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China: High GDP, 64 million empty apartments.

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Re: China: High GDP, 64 million empty apartments.

#51

Post by joshwa »

yaix wrote: post #15
trevelyan wrote: post #3

Nicely done video, but I think it gets the story wrong. The bubble is not illogical to start with. Thanks to currency controls most people have no way to invest outside China. The Shanghai stock market meanwhile has huge problems with adverse selection (bad companies pay to list -- successful companies list in Hong Kong or the United States). There are no property taxes in most of China, so people with money park it…

This is mostly what happens. Additionally, these new apartment complexes are often build in "new areas" of the bigger cities, to grow the city. China is trying hard to reach a level of urbanization comparable to the west, so they need to "grow their cities" somewhat aggressively. I have lived in two of those newly build complexes myself. First there is not much around, roads, maybe a supermarket and a few stores. The…

What city are you in? You could very easily be describing where I am (Kunming) but I suppose it really applies to pretty much every city in China with >1mm residents.

Re: China: High GDP, 64 million empty apartments.

#52

Post by joshwa »

joss82 wrote: post #13
whatwhatwhat wrote: post #9

How many apartments are vacant in the US, just as a comparison, does anyone know? That would make the number much more meaningful. Also, are these apartments dirt cheap and do they speak english in these areas at all? Maybe they could be a haven for startups, which are somewhat less bound by geography, if they were extremely cheap. I might just be dreaming though.

You may be dreaming, but you're not the only one. What would be the hurdles to get a startup running in China? The Great Firewall? It's a big country so it's always possible to find a place that fits your personal taste. For example Sanya is a tropical island. Not much infrastructure there yet though.

As a foreigner you are not allowed to own a business in China. You must start a special "joint venture" company with a native Chinese partner, with something like $15-20k USD in a chinese bank. Expect to be screwed by your Chinese partner, the bank, the local government, your local vendors, your landlord, etc.

Re: China: High GDP, 64 million empty apartments.

#54

Post by yaix »

joshwa wrote: post #51
yaix wrote: post #15

Earlier quoted context omitted.

This is mostly what happens. Additionally, these new apartment complexes are often build in "new areas" of the bigger cities, to grow the city. China is trying hard to reach a level of urbanization comparable to the west, so they need to "grow their cities" somewhat aggressively. I have lived in two of those newly build complexes myself. First there is not much around, roads, maybe a supermarket and a few stores. The…

What city are you in? You could very easily be describing where I am (Kunming) but I suppose it really applies to pretty much every city in China with >1mm residents.

I'm in Hangzhou, currently the most expensive city when it comes to housing, according to an article I read a few weeks ago. And it'll probably go further up, because there is a new bullet train and Shanghai is now only some 45 minutes away (down from about 2 hours).

(I may move to Kunming later this year, the weather so much better there :)

Re: China: High GDP, 64 million empty apartments.

#55

Post by math »

w1ntermute wrote: post #32
math wrote: post #14

Earlier quoted context omitted.

Try Phonm Penh (Cambodia). You can buy an apartment for $30k in a premium location. If you can't afford to buy, you can rent something decent for $60 a week or less. Food is about a third to half the price of what you're used to paying. Western standard places that are great to work in are springing up quickly now. Very friendly place. A lot of people speak English. Many of them have an entrepreneurial mindset (and r…

What kind of work do you do? I'm in college (CS major) now and am planning to start freelancing on the internet soon and continue that as my permanent job after I graduate. If I relocate abroad to a developing country but pretend to be located in America (just use my parents' address or something), I could make a killing off of this sort of thing and have a relatively high standard of living in a country like Cambodi…

I develop software. I did this for 10 years in Australia before moving here and because of this have relationships with Australian companies that would allow me to do contracting work remotely for good money if that is what I wanted (however at the moment I'm working on personal projects, currently backrecord.com). You are right - GNI per person in Australia is ~$42k (assume it is similar for USA). GNI per person here is $650. So you live like a king.

Internet is reliable and fast enough (I use a 3G connection and this is very cheap). There are many telcos so lots of competition.

Weather is hot and at the moment wet. I love the weather.

btw: I don't think you'd ever get away with pretending to be located in America.

Re: China: High GDP, 64 million empty apartments.

#56

Post by math »

w1ntermute wrote: post #44
w1ntermute wrote: post #32

Earlier quoted context omitted.

What kind of work do you do? I'm in college (CS major) now and am planning to start freelancing on the internet soon and continue that as my permanent job after I graduate. If I relocate abroad to a developing country but pretend to be located in America (just use my parents' address or something), I could make a killing off of this sort of thing and have a relatively high standard of living in a country like Cambodi…

Some more questions: Is it difficult to wire money from America to developing countries like Cambodia? For those cases where the people don't speak English, is it particularly difficult to learn the language when you're actually immersed in it on a daily basis? What is the local social scene like? Is there a large expat community? If not, are the natives welcoming? Hopefully it'd be possible to get some action. I don…

You can open a bank account at all banks if you have a local job. If not, Foreign Trade Bank are the ones to go with.

Transferring money is no problem (though the service I use to get a good rate - ozforex.com.au ask additional questions).

