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China's Empty Cities

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Re: China's Empty Cities

#41

Post by r0h1n »

justinschuh wrote: post #39
r0h1n wrote: post #13

Earlier quoted context omitted.

To add further, doesn't America have its own share of "ghost cities" that were once booming but are now decrepit? https://en.wikipedia.org/wiki/List_of_ghost_towns_in_the_Uni... I'd be more interested in why two such different countries as the US and China seem to have independently arrived at the same problem of ghost cities. We know that China's problems arise from a top-down, state-directed model of development un…

Is my sarcasm filter off here? The ghost towns in the US are dramatically smaller, were pretty much all the result of organic growth, and were actually populated at some point. They're ghost towns now because the populations moved away for any number of reasons (the end of a boom, economic shift, major catastrophe, eminent domain). The situation in China is completely different. Regional governments are naively tryin…

Not all US ghost towns are are dramatically smaller. There seem to be many with peak population in the (low) tens of thousands.

- http://usatoday30.usatoday.com/news/nation/2010-03-01-townha...

- http://finance.yahoo.com/news/american-ghost-towns-21st-cent...

And while I agree with you that they weren't unoccupied to begin with, unlike the case with many of China's ghost cities, I beg to disagree on the rest of your argument - namely that the US model was appropriate for its time (we have decades of hindsight) and that the Chinese model isn't appropriate for the present (we don't know).

Many experts have been prophesying a crash for China's investment driven economy for years now, and a dramatic correction in real estate prices. Yet, after a small correction prices are still rising - http://www.economist.com/news/china/21577118-soaring-house-p...

We may only know a decade or two later whether a few dozen ghost cities was a small price China paid for continuing to power ahead economically.

Re: China's Empty Cities

#42

Post by sridharvembu »

In purely economic terms, China has performed a fascinating ongoing experiment.

The Party looked at the "end state" of an industrialized, prosperous middle-class nation and then decided to will that end state into existence. In that end state, China needs to urbanize on a massive scale and these cities are simply the physical manifestation.

This is the grandest scale human experiment ever, collectivist decision making at its finest (those farmers who are forced to give up the land don't have much of a voice).

Will this work? I don't believe we can begin to calculate all the consequences of this experiment. In any case, it is not obvious the causality runs the way that is implicit in this experiment: build cities, move people, and forge a vast urban middle-class out of rural peasants.

This book is a somewhat sympathetic description of that grand experiment (mildly sympathetic to the Party):

http://www.amazon.com/Chinas-Urban-Billion-Migration-Argumen...

Re: China's Empty Cities

#43

Post by bane »

thomasd wrote: post #23

One thing not mentioned here is how much the Chinese value brand new properties. By brand new I mean, properties that have never been used/lived in. It's a common trend in real estate where investors buy properties and leave it vacant to brag about the place being brand new to sell at a higher price in the future. This is likely to exacerbate the "empty" cities problem in China.

Interestingly, in Japan, this preference is dealt with by building "disposable" houses with financing and a 25 year depreciating property valuation built around this concept.

Here's a great video https://www.youtube.com/watch?v=7tNpFkdZwpk

Re: China's Empty Cities

#44

Post by jebblue »

r0h1n wrote: post #41
justinschuh wrote: post #39

Earlier quoted context omitted.

Is my sarcasm filter off here? The ghost towns in the US are dramatically smaller, were pretty much all the result of organic growth, and were actually populated at some point. They're ghost towns now because the populations moved away for any number of reasons (the end of a boom, economic shift, major catastrophe, eminent domain). The situation in China is completely different. Regional governments are naively tryin…

Not all US ghost towns are are dramatically smaller. There seem to be many with peak population in the (low) tens of thousands. - http://usatoday30.usatoday.com/news/nation/2010-03-01-townha... - http://finance.yahoo.com/news/american-ghost-towns-21st-cent... And while I agree with you that they weren't unoccupied to begin with, unlike the case with many of China's ghost cities, I beg to disagree on the rest of your…

>> namely that the US model was appropriate for its time

There was no model other than freedom. Freedom to invent, create, build, farm all as we saw fit. This is completely different and perhaps antithetical to what the Chinese are doing now. Their government is trying to will the result of prosperity into existence rather than allow it to culminate on its own as it does in a truly free society.

Re: China's Empty Cities

#45

Post by auctiontheory »

sridharvembu wrote: post #42

In purely economic terms, China has performed a fascinating ongoing experiment. The Party looked at the "end state" of an industrialized, prosperous middle-class nation and then decided to will that end state into existence. In that end state, China needs to urbanize on a massive scale and these cities are simply the physical manifestation. This is the grandest scale human experiment ever, collectivist decision makin…

Very interesting.

