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Chinese ghost cities
December 16, 2010 1:13 PM   Subscribe


 
The Chinese economy fills me with an overwhelming sense of total doom.
posted by Stagger Lee at 1:18 PM on December 16, 2010 [6 favorites]


Are there any photos from ground level? This is mesmerizing.
posted by Admiral Haddock at 1:19 PM on December 16, 2010


"There Are Now Enough Vacant Properties In China To House Over Half Of America

Don't worry, America will catch up in the vacant property industry soon enough!

Also: I was hoping for Chinese ghosts, and the cities they live in.
posted by yeloson at 1:24 PM on December 16, 2010 [3 favorites]


Well, maybe we should all move over there. After all, that's where all the jobs went.
posted by briank at 1:26 PM on December 16, 2010 [4 favorites]


"Yunnan University, which was built to accommodate 2.3 million students"

Um Miami-Dade County is just 2.5 million. Jeeeeesus, China is huge.
posted by oddman at 1:27 PM on December 16, 2010 [2 favorites]


"There Are Now Enough Vacant Properties In China To House the country's poor and unemployed?
posted by Stagger Lee at 1:28 PM on December 16, 2010 [5 favorites]


the average price-to-income ratio in Beijing has reached 27:1
posted by enn at 1:28 PM on December 16, 2010


I do wonder how much of this story is casual racism... Surely in a country with 2 billion people when you are trying move people into cities and out of tiny agricultural villages having millions of square feet of unused housing space for them to use is a good thing?
posted by public at 1:32 PM on December 16, 2010


The overhead photos are awesome. I read a newspaper or magazine article in the last couple of months with interviews with some of the few people who live in these empty Chinese cities. I can't find it now, ring any bells?
posted by Nelson at 1:34 PM on December 16, 2010


Goldman Sachs is selling. No shit. Time to get out of the market. You would think that business analysts would appreciate cribbing answers from the smartest, most connected guy in class. Their actions aren't a secret. Still the other banks always stay at the party long after the host is turning out lights and talking about what a big day they have tomorrow.

I'd love to start a firm based on the principle of doing whatever GS is doing. Sure, I'd probably be a bit late on some deals but I wouldn't need many employees. Maybe just a Google Alert for "GS". Plus with such low overhead I could afford to charge 0.2% and 2% instead of 2% and 20%.
posted by 2bucksplus at 1:35 PM on December 16, 2010 [10 favorites]


I'm not sure where you see the racism, public, nor why you think why the entire system (investors, property owners, contracators) responsible for these empty cities would be willing to give their products away to villagers who have no ability to gather the funds to even let the system break even on their investment.
posted by griphus at 1:37 PM on December 16, 2010 [1 favorite]


I dunno. This page has that awful, glib, web-authority hectoring tone I immediately find myself skeptical of. Without cites to sources that prove the page authors (one of whose job title is "editorial intern") know what they're talking about, I remain dubious that we're looking at as dramatic a situation as they claim. For example, Wikipedia says the population of the "most famous ghost city" in the first image as 230,000. Also, the pictures of Zhengzhou New District seem to have cars in the streets, and the population of that city overall is listed in Wikipedia as 7,356,000.
posted by aught at 1:38 PM on December 16, 2010 [5 favorites]


Photo 16: "And this cauldron-shaped stadium" is really a museum in Shanghai.

Yes, there is general consensus that property prices in first-tier cities like Beijing and Shanghai are totally out of control, though some people like to bring up Hongkong as a (rather weak) counterpoint. At best I think we could see another Tokyo....
posted by of strange foe at 1:39 PM on December 16, 2010


Surely in a country with 2 billion people

1.3 billion.

posted by Ratio at 1:41 PM on December 16, 2010 [1 favorite]


I too will believe this when I see a source that isn't full-of-shit Business Insider.
posted by East Manitoba Regional Junior Kabaddi Champion '94 at 1:51 PM on December 16, 2010


I do wonder how much of this story is casual racism... Surely in a country with 2 billion people when you are trying move people into cities and out of tiny agricultural villages having millions of square feet of unused housing space for them to use is a good thing?

