline comes into view it humbles me as a Philadelphian. But then I think about those infographics—featured on HN, of course—showing how China is birthing a New York every twelve days or whatever the duration is, and I wonder: Will NYC cease to be relevant?
There is more than a little home-town pride at stake, and not the way you think: in the (nonexistent?) fight between NYC and the Valley, I am New York all the way. I deeply want New York to matter.
And so that colors my thinking, but, back to this article, I wonder: Building an city, or even building and filling a city with people, does little if it doesn't sort people and industries out in a way that makes them more efficient, more vital.
Again, I'm a Philadelphia. Everyone from West Philly says, "Oh, I love West Philly. The trees! The parks!" I love trees, I love nature, whatever that is. But I disagree with these people with their love affair with Philadelphia West of the Schuylkill River. I love people, people in quantities and densities that don't exist over there.
I don't discount the benefits of living in West Philly, or even a Chinese ghost city—all night parties without neighbors!—but you—we, society, humanity—lose something, or you don't gain something, when we put people in close proximity to each other in ways the lead to fruitful exchanges.
As I drive into NYC and the skyline comes into view it humbles me as a Philadelphian. But then I think about those infographics—featured on HN, of course—showing how China is birthing a New York every twelve days or whatever the duration is, and I wonder: Will NYC cease to be relevant?
There is more than a little home-town pride at stake, and not the way you think: in the (nonexistent?) fight between NYC and the Valley, I am New York all the way. I deeply want New York to matter.
And so that colors my thinking, but, back to this article, I wonder: Building an city, or even building and filling a city with people, does little if it doesn't sort people and industries out in a way that makes them more efficient, more vital.
Again, I'm a Philadelphia. Everyone from West Philly says, "Oh, I love West Philly. The trees! The parks!" I love trees, I love nature, whatever that is. But I disagree with these people with their love affair with Philadelphia West of the Schuylkill River. I love people, people in quantities and densities that don't exist over there.
I don't discount the benefits of living in West Philly, or even a Chinese ghost city—all night parties without neighbors!—but you—we, society, humanity—lose something, or you don't gain something, when we put people in close proximity to each other in ways the lead to fruitful exchanges.
You have to get the people there. This is something that "organic" cities like London, New York and Paris can do well, because there is a "virtuous circle" in action - people want to be at the centre of culture, culture costs money, these cities can attract the wealth creators who want to spend their wealth, and so it continues. Culture being whatever you're into, art, opera, fashion, publishing, fine dining... Cities like these are dynamos of both productivity and pleasure.
But in a sterile, planned city, that is initially empty... How do you get the ball rolling? How do you initially attract the people who can work anywhere in the world? The three cities I mentioned, and a few others, have solved that.
But in a sterile, planned city, that is initially empty... How do you get the ball rolling? How do you initially attract the people who can work anywhere in the world? The three cities I mentioned, and a few others, have solved that.
You say solved, but there was nothing to solve in your example cities since they were not planned or built from whole cloth (yes there were plans - the NYC grid, the Paris hub-and-spoke - but the cities, as you point out, grew and evolved).
Of course there was something to solve. London is 2000 years old, but NYC is much more recent. How did it become the hub for finance and media when there's Boston to the north and Washington to the south?
NYC had a better port. Back when this mattered, a deep-water port at the end of the Hudson river was a big deal (D.C. was never in the running, but up until 1815 or so Boston and Philly were bigger commercial centers than NYC.) For the first 100-150 years of its existence the early colonies traded more with England than with each other, so a good port was a necessity for a city but it did not need much else beyond that. Post-revolution most trade was still external rather than internal but England and France shut down most of this trade during the Napoleonic wars. At this point the advantage went to NYC because by sitting at the end of the Hudson river it was able to serve as the trans-shipment point for goods coming down from the Hudson river valley out to the other states. After the Gibbons v. Ogden court case established federalist supremacy over interstate commerce the maritime merchants of NYC were better positioned than their competitors in Boston, Philly, or Baltimore to take advantage of this explosion of commercial opportunity.
