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Overbuilding in China
Old 05-30-2011, 07:28 AM   #1
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Overbuilding in China

Saw a story on TV this morning (one of the early shows) about all the building going on China. Seems like the government over there has something going to just keep building apartment buildings and noone to live in them. One city has 100K people and enough apartment buildings for 300K residents and they are still building.

I didn't catch the whole story and I'm hoping for a rerun of that on the news tonight. It wasn't NBC because I usually watch that channel. Must have been ABC or CBS.

Anybody know what as going on over there? One part of the story had to do with how it is going to affect the world economy. I don't get it.
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Old 05-30-2011, 09:57 AM   #2
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My wife and I just returned from China. We hired a driver to take us around Beijing and the surrounding areas. We noticed several small towns with "many" empty condos and it appeared there was not enough population in the area to support the empty condos, ie., there were few houses, minimal shopping areas and I did not see many factories. I asked the driver if these were built for workers to commute to their jobs in Beijing and he said no because it would take way too long to commute due to traffic. Anyway, I thought it was odd there were so many empty condo buildings and some were still being built.
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Old 05-30-2011, 09:58 AM   #3
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They have to recycle all those USD's we stuck 'em with somewhere. I guess concretedollar recycling is the new petrodollar recycling.

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Old 05-31-2011, 10:16 AM   #4
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Perhaps they are preparing for the results of the repeal of the one child law.

Correction: that law is not being repealed.
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Old 05-31-2011, 10:56 AM   #5
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They are trying to keep the excess population of young male workers occupied, in hopes of avoiding political upheaval.

Most likely result is a giant bust that cannot be stopped, or a shift to a more militant external posture, thus using up a lot of young men to make mischief around the world.

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Old 05-31-2011, 02:27 PM   #6
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Ghost towns of China -

Ghost towns of China: Satellite images show cities lying completely deserted | Mail Online
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Old 05-31-2011, 05:20 PM   #7
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Ghost towns of China -

Ghost towns of China:
Reading this article, I interpret it to mean that the Chinese have discovered how to make people invisible.
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Old 05-31-2011, 05:34 PM   #8
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If the ghost towns are around the Gobi (I didn't check this), maybe they are connected to China's desertification problem.
Quote:
A senior Chinese official has said it will take 300 years to turn back China's advancing deserts at the current rate of progress.
BBC News - China official warns of 300-year desertification fight
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Old 05-31-2011, 05:34 PM   #9
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That is a bit disturbing, imagine an asian sub-prime mortgage crash (or whatever is fueling this building) that is 3-4x worse than what occurred in 2007-present.
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Old 05-31-2011, 06:26 PM   #10
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Thanks for the photos. I recall a couple of these were used in the news report I saw on TV. The whole thing is perplexing to me.
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Old 05-31-2011, 11:20 PM   #11
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Here's a 15 minute video by Australian TV's Dateline on China's Ghost Cities and Malls. Perhaps the show you saw?



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Old 06-01-2011, 12:06 AM   #12
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Here's a 15 minute video by Australian TV's Dateline on China's Ghost Cities and Malls.
Very interesting, but also rather confusing. Some complain that the government sets the prices too high, and others complain that the government lets the prices be set (too high) by speculators. Some complain about a bubble which will burst when owners cannot pay what they have promised to pay, and others complain that there aren't any owners, because no one can get credit to buy. What are the awful consequences of building dwellings that no one can afford? It would obviously be better if people could buy them, but if they can't, what happens then?
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Old 06-01-2011, 07:04 AM   #13
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I think that the Chinese property market got overheated, based on what I have heard. However, my guess is that what is happening is lopsided growth/development, which is probably more of a constant problem in a system where prices are not set by the marginal buyer and seller. I note that amid a significant electricity shortage (and concommitent coal shortage) the regime just recently relented and allowed what I believe will be the first of several electricity price increases to allow the power market to respond to demand. More power means that steel and other factories which have been shut due to power shortages can reopen, and on goes the cycle. IOW, I think we are seeing the downsides of a planned economy, rather than some sort of fundamentally huge mismatch.

But of course I could be wrong.
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Old 06-01-2011, 11:33 AM   #14
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IOW, I think we are seeing the downsides of a planned economy, rather than some sort of fundamentally huge mismatch.
Isn't the major downside of a planned economy in fact a fundamentally huge mismatch? (between what is demanded, and what is supplied) Of course if people need everything, as an economy goes from bare subsistence to a more modern state, this will not show. But China seems to be proving that it need not take long to manifest-maybe only a few decades.
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Old 06-01-2011, 11:47 AM   #15
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Isn't the major downside of a planned economy in fact a fundamentally huge mismatch? (between what is demanded, and what is supplied) Of course if people need everything, as an economy goes from bare subsistence to a more modern state, this will not show. But China seems to be proving that it need not take long to manifest-maybe only a few decades.
Depends on how much freedom is allowed in the economy and how good the central planners are in keeping up with what is going on. Relative to the Soviet Union, China appears to have a significant degree of freedom and much more adept central planners. Is this enough? We will all find out over time.
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Old 06-01-2011, 11:58 AM   #16
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Depends on how much freedom is allowed in the economy and how good the central planners are in keeping up with what is going on. Relative to the Soviet Union, China appears to have a significant degree of freedom and much more adept central planners. Is this enough? We will all find out over time.
I agree, it is an very interesting question. But don't these ghost cities prove that while CHina may be better at allocating resources than USSR was, it is not very good.

Of course it is also possible to question allocation of resources in very capitalistic, or perhaps state capitalistic societies like the US. Health care anyone? Or how about McDonalds selling artery bombs and Pfizer selling putative artery bomb antidotes?
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Old 06-01-2011, 12:57 PM   #17
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I agree, it is an very interesting question. But don't these ghost cities prove that while CHina may be better at allocating resources than USSR was, it is not very good.

Of course it is also possible to question allocation of resources in very capitalistic, or perhaps state capitalistic societies like the US. Health care anyone? Or how about McDonalds selling artery bombs and Pfizer selling putative artery bomb antidotes?

You anticipated my response. As far as ghost cities in the US, take your pick: Detroit, Las Vegas, etc.
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