These articles are about a real estate bubble. In such a bubble you have home prices out of proportion to incomes, with some kind of predatory finance filling the gap. That's the situation here. There's a cold comparison of this to the U.S., so I don't know how race factors into this reporting.

Remember it's capitalism, not socialism. These aren't state-produced housing units slated for distribution to the proletariat. It's bad, speculative investment on a massive scale. There's no jingoism about the Red Menace and Yellow Peril that applies here: implied or otherwise.

There's also several bits about commercial real estate, which has nothing to do with housing.


Incidentally, does this make anyone think wistfully about artificial reefs?
posted by clarknova at 1:54 PM on December 16, 2010 [6 favorites]


One thing I was curious about, given the success of one-family-one-child, is the anticipated growth of the population of China. According to 2001 data from the UN Population Fund that I found here, the change in Chinese population between 2015 and 2050 is going to be tiny, just a few percent. In fact, according to those projections, the absolute population increase (i.e., number of people) will be greater in the US during that time period than in China.

Obviously, even with a relatively stable population, there will still be massive urbanization in China, but it's not like India or other places where the population is going to increase dramatically. And, of course, lots of things can happen between now and then, assuming the data is even believable.
posted by snofoam at 1:57 PM on December 16, 2010


It is fascinating and horrifying watching China and the Chinese government try to manage the economy. On the one hand they want to keep things from getting out of hand, on the other, they want to keep growth up to make people richer and happier. Its a huge Catch-22. If they weren't worried about political unrest I suspect they would have pushed much harder to drain liquidity to keep shit like this from happening. Unfortunately they haven't and now people are getting angry because of inflation. It is basically a no win situation. Who knows how it ends. Worst case is probably widespread violence. Best case is sort of managed low growth while excess capacity gets soaked up.

The more interesting question is will people look back at how the government has managed the economy and say it was a net positive or a negative.

yes to EMRJKC'94's point there are much better sources for similar sorts of stories out there. At this point "China housing is an issue" is a rather common narrative you hear, and what little reliable data there is would seem to reinforce that. I think a lot of people think it will be limited to just that. I'm not so sure. (ironically the biggest basket cases from the GFC are the least exposed, and those countries who seem to think everything is pretty ok are the most exposed. Canada, Australia, Brazil. Good luck with that.)
posted by JPD at 1:58 PM on December 16, 2010 [1 favorite]


Well, this unidentified graph sure is scary. I'm convinced!

There probably is a bubble but I wouldn't assume China's reaction to a collapsed bubble would parallel a western reaction. They've got kind of a new system going on.
posted by chairface at 1:58 PM on December 16, 2010 [3 favorites]


clarknova, I'd totally dive that shit if it were in 30m of water.
posted by snofoam at 1:58 PM on December 16, 2010


It must be the contest, because it seems like the rate of awesome posts has at least doubled in the last week.

Great find.
posted by Joe Beese at 2:00 PM on December 16, 2010 [1 favorite]


So, if it's a communist country at bottom, why doesn't the government simply take over the vacant housing and distribute it to the poor? I mean, if the government sees all this excess housing as a problem, which it may not.
posted by Faze at 2:00 PM on December 16, 2010


There probably is a bubble but I wouldn't assume China's reaction to a collapsed bubble would parallel a western reaction. They've got kind of a new system going on.


What would you posit that is going to be? Excess capacity is excess capacity. I guess you could bulldoze it all.
posted by JPD at 2:03 PM on December 16, 2010


It might be just me, but NPR's Marketplace always seems to have this patrician attitude about China.

Anytime any mention emerges of the pending economic dominance of China, Marketplace always seems to tut-tut it, offering up counterexamples like:

* Chinese real estate is about to collapse

* Chinese workers are getting haughty and self-centered

* Chinese currency is falsely pegged/deflated

And, that, sooner or later, it will bite them in the ass, and we'll all be able to gloat and laugh at the American Chicken Littles.

