The Ghost Cities of China

[Josquius]

Even worse than that. With Japan at least the demand was real. With China its the government creating artificial demand whilst the people remain poor.;

What do you mean?

Japan had this big construction boom driving growth to a large degree but the stuff that was made was used, there was an actual demand for lots of luxury flats and shopping malls and that sort of thing.
China has skipped ahead a few stages and is trying to do this whilst the people all remain poor and unable to buy the flats that are being built. There's no actual demand, its just the government trying to get some sort of growth.

[Jacob]

I think you're off. There are plenty of people in China who are not poor, and there's plenty of demand for the apartments too. The problem is that due to the opaque business environment, real estate is one of the few "safe" places to invest, creating the bubble that's putting the apartments almost out of reach of even the middle class.

[Habsburg]

I think you're off. There are plenty of people in China who are not poor, and there's plenty of demand for the apartments too. The problem is that due to the opaque business environment, real estate is one of the few "safe" places to invest, creating the bubble that's putting the apartments almost out of reach of even the middle class.

[/QUOTE]

[Josquius]

That picture...I do not get.

I think you're off. There are plenty of people in China who are not poor, and there's plenty of demand for the apartments too. The problem is that due to the opaque business environment, real estate is one of the few "safe" places to invest, creating the bubble that's putting the apartments almost out of reach of even the middle class.

I don't know, sure, China has its middle class. But these flats are pretty typical western prices, middle class folks in China will tend to earn quite a bit less than middle class westerners. In Japan meanwhile by the 70s and the beginning of their rise their gdp per capita was pretty comparable to the west.

[dps]

I don't think the question is whether or not there's demand for luxury apartments.  The thing is, they're building whole cities that are uninhabited, and by-and-large, there's no reason for people to move to those new citiies.

[barkdreg]

I think you're off. There are plenty of people in China who are not poor, and there's plenty of demand for the apartments too. The problem is that due to the opaque business environment, real estate is one of the few "safe" places to invest, creating the bubble that's putting the apartments almost out of reach of even the middle class.

Whatever the reason, the real estate isn't getting sold. At least in Japan people were able to buy it.

[MadImmortalMan]

The point is not to find a way to get people to move to those cities. The point is to stop building cities where nobody wants to live.

[DGuller]

These cities may be malinvestments, but mailinvestments are still investments.

[The Brain]

The point is not to find a way to get people to move to those cities. The point is to stop building cities where nobody wants to live.

Everyone can't live in Vancouver or Perth or any of the other extremely attractive locations.

[MadImmortalMan]

These cities may be malinvestments, but mailinvestments are still investments.

Negative ones. Or if you prefer, investments toward failure; drainers of investment from other more effective enterprise. Outside of some miraculous externality factor changing, the only way they can become actual investments with a positive worth to society is if they are converted to other purposes or abandoned.

[alfred russel]

When I was growing up, the cultural revolution was starving people. Now policies are better, and people make $4k a year or so on average. With over a billion people this is a huge change in the global economy, but it doesn't mean China is a model to be emulated or somehow better than the west. In aggregate it is still a very poor country.