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China: Proudly Demolishing Buildings Before Completed In Pursuit Of The Glorious Housing Bubble Perpetual Engine

Tyler Durden's picture





 

Ever wonder how China can endlessly generate goal-seeked GDP of precisely 8.00001% year after year? Or how it can constantly find use for the massive and ever-larger surplus of warehoused commodities? Simple - never stop building. Which, apparently means blowing up empty building before they are even finished and rebuilding them. Rinse. Repeat. After all gotta keep all those construction workers from rioting, and all those USD reserves redirected into Brazilian and OZ commodities, now that China is not really buying US debt anymore. China Hush has some stunning pictures confirming that in its search of the great home bubble perpetual engine, the politbureau comrades may have stumbled onto the bricks and mortar equivalent of Shangri La. In the meantime, more on the whole "controlled demolition thing" from China Hush.

As one of the most architectural productive country, China aggregates 2 billion m2
of new building area every year, consuming about 40% of the world’s
concrete and steel. However, on the flip side of the new building fever,
there lie the rubbles and remains of other “older” buildings: people
tear down four-star hotels to build five-star ones and bulldoze newly
developed construction sites before they are even finished. Lots of
young strong buildings are down, fulfilling their unnatural destiny in
the roaring noise of blasting. (Source from ifeng.com and people.com.cn)

 

1. Vienna Wood Community in Hefei City died before born on Dec. 10th, 2005. The community covered about 20,000 m2
construction area with the main structure raised to 58.5 m high. The
tens of millions yuan worth building was blasted as a whole when its 16th
floor was still under progress. According to local government, the
community punctuated the central divide of Hefei City, blocking the
scenery between Huangshan Road and Dashushan Mountain. They couldn’t
straighten Huangshan Road unless the community was out of the way.

2. The Bund Community in Wuhan, 4 years old, blasted on March 30th,
2002. “I give you the Yangtze River” the slogan of the community
captured many people’s hearts, so did its view over the magnificent
Yangtze River and Wuhan’s historic spot Yellow Crane Tower. It took only
4 years to build the community that was documented and verified by
relative departments. Then it also took only 4 years for the once
legitimate community to be identified as illegitimate buildings that
violate the country’s flood protection regulations. Force demolition
soon took place, resulting in over 200 million yuan direct economic
losses, not to mention the costs that were times of its original
investment government had to cover for the demolition and restoration of
bund environment.

3. Yuxi Exhibition Center, 5 years old, down on Aug. 20th,
2005. The landmark building in Yongchuan City, Chongqing Municipality
cost 40 million yuan to build, and 250 kg dynamite and about 5000
detonators to blow up. Besides holding exhibition, the center was also
used as administrative reception center due to its convenient location
and sound facility. However, the mine boss who bought the center for 30
million yuan decided it was an even better idea for the center to become
the city’s first five-star hotel instead of holding some stupid
exhibitions. Thus down with the landmark exhibition center and here was
250 million yuan to build the glorious five star hotel. To welcome the
city’s first five-star hotel, vice mayor of Yongchuang City came down to
the site in person and helped monitor the blasting process.

4. Zhongyin Building in Wenzhou City, 6 years old, life ended on May 18th,
2004. Situated at the city’s golden area since 1997, the 93 m high
building was never put into use as it was identified as unsafe building
and soon brought out the city’s biggest financial crime ever, involving
43 suspects and over 30 million yuan corruption. And for that reason, it
was also remembered as corruption building. Solving all of the
building’s safety problems would demand more than the cost of building a
new one, the authority then blow it up.

5. Shouyi Sports Center, 10 years old, blasted on June 16th,
2009. It was called “champion’s cradle” for fostering a good many sport
talents for Hubei Province, including badminton     world champions Gao
Ling and Wei Yili. But when its existence bothered the 20 billion worth
museum project for the 100th anniversary of Revolution of
1911, it had to give way, even though it was only 10 years old and still
upgrading its sport equipments up till the demolition.

6. Five Lake Hotel in Nancang City, 13 years old, blasted on Feb. 6th,
2010. The four star hotel building was finished in 1997 and viewed as
one of the landmark building in Nancang City too. The hotel was taken
over by a Hong Kong company who decided to turn it into a five-star
hotel. It was estimated that the demolition would result in 40,000 ton
of construction waste, taking up a large area of refuse landfill.