The reason people gathered at a certain buttonwood tree in lower manhattan was to trade shipping interests -- early finance was all about commercial shipping and the fact that NYC was an early leader in shipping led to the development of a finance hub and the two sides of the same coin propped each other up.
The reason people gathered at a certain buttonwood tree in lower manhattan was to trade shipping interests -- early finance was all about commercial shipping and the fact that NYC was an early leader in shipping led to the development of a finance hub and the two sides of the same coin propped each other up.
So how would you do this today? A better airport?
Here in England there is growing concern that Heathrow is stifling growth in London as it doesn't have capacity anymore and expanding it is politically infeasible. So it's not a far-fetched scenario...
Here in England there is growing concern that Heathrow is stifling growth in London as it doesn't have capacity anymore and expanding it is politically infeasible. So it's not a far-fetched scenario...
The question that comes to mind - are they building a new NYC every 12 days or are they putting up a whole lot of building every 12 days? To borrow a cliche, NYC was not built in a day (or even 12 days) - it's an accretion and a culture. How does that change the question 'will NYC cease to be relevant'?
That was what I was thinking: just as nine women can't have a baby in one month, you cannot create a seething furnace of urban synergy by just throwing a bunch of infrastructure together. It's like giving a kid a cupcake liner filled with raw batter: you're going to make him cry.
I don't see NYC or any of the other regions mentioned—London, Tokyo, the Valley—becoming irrelevant anytime soon. I doubt any city is going to steal the title of "Capital of X" from any of them, though the industries that drive the success of these cities may wane—and wax and wane and wax and…—new cities (or existing cities) will rise to prominence due to the development of new industries and new ways of working.
One of the ironies that always struck me about the Valley was that much of it was built on the dream on making distance no longer matter. Instant, global, paperless, tele-blah, and on and on. Yet the Valley continued (and continues) to matter.
What we think of as technology really isn't technology any longer, in any meaningful sense. Pencils and paper are technology, yet CTOs don't control the stationary cabinet. I've asked, sarcastically, CTOs why they don't show more interest in the legal pads and ballpoint pens, to make a point: computers and phones are no longer perceived as technology but as things.
And as things, along with other newly-just-a-thing things like web apps and virtualized servers and storage and clusters, the history and dynamics that favor the Valley don't necessarily support the sort of innovations that are going to make a big difference.
That's why the New Yorker article on Nick Denton, who, according to the article, is trying to bring a television-like time model to web advertising—and is working to kill the impression model—is so interesting. It details a guy that's using technology—yawn, programmers—but has internalized and is working to forward the interests of a completely different culture.
Of course, the existing web advertising mindset is a product of the application of the paper publishing world's advertising models, which just goes to show that as time passes it's less about how any given technology technology wants us to think but how we make sense of that technology.
So maybe the sorts of things that come out of the Valley will change. There's an understatement. Of course they've already changed!
Place has a huge role in shaping what happens. Where you live affects the way you think about the world. The way you think about the world affects where you want to live. (See Slate's "The Big Sort" coverage.) Until a city has a distinct worldview, a Weltanschauung, that draws people and changes them—and the rest of the world—it doesn't really matter.
I don't see NYC or any of the other regions mentioned—London, Tokyo, the Valley—becoming irrelevant anytime soon. I doubt any city is going to steal the title of "Capital of X" from any of them, though the industries that drive the success of these cities may wane—and wax and wane and wax and…—new cities (or existing cities) will rise to prominence due to the development of new industries and new ways of working.
One of the ironies that always struck me about the Valley was that much of it was built on the dream on making distance no longer matter. Instant, global, paperless, tele-blah, and on and on. Yet the Valley continued (and continues) to matter.
What we think of as technology really isn't technology any longer, in any meaningful sense. Pencils and paper are technology, yet CTOs don't control the stationary cabinet. I've asked, sarcastically, CTOs why they don't show more interest in the legal pads and ballpoint pens, to make a point: computers and phones are no longer perceived as technology but as things.
And as things, along with other newly-just-a-thing things like web apps and virtualized servers and storage and clusters, the history and dynamics that favor the Valley don't necessarily support the sort of innovations that are going to make a big difference.