I've tried to learn Chinese and (a little bit of) Khmer. Khmer is much easier than Chinese, you'll pick up lots. But it's not essential.

It is VERY social, unlike any other place I've lived. Don't worry, the local girls will love you.

Re: China: High GDP, 64 million empty apartments.

#57

Post by math »

w1ntermute wrote: post #43
ams6110 wrote: post #35

Earlier quoted context omitted.

Starting off your professional life by being deceptive is not something I'd recommend.

I'm a native-born American, with a degree from an American college. I don't see why my pay should be reduced because of my location when I'm doing the exact same work.

ams6110 is correct, I'm not sure why he is being down-voted.

Re: China: High GDP, 64 million empty apartments.

#58

Post by wisty »

stretchwithme wrote: post #46
wisty wrote: post #34

Earlier quoted context omitted.

I dunno. The government incentives aren't that big, and people do stupid stuff with and without government help. There's no doubt that the government (and neo-liberal mainstream economists) failed to prevent the bubbles. But there's other factors at play. Housing takes a long time to reach an equilibrium. It can take decades for people to move out of a house that's too big for them. The market just doesn't respond qu…

Government incentives aren't that big? In the US or in China? You think empty cities crop up all on their own? With no rents being collected, you think people will just keep building and tying up their capital for no reason? If you mean the US, the incentives are not trivial. Interest rates are a big one and they are kept artificially low. You can write off your interest. You don't have to pay capital gains taxes on…

First off, bubbles can have many causes. Cheap, stupid credit, feeding off itself can be the main one. The government regulates credit; so ultimately it failed its duty if credit blows up. I'm just not sure if this is your point, or if you think prescribe to the "the market knows best, any problems are caused by the mere presence of the government, and wouldn't be caused in a free-market utopia" philosophy of Alan Greenspan, the guy who arguably caused the GFC. Government inaction, and government action both can cause damage. The government does have a part to play (IMO), and sometimes it does play it badly.

Which empty cities? The one in Inner Mongolia? That was the fault of the local government.

The one in Shenzhen, where the prices are really fucking high? There is no empty city in Shenzhen, because rich investors are buying up apartment at 10-40 times the median income. Crazy investors.

There's a huge demographic component to the bubble, too. There's a massive cohort of 20-30 year olds, and bugger-all 10-20 year olds. Because rich people have less children (and there's the One-Child thing, but even if there wasn't the numbers would be similar). Guess who is looking at buying a house? Guess what will happen to demand, in 10 years? That's what I'm talking about, when I say that demographics can have an effect.

Now, we come to interest rates and inflation. Artificially low interest rates in China, yes. They can buy gold, or invest, or buy houses; but due to the massive gains that houses have been showing (due to demographic effects, and income gains I think) they pile onto houses, causing a bubble. The government pushing construction projects MITIGATES this, though they could end up overshooting (yay, apartments for poor people).

During the Great Depression, the gold standard screwed things up, as the government had their hands tied and couldn't do QE. Did the government also cause the Great Depression, by sticking to the gold standard? No doubt, if you look to blame them for everything.

Re: China: High GDP, 64 million empty apartments.

#59

Post by white_devil »

w1ntermute wrote: post #44
w1ntermute wrote: post #32

Earlier quoted context omitted.

What kind of work do you do? I'm in college (CS major) now and am planning to start freelancing on the internet soon and continue that as my permanent job after I graduate. If I relocate abroad to a developing country but pretend to be located in America (just use my parents' address or something), I could make a killing off of this sort of thing and have a relatively high standard of living in a country like Cambodi…

Some more questions: Is it difficult to wire money from America to developing countries like Cambodia? For those cases where the people don't speak English, is it particularly difficult to learn the language when you're actually immersed in it on a daily basis? What is the local social scene like? Is there a large expat community? If not, are the natives welcoming? Hopefully it'd be possible to get some action. I don…

For those cases where the people don't speak English, is it particularly difficult to learn the language when you're actually immersed in it on a daily basis?

Just hearing it all day every day won't make you suddenly magically start to understand it.

Of course, the difficulty level depends on the language. For example, many South-East Asian languages have tones and a highly bothersome writing system (especially compared to the 26 characters you're used to).

But no matter what foreign language you decide to learn, expect to make a huge effort.

Re: China: High GDP, 64 million empty apartments.

#60

Post by w1ntermute »

white_devil wrote: post #59
w1ntermute wrote: post #44

Earlier quoted context omitted.

Some more questions: Is it difficult to wire money from America to developing countries like Cambodia? For those cases where the people don't speak English, is it particularly difficult to learn the language when you're actually immersed in it on a daily basis? What is the local social scene like? Is there a large expat community? If not, are the natives welcoming? Hopefully it'd be possible to get some action. I don…

For those cases where the people don't speak English, is it particularly difficult to learn the language when you're actually immersed in it on a daily basis? Just hearing it all day every day won't make you suddenly magically start to understand it. Of course, the difficulty level depends on the language. For example, many South-East Asian languages have tones and a highly bothersome writing system (especially compa…

> But no matter what foreign language you decide to learn, expect to make a huge effort.

Haha, I guess this can't really compare to a few years of high school Spanish (not that I really learned anything from that either).

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