7. Shenyang Summer Palace, 15 years old, blasted on Feb. 20th,
2009. Completed in 1994, the palace is a water entertaining center that
cost 200 million yuan to build. It was the biggest arched architecture
in Asia then. For a long time, Shenyang Summer Palace was viewed as the
greatest fun in the city, receiving over 400 million tourists in its
first 5 years. However, the city’s greatest fun was blown up within 2
seconds for the sake of real estate development.

8. Zhejiang University’s No. 3 building in lakeside campus, 16 years old, downed on Jan. 6th,
2007. Standing 67 m high with 20 floors, the No.3 building was the
highest on West Lake side. But the university transferred part of the
campus land into commercial property for 2.46 billion yuan, thus torn
down the building to hand over a flat land. On the day of the blasting,
teachers and students flocked together to witness the spectacular and
tragic moment.

9. Tsingtao Railway Building, 16 years old, blasted on Jan. 17th,
2007. The building was designed in accordance with three star standard
and meant to be there for about 100 years. Opened in 1991, it was seen
as one of the landmark buildings of the city at that time. Still it had
to give way when it countered the construction program for the 2008
Olympic.

10. Shenyang Wulihe Stadium, 18 years old, blasted on Feb 12th,
2007. Known as China’s blessed football land, the stadium costs 250
million yuan to build. It witnessed the one time China football team
became World Cup qualifier on Oct. 7th 2001. Two years later,
Shenyang City successfully applied for football competition venue of
the 2008 Olympic. The government switched its alteration and addition
plan to tearing down the 18-year-old stadium instead. The land was then
auctioned at 1.6 billion yuan and gulped up 1.9 billion yuan investment
to build a new Olympic Center.

11. “Asian First Arc” in Shanghai, 11 years old, demolished on Feb. 13th,
2008. The beautiful arc was seen as the best viewing spot in Shanghai
bund. The bridge was designed to service for at least 100 years, but the
bund passage remodeling program decided it should die at 1/10 of its
life span. “We architect designers, should look further in future
planning.” Said Zhao Lizhong, designer of the arc.

h/t Robert

 


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Sun, 09/26/2010 - 19:41 | Link to Comment Midas
Midas's picture

First Post of my life Bitchez!  Welcome to me!

Sun, 09/26/2010 - 19:47 | Link to Comment weinerdog43
weinerdog43's picture

Well done Midas.  Now prepare for a bunch of posts advising how great China is, and how fantastic their economic model remains.  Oops, the Chinese have not created anything of value for 1,000 years. 

 

Let the flaming begin. 

Sun, 09/26/2010 - 20:18 | Link to Comment tmosley
tmosley's picture

Says the guy who buys 98% of his consumer goods from China.

Sun, 09/26/2010 - 20:26 | Link to Comment weinerdog43
weinerdog43's picture

Create dumbass.  Do you know the difference between copying and creating? 

Sun, 09/26/2010 - 20:45 | Link to Comment spartan117
spartan117's picture

What really is your point?  Or do you even have one?  So China "copies" and "makes" lots of consumer goods.  Most, if not all, are not of original design, yet the world wants and needs these goods.  Are you saying they don't play an important economic role in the global arena?  They provide cheap labor.  Are you upset that they have a a competitive edge when it comes to cost of production?  You hate China because of...?  Or you just hate China, period.  It's entirely your right to hate them, for whatever reason, but if your position is that they are irrelevant somehow, then you're incredily stupid.

Sun, 09/26/2010 - 20:56 | Link to Comment weinerdog43
weinerdog43's picture

"Are you saying they don't play an important economic role in the global arena?  They provide cheap labor."

Are you retarded?  Read the post.  Of course an economy that produces mass quantities is important.  Chimps can copy stuff too.   Are they as smart as a human?  My point is that when the West stops exporting it's ideas, we'll be competitive too.  Henry Ford paid his workers a higher wage because he wanted them to be able to buy his products. 

Sun, 09/26/2010 - 21:05 | Link to Comment spartan117
spartan117's picture

Really, chimps can build cars?  I didn't know that.  Now you're comparing the Chinese to chimps.  You obviously have an issue with China and see their competitive edge as a personal attack on your well-being.  The truth is, capital will flow to where it is most productive.  You need to get a grip and stop taking things so personally.  It's obvious since I am the second poster you have attacked regarding this topic.