For some reason, I still don't buy it.
posted by The Giant Squid at 2:08 PM on December 16, 2010 [1 favorite]


3 is an actual fact though - but its also not a reason for them to collapse. Its actually self-perpetuating to a degree.
2 - may fuck them over, but all it really does is move the factories further off the coast where the workers aren't rich enough to get uppity.
1- is controversial.
posted by JPD at 2:11 PM on December 16, 2010


Some of my friends worked on Ordos Villas when things were going gangbusters. You know how architects love stark open spaces to showcase their buildings? Looks like they got their wish. In spades.
posted by helmutdog at 2:28 PM on December 16, 2010 [1 favorite]


Chairface, that graph you linked to has the caption "Any bubble can go on A LOT longer than you might think." It is meant to illustrate just how far a bubble can grow before it pops, and how long and severe the ensuing downturn can be. The graph is the Nikkei 225. It nicely illustrates Japan's huge asset bubble which collapsed in 1991 leading to the increasingly inaccurately named "lost decade", from which Japan has yet to recover.

I would guess that based on the name of this site, the editors and writers of this publication assume most of their readers would recognize this graph with the axes unlabled. Another assumption likely to be shared among this publication and much of its readership is that the Chinese leadership have deliberately modeled China's growth after postwar Japan and 20th Century America, two economies that are very familiar with the crazy parties and horrible hangovers that this graph neatly illustrates.

Combine this with the common belief that China is doing the lion's share in keeping the global economy out of a severe deflationary spiral, and the collapse of a huge asset bubble in China should be enough to keep any cigar-puffing titan of finance awake at night.
posted by [expletive deleted] at 2:37 PM on December 16, 2010 [2 favorites]


Huge abandoned modern city? I want to film a movie there.
posted by quin at 2:45 PM on December 16, 2010 [3 favorites]


When I was teaching in China, I noticed the huge numbers of vacant housing complexes. One time I asked one of my students about it, and she said that it's very common for Chinese parents (or even parents-to-be) to buy their kids' housing before they're even, say, in their teens (or sometimes even before they're born). And while I have noticed that this kind of planning-far-ahead is common in Chinese culture, I didn't entirely buy that explanation... There were just so many, and it couldn't possibly account for that number.
posted by mingo_clambake at 3:14 PM on December 16, 2010 [1 favorite]


Heheh, that Tom Friedman article linked to in this slide is awesome(ly bad). At least we'll have something to pull up and mock when the bubble pops and it all goes to hell. I imagine Jim Chanos is already picking out the frame for it.
posted by longdaysjourney at 5:31 PM on December 16, 2010


Sorry: "has already picked".
posted by longdaysjourney at 5:34 PM on December 16, 2010


Ha ha ha China?

China population today 1.5 billion
or maybe
1.2 billion
either way
American just rounding error

posted by dhartung at 5:47 PM on December 16, 2010 [3 favorites]


In Japan, at the moment, there's something like 10-15% vacancy (?) in houses and rental apartments. That's not a bubble, that's just where things are, and how bad they've gotten.

And the bubble popped in 1991. 20 years of economic despair, folks. It just keeps getting better!
posted by Ghidorah at 6:19 PM on December 16, 2010


Perhaps the Israeli settlers could move there.
posted by lathrop at 6:28 PM on December 16, 2010 [2 favorites]


Those look like safe places to ride a bicycle
posted by titboy at 6:47 PM on December 16, 2010


the road (well, more like highway) design in http://static.businessinsider.com/image/4d07c5f0ccd1d50155290000-900-/like-ordos-zhengzhou-new-district-has-glamorous-public-buildings.jpg is... peculiar.
Nice place to bike or skate at indeed
posted by 3mendo at 6:59 PM on December 16, 2010


It might be just me, but NPR's Marketplace always seems to have this patrician attitude about China.
I used to feel like that, but got more skeptical as their boom has gone one. As China expands they also intensify some of their economic problems. People are upset about economic inequality in the US, but the income differentials in China are much more of a problem. Here a small number of people make vastly more money than of us can ever imagine, and there's pressure on the middle class.

But China has millions of people who are vastly poorer than most of us can ever imagine, and although the Chinese middle class is expanding their cost of living is increasing rapidly as well. It's going up because there are maybe 3-5 times as many people living on much less money who would like to be middle class. As long as their standard of living keeps going up, everything is OK. But if (when) there is an economic contraction and their standard of living goes down, then they are going to be pretty pissed off. China's middle class makes up a much smaller proportion of society than America's does, and the gap between middle class and poor is a lot wider. When you omit the super-rich (whose incomes distort the statistics considerably), American wealth and incomes are distributed a lot more evenly than China's are.

