Empty Cities: China's phony construction boom

[specuvestor]

The problem with China is the lack of transparency, who knows what the true numbers are. The ghost cities there are actually the same as those in Spain. China will probably go the way of Spain in terms of economy in the near future.

Not a die hard "China-lover" and I am not so familiar with Spain but are those ghost cities paid up? Ability to pay via employment rate is probably a good indicator as well.

[BlueKelah]

The problem with China is the lack of transparency, who knows what the true numbers are. The ghost cities there are actually the same as those in Spain. China will probably go the way of Spain in terms of economy in the near future.

Not a die hard "China-lover" and I am not so familiar with Spain but are those ghost cities paid up? Ability to pay via employment rate is probably a good indicator as well.

According to the reports i have seen they are mostly paid up by investors. Whether using cash or credit from the bank that one i am not sure of. But having property rises of 50% in a year is certainly unsustainable. Prices will have to REVERT TO MEAN sooner or later.

In the end, land values should always be coupled to economic progress. The chinese are just using property like a piece of paper stock to trade. Both the land value and building value are not there, nor are fundamentals like rental returns as most are just empty.

So just like an S-Chip that is traded up on a promise of growth and future profits, one day the price will just "evaporate" so to speak.

[freedom]

Do every family in China have a property in the city already?

Hell No!

So those so called "empty cities" can be easily filled by almost 1 billion farmers freed from agriculture. Industrial farming is the future, Chinese government knows it and is preparing for farmer transitions.

[specuvestor]

Actually urban to rural ratio passed 50% about 2 years ago.

But considering <10% of US population are farmers who feed the whole nation and more, the long term demand is still there. The other issue is of course we have 4 parents' finances subsiding one couple due to the one child policy.

[opmi]

american farmers are using mechanized farming and fertilizers. With tons of farm subsidies.

[freedom]

agriculture is one of the most unproductive industry in the world though very important. The same for mining and property industry.

If too many people are working in the unproductive industries, though they may be rich, the society as a whole will not progress well.

It is about time for China to move most of its people in the agriculture to manufacturing and services.

[specuvestor]

Agriculture serves a very important function, finance is higher value added but I doubt it is that essential or "productive" pre se. What exactly do finance people produce to be deemed productive? Allocating capital to the highest return irregardless of risk? BTW I am in finance line so I am not sliming something that I am not privy to and I deemed myself to be in Michael Lewis' camp

1 person feeding more than 10 people IMHO is a pretty productive industry but not high value add as it is very competitive with low barriers of entry. Nonetheless logically China has to move towards this goal of high value farming with more mechanisation and professional/ scientific management of the produce

Residential property is productive up to the point of sheltering the populace. Otherwise it is a misallocation of capital chasing funny money.

China has risen very fast and a fast-forward industrial revolution for 1.3b people. Indeed they have moved most people to urban and could do more, but they also know that to be self-sufficient in food is in the interest of national security. That's where the "non-economical" subsidies come in. It's not always economics.

[freedom]

It always seems that you prefer exaggerating a small part of an argument to the extreme, which makes the whole discussion meaningless. haha.

[sgd]

If more people in china switch from farming to doing other things means they going to put a strain on their own supply and create a huge demand overseas. Recently in October this year a delegation from china visited thailand and concluded a deal to buy 1 million tonnes of rice from thailand every year. If they have to start buying other things like poultry from australia, vietnam, indonesia very soon everybody going to be priced out of the market, no more cheap airpork from australia. Like coal today there's intense demand from china to point that india had blackouts last year because they were struggling and couldn't buy enough coal for their own energy needs.

Just imagine china don't farm much anymore for it's own food and starts buying and soaking up all the dairy and poultry from australia nz what are we small country going to eat?

So for selfish reason I hope the proportion of people in china in farming stays the same for a long long time to come.

[freedom]

The problem in China for food security is about not enough farmland, not about not enough people working in agriculture.

China has too many people working in agriculture, not too few...

The productivity is so low in China that the cost of producing grains is too high.....