China's housing bubble: ghost malls, ghost highrises, and ghost cities

“Here’s an Australian TV documentary about China’s housing bubble which has given rise of bizarre ghost malls, ghost highrises, and even ghost cities. It’s symptomatic of the growing divide between China’s rich and poor, which has left many Chinese without adequate housing. Unlike the US bubble, the Chinese property bubble isn’t founded on cheap credit, which makes the analyst hosting the show believe that it won’t burst in the same way as American one.”

via BoingBoing
http://www.boingboing.net/2011/04/18/chinas-housing-bubbl.html

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I see it all the time - brand new, EMPTY malls. Brand new complexes and high rises and villas - EMPTY. And starting to crumble quickly.

Wasted money trying to falsely inflate the GDP, PRC stylee.

Has left many without adequate housing”? When I lived in China way back in 1995, I didn’t see anybody in adequate housing. I saw farm houses where the pigs and chickens were kept indoors, usually in the kitchen, where it was warm, at least when people were cooking. It was adequate for the pigs, I’ll admit.

[quote=“Baas Babelaas”]I see it all the time - brand new, EMPTY malls. Brand new complexes and high rises and villas - EMPTY. And starting to crumble quickly.

Wasted money trying to falsely inflate the GDP, PRC stylee.[/quote]

Yeah man, you see that everywhere. PRC just has it large. Taichung is also the same, with many empty high rises ans empty malls. The buildings were just a way of making money at the time. The fundamental problem is land speculation, which really does fcuk things up. The land owners just hold onto the value of the land and hope it will go up while they sit on their rotund posteriors.

[quote=“trubadour”][quote=“Baas Babelaas”]I see it all the time - brand new, EMPTY malls. Brand new complexes and high rises and villas - EMPTY. And starting to crumble quickly.

Wasted money trying to falsely inflate the GDP, PRC stylee.[/quote]

Yeah man, you see that everywhere. PRC just has it large. Taichung is also the same, with many empty high rises ans empty malls. The buildings were just a way of making money at the time. The fundamental problem is land speculation, which really does fcuk things up. The land owners just hold onto the value of the land and hope it will go up while they sit on their rotund posteriors.[/quote]

Taichung pales besides China in that respect, I must say. Do we have any ghost new towns here? Tamhai new town perhaps?

I think that angry china speculators will end up as the biggest challenge for Beijing since Tiananmen.

I swear that mall in one of the first shots is in the complex where I lived in Zhengzhou last year. What a hell hole!

I keep hearing that China is going to collapse as a result of this problem. And I hate that country so much that my evil side can’t wait for that to happen. But my realistic side wonders how many problems that possible collapse will cause outside of China.

Thanks for that link. Very interesting, although I’d seen much of it before. Was very interested to see Gillem interviewed for this! You can see more of his comments in a piece here:
China property bubble to pop this year, says analyst
Gillem was based in Thailand for a long time before fairly recently starting at his current house in HK. He is an extremely good analyst, and the company is also very good at stock specific analysis/research, but I’m not altogether convinced they are an especially good source of comment for a sector or market.

I think it’s disingenuous to take a couple of extreme cases out of the context of China’s vast economy. That mall in Dongguan, for example, was the harebrained scheme of one exceptionally rich man. I also think a bet on a China property bubble is a bet against the CCP, and that’s usually not a good one, well in recent years, at least.

Some factors in the favour of China’s property market include - government measures aimed at easing property prices and speculation have started to bite in China, and the country is embarking on a grand social housing programme aimed at improving the number of low cost residential properties. The majority of property purchases are done with cash, and there’s very little credit going into the market. Additionally, the current rate on property prices is in step with wage rises.

Yes there is a bottom 10% of people in Chinas economy that are being left behind, but the government is constantly implementing policies under the “harmonious society” platform to address this. It is a vast task, for sure, but so far, you simply have to acknowledge, they’ve done a bloody good job.

However, one thing that does startle me, is the amount of China’s limited arable land that is being concreted over for some of these nutjob schemes. I think therein lies the potential for a much bigger issue. Food and water. Fundamental stuff. China imports something like 25% of Thailand’s rice crop each year, at present.

