Chinese Ghost Cities
Recent statistics show that there are about 64 million apartments and houses that have remained empty during the past six months, according to Chinese media reports. On the assumption that each flat serves as a home to a typical Chinese family of three (parents and one child), the vacant properties could accommodate 200 million people, which account for more than 15% of the country’s 1.3 billion population. But instead, they remain empty. This is in part because many Chinese believe that a home is not a real home unless you own the flat
http://www.businessinsider.com/there-are-now-enou…
And now for some fun satellite imagery:
http://www.businessinsider.com/pictures-chinese-g…
So what do you guys think? People have been claiming a Chinese bubble for a while now, but it just keeps bruising along. Do you think this could have a serious risk of shock for the Chinese economy?
The Chinese have some serious issues that their government is able to mask. Not saying that China is going to blow up, but I think some of the growth projections are a little too optimistic.
Actually, George Friedman, founder/owner of Stratfor (a private geopolitical intelligence agency-basically a private CIA) believes that China will completely fall apart in the next 10-20 years.
Yep. The growth figures are absolutely exaggerated, and to a pretty large degree.
Wasn't there a leak about a finance official from China using power usage and transport as indicators of GDP because he didn't believe the official figures?
How about the disproportionate amount of males because of the one child policy. I can imagine the rage of a 100MM unemployed men who cannot get laid.
Many of the vacant properties are unlivable (they structurally exist, but they haven't been fit-out and the buildings aren't even completed) and also 64 million is the highest estimate I've seen.... 25 million is more consensus... There is really no bubble outside of certain sectors in first tier cities.
full disclosure: I am in REPE in China and my firm specializes in investing in mass residential developments
house of cards
I think it is inevitable that the Chinese will have a bubble. They already have a human bubble, it is only a matter of time before they have a financial.
How about the ability of the gov to fudge numbers and engineer a softer financial landing? Control your populace? Remember things don't really act the same way in China as a textbook free and open market should.
I agree with you, I actually think the bubble is currently formed and going. Just a matter of how long can they keep this going and when is the NPV so negative that the people that own the unrented/lived in apartments and the companies that own them feel the pain?
BTW 99% unleased since open in 2005????????:
http://en.wikipedia.org/wiki/New_South_China_Mall
See, I think the Chinese will be able to keep things afloat longer and mask things, but all that will do is make the bubble bigger. Eventually things pop. We injected over a trillion USD into this economy and we still crashed really hard.
Ag prices are killing the Chinese. I just read it today in Gartman. They are releasing grain supplies to the interior of the country to keep them from being hurt by the prices, but they have to pay market prices to replenish the warehouses.
Lot of issues going on. I am still very bullish on China and think they are doing a lot of good. Just am not all fanboy like some people.
People sweat China way too much. This isn't Britney Spears people.
So to the first point again I agree there will be a pop, I'm sooner then later though, forgot about the grain situation. Recent domestic yields there are suppose to be down, wasn't aware of the dispersals.
They don't play by the same game though. BTW top 8 Chinese companies by market cap are all state controlled...
Chanos on the subject: http://www.bloomberg.com/news/2010-12-17/chanos-says-china-property-boo…
Love his commentary on it all but he has been bleeding hard on some shorts in China, not the only one though.
This reminds me of an article I saw recently regarding the centenarians in Japan. For years their life expecteancy has been greater than most nations because the metric was anchored so heavily by a massive amount of centenarians running around the country. The article I recently read said they have been unable to find tens of thousands of these people...like they don't exist, or no longer exist, or never existed in the first place.
Unyielding pride is great when it comes to creating text devouring, equations churning student robots but when you go so far as to risk your credibility so it seems the people of your nation longer than anyone else, then it's a problem. Same thing in China, there is so much hype surrounding them, some of which is true, but like a Ponzi scheme, you just have to keep going until the wheels fall off and just hope that isn't anytime soon. We all foresee issues with China going forward (poor infrastructure, too many dudes, etc, etc) it's really just a question of whether they are able to ride the wave to the shore without dumping off the board.
As far as the South China Mall is concerned, that serves as a perfect example, in my mind, of what the US government would do if there were no checks and balances. They have these great visions of "if you build it, they will come", which is fine if you are putting up your own money, and boosting the economy by providing jobs, etc but there is no real analysis because there are no consequences for them. When you are spending tax payer dollars you just keep collecting and diverting the money here and there and as long as no one turns off the spigot, you are good to go. Giant fucking Ponzi scheme.
Regards
Would love to live in one those of cities be like Will Smith in I am legend
Fascinating images. We should ship all our homeless people to China! (Joking)
Is it possible to rent this empty museum as an appartment?
I can write my thesis everywhere in the world and it would be a lot more fun wrting it in a super-scale museum with tons of girls throwing parties for me every night rather than a silly flat.
So if anyone has contact information, I would like to rent that thing for 5 bucks/month.
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