Tuesday, March 11, 2014

"In China There's Not One City Sans Terrifying Stretches Of Empty Houses"


"Over the last two years of traveling constantly in China, I can say that I have not seen a single city, town, or hamlet without massive empty housing stock. A colleague, on two trips crossing about 1,500 kilometers overland, said that he was not out of sight of empty buildings even once. Up by the Siberian border, the town of Manzhouli has decided to become a tourist resort and built thousands of empty 'villa' developments. In the southern mountains of Yunnan, a colleague took video footage of 15 kilometers unbroken of empty highrises. The ghost developments stretch along Beijing’s southern Fourth Ring and through Shanghai’s Pudong and Xuhui. The East District Zhengzhou looks like a post-apocalyptic landscape. The new districts of Harbin could earn some revenue as sets for a remake of I Am Legend."

1 comment:

Nathan said...

The purchased units are left empty, because renting them would depreciate the value of the real estate; living in the housing is actually an impediment to realizing its value.

If only there was an ancient Chinese proverb about the fallacy of the underpants gnomes this situation could have been avoided.

Actually, credit for that observation goes to Hugh Hendry:
The ancient ethical system of Confucius is silent on the subject of modernisation. There is no proverb counselling that "wise men not invest in over-capacity". Perhaps there should be: in China, investment spending has tripled since 2001 and the consequences are staggering. A country that represents just 7pc of global GDP is now responsible for 30pc of global aluminum consumption, 47pc of global steel consumption and 40pc of global copper consumption. The overriding problem is that the Chinese model leads to a deflationary spiral that is perpetual in nature.

I miss that Hugh Hendry.