HG

[quote=“Huang Guang Chen”]However, one thing that does startle me, is the amount of China’s limited arable land that is being concreted over for some of these nutjob schemes. I think therein lies the potential for a much bigger issue. Food and water. Fundamental stuff. China imports something like 25% of Thailand’s rice crop each year, at present.

HG[/quote]

or the pollution that’s destroying food resources. and now in the NE, farms having bad harvests.

I’ve been reading about famines in the 3rd world. It would be aboominable to see it happen again and at China scale, but it is not unfeasible. Next wars will not be for oil, but water.

Just last week there was this BBC article on the danger of famine due to the rising prices of basic commodities, grains, etc. and how there should be an agreement so speculation would be constraint and grains used for fuel production limited.

The same short-sighted greed hubris in real estate causing havoc in food resources, not only water. Not only in China, though. Insane.

Edging dangerously off a worthy topic here, and onto another, but I completely agree with the famine issue. I’m surprised no one, or at least that I’ve seen, has drawn the obvious line from protests over food prices in Cairo to the Arab revolt! To be fair, I’ve pretty much only looked at headlines on that issue, so perhaps that is a given. Still.

[quote]Egypt: Soaring Food Prices Squeeze Poor - Friday, November 19, 2010
Prices for most basic food commodities in Egypt have finally returned to earth - more or less - after soaring to unprecedented levels over the summer. But steadily rising food costs in recent years, along with the government’s seeming disinclination to take effective steps to regulate the market, continue to be the source of mounting public anger.

‘Even though the summer price hikes have eased for the time being, the situation is still desperate,’ Hamdi Abdelazim, economist and former president of the Cairo-based Sadat Academy for Administrative Sciences told IPS. 'If the rise in food costs persists, there will be an explosion of popular anger against the government.’[/quote]
Note that was written in November last year.

HG

Huang, there was a lot of specualtion and debate on the role of unemployment and rising food prices in the Arab revolt. Just Google my good man.

As for arable land in China being paved over, it’s central policy to reduce the amount of land used for farming so that is not a surprise. Again, it comes down to water. China’s pushing up against its upper limits and has lost 15% of its annual water supply over the past decade because of global warming.

Cirlce of Blue has an ongoing series on water in China. Well worth reading:

circleofblue.org/waternews/2 … oint-china—confronting-water-scarcity-and-energy-demand-in-the-world’s-largest-country/

I’ve seen a few articles in the past several months, but, of course its difficult to find them now.

There is this one, though, easily found:

Amid Middle East unrest, is China next? Not likely… Like many Arab nations, China has one-party rule, corruption and soaring food prices—but experts say that its stunning record of economic success militates against pressure for revolutionary change.

[quote=“Mr He”]
Taichung pales besides China in that respect, I must say. Do we have any ghost new towns here? Tamhai new town perhaps?[/quote]

I made exactly that point. The ‘PRC has it large’ - the scale of the problem is the only thing that is different. Taichung has a significant number of empty buildings, empty lots. The Mayor recently raised taxes on vacant lots to encourage landlords to do something with the land.

[quote=“Mr He”]
I think that angry china speculators will end up as the biggest challenge for Beijing since Tiananmen.[/quote]

Sensationalist reactions to the intimation that China is the only country suffering from land tax speculation are misguided.

As other posters have pointed out, China suffers from many problems but the government there has made fantastically effective efforts to keep things together. Better than, say, in the UK where there have been mass protests.

Cheers, for that, and the links. Obviously I really wasn’t following the Arab issue, as my eyes tend to be firmly on China, with a sly longing peak back to Taiwan and Thailand when I get the chance.

As an amusing aside, there were tales of China banning the word jasmine or filtering it in search engines. Well you can just imagine the fun! Chinese play with words to get around Great Firewall

HG

It certainly is.

There certainly seems to be a connection in there somewhere. Serious discontent over shortages of food certainly occurs now and again:

[quote]Polish army artillery was turned on grim workers holding out in Poznan’s anticommunist bread revolt today, a French business man reported.