That's why the New Yorker article on Nick Denton, who, according to the article, is trying to bring a television-like time model to web advertising—and is working to kill the impression model—is so interesting. It details a guy that's using technology—yawn, programmers—but has internalized and is working to forward the interests of a completely different culture.
Of course, the existing web advertising mindset is a product of the application of the paper publishing world's advertising models, which just goes to show that as time passes it's less about how any given technology technology wants us to think but how we make sense of that technology.
So maybe the sorts of things that come out of the Valley will change. There's an understatement. Of course they've already changed!
Place has a huge role in shaping what happens. Where you live affects the way you think about the world. The way you think about the world affects where you want to live. (See Slate's "The Big Sort" coverage.) Until a city has a distinct worldview, a Weltanschauung, that draws people and changes them—and the rest of the world—it doesn't really matter.
They have a "build it and they will come" policy. But really I can't understand how apartment prices keep rising here so quickly, surely there must be a crash.
There will undoubtedly be a crash. Prices are rising for two reason:
-Speculative buying (that's the cause of all the empty appartments in places no one wants to buy)
-Cultural reasons. When a guy wants to marry a girl, he has to own his own appartment. No when, no ifs, no but. If a girl were to marry a guy with no apartment her whole family would lose face. Because of the sex imbalance in China, there is a large "demand" of girls, and little "supply", so the "price" (quality, location and numbers of appartments) keeps rising. So this means parents of boys are constantly upping the ante, to get more and bigger appartments to try and ensure their son gets married. (my girlfriend is Chinese, so I am very aware of these issues...)
While the first reason would seem to indicate that the bubble would burst sooner rather than later, the second one seems to indicate that demand for appartment won't fall anytime soon.
-Speculative buying (that's the cause of all the empty appartments in places no one wants to buy)
-Cultural reasons. When a guy wants to marry a girl, he has to own his own appartment. No when, no ifs, no but. If a girl were to marry a guy with no apartment her whole family would lose face. Because of the sex imbalance in China, there is a large "demand" of girls, and little "supply", so the "price" (quality, location and numbers of appartments) keeps rising. So this means parents of boys are constantly upping the ante, to get more and bigger appartments to try and ensure their son gets married. (my girlfriend is Chinese, so I am very aware of these issues...)
While the first reason would seem to indicate that the bubble would burst sooner rather than later, the second one seems to indicate that demand for appartment won't fall anytime soon.
Yes, this is the other reason for China's interest in Africa. It's not only minerals they're interested in... But also doing something about ~50M young Chinese men who will never be able to marry a Chinese girl. No-one ever thought about the long term effect of a one-child policy + a cultural preference for sons (or they'd simply have passed laws incentivizing daughters). I can't imagine the locals will be too happy when they figure this out...
I don't think you can say that these 50M guys simply won't get married.
Have you thought about what would happen if china lowered the marriage age for women? 50 million+ new women in the marriage market. Problem delayed.
There's already age disparity in chinese marriages. The idea that millions of young men simply won't get married is absurd. They'll just wait longer, or expand the group of women they're willing to marry.
And I assume you're joking about chinese men marrying african women.
Have you thought about what would happen if china lowered the marriage age for women? 50 million+ new women in the marriage market. Problem delayed.
There's already age disparity in chinese marriages. The idea that millions of young men simply won't get married is absurd. They'll just wait longer, or expand the group of women they're willing to marry.
And I assume you're joking about chinese men marrying african women.
Indeed, delayed not solved.
I don't necessarily mean marrying African women (tho' why not? historically colonists have always enthusiastically intermarried) but being out of China and working on labour-intensive projects like major infrastructure. Societies with lots of frustrated young men in them tend to go horribly wrong, Afghanistan is an example, in a society where there is a shortage of women anyway due to cultural reasons (e.g. healthcare), and successful men have 4 wives, and there is no social scene for teenagers and certainly no extramarital sex, what do the young men do? They run off into the mountains and it all goes a bit Lord of the Flies.