Another thing to consider is that China's been (more or less) a single nation governed from Beijing since around the time of the Roman Empire, 2000 years. And they've gone through a many massive expansions of trade and economic development in the past, with periods of great prosperity, creativity, and so forth - all of which have been followed by equally massive busts. They're as much subject to the overshoot-and-retrenchment economic problem as western economies; it's just been more obvious over the last few decades because they sort of skipped the industrial revolution when the West had one, and then went from agriculture to today's relatively high-tech manufacturing in about 20% of the time it took most western countries, even Japan. And they go through smaller economic cycles in the process, same as here - for example the silk export industry was going great guns in 1990, over-expanded and then saw sales collapse because of anti-dumping tariffs and lowered quality. It's taken until now to get it back to where it used to be. I'm oversimplifying of course but my point is that they have their own ups and downs to deal with, and historically do so with mixed results.

They have not rewritten the laws of finance or industrial policy or anything like that, any more than we have destroyed ourselves forever just because our economic over-confidence caused us to drive right into the ditch. I think the existence of all these ghost cities reflects the fact that they have so much cash sloshing around their economy right now that they're not really sure what to do with it.
posted by anigbrowl at 7:23 PM on December 16, 2010 [4 favorites]


Anecdata: in my apartment complex in Shekou, Shenzhen (S. China, just across the water from Hong Kong), occupancy is only about 40%. I can look across at the other buildings in the complex at night and most of them are dark.

Given that this is quite a posh complex and half of the occupied ones are rented out at above the market rate for locals to foreign companies for their expat workers (me included). The remainder are bought by property speculators who are simply waiting on the prices to increase so they can flip them. Either that, or like my landlord, they invested their life savings in them and then can't afford to live in them so they rent to expats and live in something much smaller in a cheaper area.

There's new buildings goign up all the time and it doesn't seem to be constrained at all. They're going somewhere fast, and seem to be making it up as they go along at times; but damn if it isn't impressive.
posted by arcticseal at 8:13 PM on December 16, 2010


Another thing to consider is that China's been (more or less) a single nation governed from Beijing since around the time of the Roman Empire, 2000 years.

I agree with your broader comment, but "less" is definitely the operative word when looking at the current geographical area known as "China" compared with its past areas of operation and actual control. Still big, I grant you, but much smaller.
posted by smoke at 9:08 PM on December 16, 2010


Maybe they are just hitting the Build button twice?
posted by anigbrowl at 9:25 PM on December 16, 2010


This is in part because many Chinese believe that a home is not a real home unless you own the flat.

Communism: You're doing it wrong.
posted by TrialByMedia at 10:46 PM on December 16, 2010


China is huge.

China is nearly identical in area to the United States. It's not like they are sitting around thinking, "man, we really need a bunch of concrete over in X."
Does the US have anything comparable to these huge ghost cities? I've see pictures of suburban developments that are largely vacant but nothing on this level.
Even if these articles aren't 100% correct they probably aren't very wrong either.
posted by zephyr_words at 11:12 PM on December 16, 2010


"...she said that it's very common for Chinese parents (or even parents-to-be) to buy their kids' housing before they're even, say, in their teens (or sometimes even before they're born)."

1) My Chinese-Canadian ex-boyfriend and his family were a bit like this with real estate. Bought up condos whenever they could get a good price, in any city/country that they or another member of their family might want to live in someday.

"And while I have noticed that this kind of planning-far-ahead is common in Chinese culture, I didn't entirely buy that explanation... There were just so many, and it couldn't possibly account for that number."

2) Well, there *are* a shitton of people in China, and their rural-to-urban migration is far from over.
posted by Jacqueline at 8:21 AM on December 17, 2010


The problem isn't just volume it is also price.
posted by JPD at 9:07 AM on December 17, 2010


The BBC has something related this week on From Our Own Correspondent.
posted by arcticseal at 9:22 PM on December 18, 2010


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