Lucien Delain, of Meudon, France, arrived by automobile at Helmstedt on the frontier between East and West Germany and said he had seen the artillery firing spasmodically when he left Poznan at 9 a. m.[/quote]–“Gunfire Is Continuing in Polish City Revolt, Is Travelers’ Report,” Spokane (Washington) Daily Chronicle, June 30, 1956

And again:

[quote]Polish troops and tanks moved into three northern Polish cities today to put down rioting.

Workers infuriated by food price increases have stoned Communist Party offices, set fire to shops and cars, looted stores and clashed with militiamen in the past two days.

A Polish Radio report monitored in West Germany said the clashes occurred at Gdansk, Gdynia, and Sopot. . . .[/quote]–“Tanks Move in to Quell Riots in Poland,” Sydney Morning Herald, December 17, 1970

And yet again:

[quote]WARSAW, Poland (UPI) – Shipyard workers in the major Baltic seaport of Gdansk, where 1970 riots brought down the previous regime, went on strike today in the spreading seven-week labor unrest rocking Poland, dissidents said.

Unlike other strikes, which were sparked by an increase in the price of meat, the dissident Committee for the Social Self-Defense said the workers at Gdansk were angered over the dismissal of a woman colleague, who was fired for involvement with a dissident trade union.

“It is a solidarity strike and has a political character,” Jacek Kuron, committee spokesman, said.[/quote]–“Polish Shipyard Workers Strike,” (Dubuque, Iowa) Telegraph-Herald, August 14, 1980

But it appears that the unrest described immediately above originated with protests against meat price hikes:

[quote]WARSAW, Poland (AP) – The Polish government announced it was doubling the price of common types of meat, and 6,000 workers at a nearby tractor factory staged a one-day protest strike.

Reports from Ursus, an industrial suburb outside Warsaw that was the center of meat riots in 1976, said most of the workers had returned to their posts today. But unconfirmed reports reaching Warsaw said 3,500 more workers at a car parts factory in Tcew, in north Poland, also walked off their jobs Wednesday.[/quote]–“Meat Hikes Protested in Poland,” Youngstown [Ohio] Vindicator, July 3, 1980

And I guess that last performance (or run of performances) is the one that eventually brought down the house. I wonder if such a thing might happen in China. But for all I know, the people in charge in China nowadays may be tougher and meaner than the Polish and Russian Communists were back in the 1980s.

The people in charge of China are much tougher and meaner than any other communist rule since Stalin.

They will drown any uprising in blood if that is what it takes.

[quote=“Mr He”]The people in charge of China are much tougher and meaner than any other communist rule since Stalin.

They will drown any uprising in blood if that is what it takes.[/quote]

The problem with Chinese autocracy is the legacy of Mandate of Heaven, which in simple terms is, if you can grab the power, then you deserve the power. This is not lost on the chicoms. Power is up for grab by anyone strong enough or lucky enough to take it. They will quell any uprising in blood, but there’s always a tipping point related to how much blood you can spill b4 u lose control.

Horses for courses, I’d say. And it’s a good thing, because if they were to really lift their foot from that collective throat, there’d be, as even a scant read of Chinese history will inform you, a gazillion nutjobs ready to pop up and do mass slaughter all over again.

China, the world’s greatest living example of why anarchy is a cute idea for playful university undergrads, but an extremely bad thing in reality.

HG

[quote=“Mr He”]The people in charge of China are much tougher and meaner than any other communist rule since Stalin.

They will drown any uprising in blood if that is what it takes.[/quote]

well they are chinese and not russians. and from what i have experienced they tend to give a hell of a lot less of a shit about anyone except themselves (and maybe their family) and human life in general…

Horses for courses, I’d say. And it’s a good thing, because if they were to really lift their foot from that collective throat, there’d be, as even a scant read of Chinese history will inform you, a gazillion nutjobs ready to pop up and do mass slaughter all over again.

China, the world’s greatest living example of why anarchy is a cute idea for playful university undergrads, but an extremely bad thing in reality.

HG[/quote]

I know that much, given that we both spent years learning about China.

Democracy will most likely not work in China, and China will be caught in her old vicious cycle once the chicoms fall out of the saddle.