And the last time I checked, the West did pay its auto-workers more than the Japanese paid theirs, and the west was still not very competitive. 

Sun, 09/26/2010 - 22:17 | Link to Comment weinerdog43
weinerdog43's picture

Christ, you must either be a chimp or a Republic. 

WHAT. HAVE. THE. CHINESE. PRODUCED. IN. THE. LAST. 1000. YEARS?

Go for it chimp.

Sun, 09/26/2010 - 22:42 | Link to Comment DaveyJones
DaveyJones's picture

your right they haven't invented much, their language is simple, and they're broke compared to us. Now give me a banana

Sun, 09/26/2010 - 22:46 | Link to Comment weinerdog43
weinerdog43's picture

Thanks.  I'm not picking on the Chinese people.  They've been misruled longer than virtually anyone. 

The fact remains:  Show me any Chinese product that was not invented/perfected in the West over the past 1,000 years. 

 

I would call this EPIC FAIL.  Prove me wrong.  Thanks.

Sun, 09/26/2010 - 23:13 | Link to Comment sushi
sushi's picture

Chow Mao Mein?

 

Gotta remember that 40 years ago China was a country of peasant rice farmers. Today it is the 2nd largest global economy still populated by peasant rice farmers. Don't know who they imitated to achieve that result but maybe the west should learn to copy and perfect the Chinese model. Perhaps replace bottomless debt with bountiful rice paddy (an Irish carbohydrate dish pefected by Han).

Sun, 09/26/2010 - 23:34 | Link to Comment tmosley
tmosley's picture

Mmm-hmmm.

Past 1000 years?  Ok, we'll start with gunpowder and the compass.  Move on a bit beyond that and they were the first to practice archaeology.  

Too old for you?  in 1972, they discovered the anti-malarial properties of artemisisnin (artemisinin).

That's the "A"s for the last 1000 years.  Now for the "B"s:

The bomb, the bristle toothbrush, and the bulkhead partition.

The C's: Co-fusion steel process was perfected, the use of coke for fuel, and the chain drive.

In the D's, they have only dominoes for the last 1000 years.

They make up for this in the E's, where they founded the study of endocrinology, created the escapement (useful for clockworks), and exploding bombs.

Everyone knows about fireworks, but they might not know that they also invented aerial flares.  They should also be noted for the invention of forensic science.

They created the gas cylinder.  They were the first to develop hybrid rice (in the 1970's).  

They were the first to inoculate for SMALLPOX, at least 400 years prior to its discovery in the West, and it may have been in sporadic use for several hundred years before that.

They invented Jacob's staff, a surveying tool.  Their junks, while in existence for hundreds of years prior, were still traveling the open ocean as far as Africa, and some say America (though evidence of this is sketchy at best).

Aerial signaling using kites was perfected during this time.

In 2006, the Chinese invented maglev wind power generators.  They also invented modular architecture.

They invented the naval mine.

They invented the pound lock (as in canal lock, allowing ships to be raised and lowered between waterways and canals).  Also, porcelain.

The raised relief map, the restaurant menu, rocket bombs.

Suspension bridges.

Toilet paper (actually came BEFORE fiat currency, but didn't see widespread use until around 1200).

So, is that enough for you, you raving jackass?

 

Mon, 09/27/2010 - 07:19 | Link to Comment kathy.chamberli...
kathy.chamberlin@gmail.com's picture

 Also, porcelain.

you don't invent porcelain, it is a clay, natural formula from the earth. maybe they found it, but not invent. it is clay.

Mon, 09/27/2010 - 17:07 | Link to Comment tmosley
tmosley's picture

I guess no-one invented the integrated circuit either, since it is made out of sand and metal?

Porcelain is NOT a natural clay, it is a specific blend of minerals that forms and exceedingly strong ceramic at super-high temperatures.

Mon, 09/27/2010 - 20:09 | Link to Comment kathy.chamberli...
kathy.chamberlin@gmail.com's picture

well i would go dig clay out of the ground locally. i thought porcelain was found in great britian along the cliffs of dover. cause dover clay. i have become some what forgetful lately. it has been a few years since i used porcelain. it is very very hard to throw porcelain clay because it doesn't have much grog. can't throw large pieces. i used a white stoneware that fired similarly to porcelain. porcelain cracks easy, too. thanks for your technical reasoning.

