Coming soon to the US!!
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Does alibaba sell those? I’d like one delivered.
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From a western perspective I think this is true, but the same logic says this bubble should’ve popped years ago. It hasn’t, remotely.
The hard numbers don’t lie with their build at all costs approach. LR GDP growth makes every other nation blush. 30 years ago, Chinese construction was a domestic market only. Now they have some of the largest construction firms and build the world over.
Their middle class is the largest and growing, their production of renewable energy, only begun in earnest in 2009, already leads the world. All that coal we wanted to dig up and ship to China? They won’t need it by the time the terminals to ship it all would be finished. They are playing our game, and in many ways, totally kicking our ass at it.
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How is ‘zombie’ a better analogy than ‘ghost’ for the as yet un-live? Both terms refer to things once living and now dead. If only there were a word for what’s not yet active that is as fashionable as zombie.
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Zombie cities? Zombie? Didn’t they have to be “alive” at one time. These places were dead from the get-go.
Zygote Cities.
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Larval cities?
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I wonder if the build quality and QA were good enough that they’ll be usable in 15 years.
Between the…mixed results…achieved by some of the Brutalists who didn’t realize that honesty to your materials is harder than it looks(especially in the presence of moisture); and the numerous bracing stories of…value oriented…engineering; I wouldn’t be too confident.
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They’d better hope that the American experience is not representative; because it sure looks like they’ve built “the projects” on a scale larger than most cities.
This might be good for Chinese rap production; but is otherwise not an encouraging prospect.
They aren’t playing our game. They are operating under completely different rules that has the government in charge of a demand economy. They have growth targets they need to hit in order to maintain employment levels. Those targets require a certain level of output and right now they are exceeding demand and the surplus is going to building empty cities. It reminds me of when I grew up near a car factory in the 70’s - whenever the economy slowed unsold cars would fill the lot to overflowing and new cars would be parked in fields and along the side of the road. China is doing the same thing, but with cities. They have a high level of control over their economy and citizens. They can force people to relocate, they can absorb bad debts, and take a number of steps to drag things out, but eventually economic reality has to take over - a huge percentage of economic output is dedicated to creating stuff that is sitting unused. If you’re not selling or renting most of your residential construction, you can’t pay your debts. So all those loans are bad and all the banks holding those loans have a problem. Anyone who has already bought one of these new places is probably going to lose a lot of money because prices have to drop to boost demand and absorb the supply, so those loans are probably bad, too. There is also a lot of corruption (I like the story of the official who was caught with so much cash in his apartment they didn’t bother counting it - they estimated its value by weighing it), which increases lower quality projects, increases theft, etc. The amount of economic growth from each billion spent in China has been shrinking for years due the increase in inefficiency, defaults and the decrease in good projects. What will happen when they spend 500 billion dollars and get zero growth?
Well, the official Chinese budget (not the most transparent, for sure, but it’s all we have) for 2016 was roughly $2.2 trillion dollars, and they achieved something like 7.7% GDP growth last year (a down year across the 30 year avg) so I suppose we have the answer to your 500 billion dollar question…
They are most definitely playing capitalism, it’s the only game in town. They are playing by different rules, but they start from a different analytical foundation. What is it about their rules that make them inferior to US counterparts?
The last time the US equaled China’s growth rate, Marky Mark was still in the Funky Bunch. As for corruption, might that be in the eye of the beholder? I can’t be sure your standards, but mine include federal elections financed by the top 10%, bills drafted by corporate lobbyists, and regulatory agencies chaired by corporate insiders (and now the CEOs themselves, after a long layoff.)
Look, I’m not saying China’s perfect-- obviously far from it. But if you wanna compare pure economic outcomes, well…
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All I am saying is that no country is immune to economic forces. China is a demand economy, they have GDP growth targets they need to hit and new construction gives you the biggest bang for the buck. Over time the construction industry has become a huge percentage of their economy as growth moderates elsewhere and they continued to boost construction to hit those targets, which is getting harder and harder to do. They are now sitting on trillions worth of unused residential and commercial properties. That simply can’t go on indefinitely. Unused means no income, tens of millions of surplus units means none of them are worth what people predicted when the projects were initiated. Prices have to come down and inventory has to be cleared, that means financial losses, bankruptcies, write downs, industry contraction and unemployment.
I’ve wondered what the occupancy rate is for all those skyscrapers in Dubai.
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Construction as a percentage of GDP in China is 5%, compared to 4.2% in the US (most recent data I could find quickly was 2015, but I doubt that there is considerable difference between the two now.)
All economies have methods of dealing with over supply and waste. I’m sure you’ve read at some point how much food gets wasted in this country, which gives a hint as to the inefficiency of the sector as a whole. Despite the overall inefficiency of the market, food prices have remained roughly in line with inflation.
I won’t say because I don’t know how the Chinese manage to deal with oversupply, but I will say they’ve managed to confuse far more intelligent people than I. As long as I can remember, I’ve read western popular discourse counting on a Chinese economic collapse, god forbid even just a reentry to the “mature” economies like US, Japan, Germany, etc. and it simply hasn’t happened. I feel confident in saying that at some point in the future, China’s economic boom, now in its 27th year, will be regarded as one of the greatest.
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