In typical state-planner fashion, the Chinese government completely misses a critical component of the rich-country population distribution: people (more or less) choose where they are going to live, i.e. it's not just a question of available bedrooms. Detroit has plenty of available bedrooms, and so does the most of the South and mid-West.

Re: China's Empty Cities

#46

Post by saosebastiao »

About 10 years ago, a friend of mine wanted to lease out an old building on an old decaying street in Stockton CA, so he could build an indoor soccer field and start a league. The building was unleased, and the owner was happy to lease it to him at an excellent rate (it had sat unleased for 4 years). He had pre-orders for his first league session for almost 80 teams. He had a local investor that was willing to front the cost of the indoor field. He could comply with 100% of the local health and safety regulations, and only had one deterrent: The city planners. They insisted that this entire city block was to be used for upscale retail...no restaurants, no office space, no mini marts, no grocery stores, no movie theaters, no coffee shops, no used book stores, no NGOs, no news stands, and especially no indoor soccer facilities. The owner of the real estate declared bankruptcy a year or two later (it appears most of the other owners of property on the block followed suit) because he couldn't find a single tenant to get past the city planners. I believe the property has now been seized by the city, where it hasn't sold anything since. The zoning has still not changed.

This is what American cities would look like if American city planners had their way. They wouldn't tell you that though...they think they are way better at playing Sim City than their Chinese counterparts.

Re: China's Empty Cities

#47

Post by tossacct »

r0h1n wrote: post #32
seanmcdirmid wrote: post #26

Earlier quoted context omitted.

America's ghost towns were once thriving and now are deserted. China's ghost cities are relatively new and have never thrived before; they are just symptoms of a huge real estate bubble. China overbuilds way too much, even in thriving cities like Shanghai and Beijing will you find almost completely deserted shopping malls.

I only observed that America and China both arrived at the same end result independently - ghost cities. I am not saying that they followed the same approaches, or took the same time.

seanmcdirmind did not accuse you of saying anything. You asked a question and then he answered it. Are you replying to the right thread?

>>I only observed...

You didn't ONLY observe, you observed and then asked a question, and then the question was answered:

r0h1n>>"I'd be more interested in why two such different countries as the US and China seem to have independently arrived at the same problem"

Seanmcdirmind asked you if your question was genuine, you responded that it was, then he answered your question. There is no conflict here.

Re: China's Empty Cities

#48

Post by auctiontheory »

justinschuh wrote: post #39
r0h1n wrote: post #13

Earlier quoted context omitted.

To add further, doesn't America have its own share of "ghost cities" that were once booming but are now decrepit? https://en.wikipedia.org/wiki/List_of_ghost_towns_in_the_Uni... I'd be more interested in why two such different countries as the US and China seem to have independently arrived at the same problem of ghost cities. We know that China's problems arise from a top-down, state-directed model of development un…

Is my sarcasm filter off here? The ghost towns in the US are dramatically smaller, were pretty much all the result of organic growth, and were actually populated at some point. They're ghost towns now because the populations moved away for any number of reasons (the end of a boom, economic shift, major catastrophe, eminent domain). The situation in China is completely different. Regional governments are naively tryin…

Are these "generic" bonds, or does the government issue bonds explicitly tied to the development of one or another city development? Are these bonds to be paid out from new-city tax revenue streams? (Not enough plugged in to the China finance system to search for myself.)

If so, I'm surprised that financial institutions would buy these bonds, despite their high ratings.

Re: China's Empty Cities

#49

Post by ttflee »

Conceding that there are cases of failure on real-estate investment, for many of these new towns, it is still far too early to call them ghost town. Constructions are just too quick that immigration has not caught up(, and some correspondents did count unfinished projects in). Only time would tell.

The current urbanization would not stop without a huge impact(, in a good, a bad, or a mixed way). In near future, real ghost villages, from which people emigrate, are more likely than real ghost town, like what happened in Japan during urbanization years post-WWII.

Re: China's Empty Cities

#50

Post by r0h1n »

tossacct wrote: post #47
r0h1n wrote: post #32

Earlier quoted context omitted.

I only observed that America and China both arrived at the same end result independently - ghost cities. I am not saying that they followed the same approaches, or took the same time.

seanmcdirmind did not accuse you of saying anything. You asked a question and then he answered it. Are you replying to the right thread? >>I only observed... You didn't ONLY observe, you observed and then asked a question, and then the question was answered: r0h1n>>"I'd be more interested in why two such different countries as the US and China seem to have independently arrived at the same problem" Seanmcdirmind aske…

That's a fair point.
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