I don't necessarily mean marrying African women (tho' why not? historically colonists have always enthusiastically intermarried) but being out of China and working on labour-intensive projects like major infrastructure. Societies with lots of frustrated young men in them tend to go horribly wrong, Afghanistan is an example, in a society where there is a shortage of women anyway due to cultural reasons (e.g. healthcare), and successful men have 4 wives, and there is no social scene for teenagers and certainly no extramarital sex, what do the young men do? They run off into the mountains and it all goes a bit Lord of the Flies.
I always figured North Korea would be the obvious target for that kind of exploitation.
Was your girlfriend born in China? It seems this kind of mentality has gradually changed with the rise of the communist regime. China is now one of the most feminist countries in the world with women and men on equal feet in most spheres of society. My girlfriend is also Chinese, has always lived in China and as far as I know, her family doesn't care whether I own an apartment or not. Perhaps the rules are different for foreigners...
You're white, for most Chinese families that is very good, better than owning an apartment. Plus you're from Canada, that is automatic opportunity for their daughter and the rest of her family. Given Canada's preference for uniting families in immigration policy if you marry her then the better part of her immediate family gets in much easier.
Some of my friends (guys no less) get paid to go to clubs in China just because the owner wants to associate it as a place white people go.
Some of my friends (guys no less) get paid to go to clubs in China just because the owner wants to associate it as a place white people go.
I married my Chinese wife last year & I understand perfectly well that a lot of compromised had to be made by the family just because I'm a Westerner. I own a flat, back home in Europe, but it's not paid off 100% so "that doesn't count". Also, in their eyes, instead of me tucking away a few 100000 in my propety they see a few 100000 "lost" because I invested in European real estate and not Chinese real estate. I spent a few days in a newly-built 'city' of summer houses just outside of Shanghai. Lots of places that people don't even bother to fully furnish since they are planning to flip them anyway.
The rules are definitely different for foreigners.
You are assumed to be wealthy or at least a very good bet to eventually be wealthy.
As well, you can guarantee citizenship in a First World country. Have you encountered the term "filial piety" yet?
You are assumed to be wealthy or at least a very good bet to eventually be wealthy.
As well, you can guarantee citizenship in a First World country. Have you encountered the term "filial piety" yet?
I guess most spheres excludes family, the most important one for some people. Take for example homosexuality. You can work with, play with, and be friends with a gay person. But come out to your family and start dating someone of the same sex is a big problem.
Apparently,even though you have a chinese girlfriend,you don't seem to understand much about Chinese people or culture. Trust me, everyone of her family care about whether you own (or have the ability to own) an apartment or not (including their dog if they have one) though I doubt they will say it to your face.
Probably depends on the family. In my case (she was indeed born in China), it's not so much her parents as her who cares a lot about that.
When discussing the characteristics of their ideal husband, Chinese girls will occasional joking (not really) say, "有车，有房，父母双亡”。 Which means, "[He] has a car, a house, and both of his parents are dead." Filial piety is hard work.
So... what measures is the American government taking to protect themselves from the rapid cashing in of Chinese-held American bonds that will follow China's seemingly inevitable bubble-bursting?
There is an excellent presentation by high profile short seller James Chanos on betting against China: http://www.youtube.com/watch?v=99HNFCn5RP8
(from a year ago). About an hour long, but well worth it.
Edit: I meant to say, the focus of his talk is mainly details of the property bubble. Great information.
(from a year ago). About an hour long, but well worth it.
Edit: I meant to say, the focus of his talk is mainly details of the property bubble. Great information.
I wonder if such places will end up like Kowloon walled city. When there is no one around it's easy to sneak in. And the poor are in need of a home (because they demolished there home building these cities).
(http://en.wikipedia.org/wiki/Kowloon_Walled_City)
(http://en.wikipedia.org/wiki/Kowloon_Walled_City)
Why have I not heard about this before? This really makes me doubt China's growth (which is all you hear about these days) even more.
[deleted]
The same cannot be said for the rest of the country. Many apartments are owned by companies anticipating renting the rooms to their workers. One of the buildings I was initially staying in was a dorm room sharing with other developers in my team. With wages so low it was difficult if not impossible for many of them to afford an apartment.
Many other apartments are owned by overseas Chinese, investing in their locality, awaiting their return.