*Dover (Cone 6-10) An awesome high fire white stoneware! ... *Jiki (Cone 8-10) means Fine Porcelain. This clay is the ultimate in translucent porcelain

 

Mon, 09/27/2010 - 08:15 | Link to Comment aurum
aurum's picture

they are transferring "wealth" from toilet paper into hard assets....taking advantage of the US to protect their future..they've been doing it for quite a while....while we here in the US indebt ourselves into oblivion...in my opinion theres not much else that is more intelligent....duh.

Mon, 09/27/2010 - 08:57 | Link to Comment spartan117
spartan117's picture

I might be a chimp, but at least I didn't dig myself into a hole and attempt to argue my way out of it.  Any other stupid blanket statements for today?  Next time you open your mouth, you should do a little research.  Moron.

Sun, 09/26/2010 - 22:33 | Link to Comment kujo
kujo's picture

You mean China is Vegas?

Sun, 09/26/2010 - 22:59 | Link to Comment kujo
kujo's picture

How come they got money to build shit and we don't?

Sun, 09/26/2010 - 23:01 | Link to Comment kujo
kujo's picture

How come they got money to build shit and we don't?

Sun, 09/26/2010 - 23:30 | Link to Comment Kali
Kali's picture

Well, SOMEBODY is.  Walking around town yesterday, saw a building that isn't even 10yrs old, being torn down and a new CRE building going in!  Remember when it was built, had a Subway and a Supercuts and something else, don't remember what now.  Even though, a guesstimate, 30% of CRE around it is for sale or lease, mostly newer buildings.  I even commented out loud, who would finance a new CRE in this climate?  Very strange.

Sun, 09/26/2010 - 20:45 | Link to Comment Carl Marks
Carl Marks's picture

They said the Japs were copycats too

Mon, 09/27/2010 - 05:28 | Link to Comment jez
jez's picture

Yeah, I remember that. And then came the 1969 four-cylinder Honda CB750, which, if you were an open-minded motorcyclist, changed everything:

http://world.honda.com/history/challenge/1969cb750four/text/01.html

Nobody's ever been able to tell me what they copied when they designed that.

It's a lesson that the West never seems to learn. We started off by sneering at these funny little men with their funny little motorcycles. As late as 1966, BSA (in England) was making more bikes than any other company in the world. By 1973, BSA-Triumph was bankrupt. And the sneering had lessened somewhat.

Same with cameras and optical equipment. Same with cars, TVs, radios, photocopiers, and so on and so on.

But of course, unlike in the 1960s, Japan is now a comparatively high-cost country. China has taken Japan's place. I bet that within 10 years, China will be offering BMW-quality vehicles at decidedly unBMW prices. And, once again, some will sneer at these funny little men with their funny little vehicles.

It will last a couple of generations, and then some other low-cost country will start to displace China. I wonder which one it will be . . .

Mon, 09/27/2010 - 17:17 | Link to Comment tmosley
tmosley's picture

No-one will displace China until they fully reverse coarse on their drive from socialism to capitalism.  They have the breaks on the floor right now, though in some places, the gas is also to the floor.  We'll see.

The most useful predictor of a nation's long term global power is this:  population/(Government spending as a fraction of GDP).  There is likely an exponential term in there somewhere, but this is the simple version.  The US lead the world in 1900, with a score about what China's is today (but with a MUCH smaller population).  Lack of government spending implies freedom for the citizens, who will use that freedom to advance their own lot in life, creating a huge amount of capital.  If the government leaves it alone, that capital will grow exponentially forever, until you get a bunch of immortal energy beings floating around a dying universe.  Life is quite good in the meantime for the average person.  Even the poorest of the poor will have access to at least some minimal capital, as it will be so cheap it can be given away for free.  Governments try to force that process to happen early (when they have their citizens best interests in mind), or they try to take that capital and more for themselves and their friends (when they don't).  Either way, you wind up with slowed, then stopped, then reversed progress.

Mon, 09/27/2010 - 20:12 | Link to Comment kathy.chamberli...
kathy.chamberlin@gmail.com's picture

i thought you bought a BMW for the brand, and that they were expensive. all about the amount of money something costs, not the quality¿

Sun, 09/26/2010 - 20:42 | Link to Comment snowball777
snowball777's picture

If you can find 1% of your house that doesn't have their little yellow fingerprints on it, I'd be impressed.

Sun, 09/26/2010 - 20:21 | Link to Comment stewie
stewie's picture

Midas Bitchez!

Sun, 09/26/2010 - 21:16 | Link to Comment kato
kato's picture

fag

Sun, 09/26/2010 - 19:41 | Link to Comment Fast Twitch
Fast Twitch's picture

Globalization is out of control! Talk about imploding the ambition of construction workers...WTF

Sun, 09/26/2010 - 19:42 | Link to Comment gwar5
gwar5's picture

That's amazing. China and the whole world is bubblicious too.

At least they're not directing all their endeavors to the military. They are expanding their capabilities, but it only represents a small part of their economy and it could be much much worse.

Sun, 09/26/2010 - 19:46 | Link to Comment FunkyMonkeyBoy
FunkyMonkeyBoy's picture

Hey, isn't that first picture of building 7?

Sun, 09/26/2010 - 19:50 | Link to Comment CrockettAlmanac.com
CrockettAlmanac.com's picture

It's funny because it's truth.

Sun, 09/26/2010 - 20:04 | Link to Comment FunkyMonkeyBoy
FunkyMonkeyBoy's picture

or maybe it isn't funny because it's true.

Sun, 09/26/2010 - 20:24 | Link to Comment Careless Whisper
Sun, 09/26/2010 - 20:41 | Link to Comment repete
repete's picture

Do you think china will be ok with this new building forever being refered to as "Building What"?  http://buildingwhat.com/

Sun, 09/26/2010 - 20:58 | Link to Comment Max Hunter
Max Hunter's picture

Amateurs!... When Americans take down buildings we get way more bang for our powder... Did it in 2001 got the following:

-Increase in Defense spending

- Public behind senseless war to kill 1 million muslims

- Patriot Act... Free spying for anyone able. No more civil liberties.

- A whole new department to waste untold amounts of USD's

- Americans wetting the bed at night worried about that crazy muslim at work coming in one day and going postal.

- And last but certainly not least, enhanced love and admiration for the great state of Israhell..

Wow... what a bag full of goodies... Like coming home from a birthday party at the rich kids house.. mmmmm....

 

 

Sun, 09/26/2010 - 21:25 | Link to Comment goldfish1
goldfish1's picture

- and, a great coverup to the missing $2.1 trillion at the Pentagon announced by Rummy on 9/10/2001

Mon, 09/27/2010 - 03:26 | Link to Comment umop episdn
umop episdn's picture

http://www.youtube.com/watch?v=3kpWqdPMjmo

2.3 trillion actually. I guess 200 billion is chump change these days, tho.

Mon, 09/27/2010 - 07:25 | Link to Comment Incubus
Incubus's picture

There was a muslim where I used to work a few years ago: what a scary, terrible, horrible person. 

 

All he talked about was honey.

 

...who talks about honey?  I bet he was hiding something in that honey.

Mon, 09/27/2010 - 11:17 | Link to Comment scratch_and_sniff
scratch_and_sniff's picture

He talked about honey? Man that's fucked up, he was obviously a nutcase. 

Mon, 09/27/2010 - 20:13 | Link to Comment kathy.chamberli...
kathy.chamberlin@gmail.com's picture

h o n e y     m o n e y,  bitchez

Wed, 09/29/2010 - 21:37 | Link to Comment Political Athiest
Political Athiest's picture

No, not clean enough. The Chinese government need to call Inside Job Demolition Crew to implode buildings to collapse PERFECTLY in their footprint at free fall speed.

Sun, 09/26/2010 - 19:46 | Link to Comment Dollar Bill Hiccup
Dollar Bill Hiccup's picture

"Creative destruction" translated into CCP speak.

The US firebombed Tokyo and out of the ashes sprang a booming economy.

For the Chinese, who better to create the rubble from whence to spring forth than themselves ...

 

Sun, 09/26/2010 - 23:42 | Link to Comment FEDbuster
FEDbuster's picture

We should learn something from this.  It seems we like to go elsewhere to blow shit up and then pay to rebuild it using the locals that are still alive to do the rebuilding.  Why don't we carpet bomb Detroit, Cleveland, Newark, etc.... Then put out of work construction workers back to work rebuilding some cities right here in the USA! 

Take a look at Hiroshima after we dropped the bomb on it and what it looks like today.  Talk about urban renewal.  Let's keep those destructive dollars working right here, right now. Time for the government to blow some shit up here.

http://www.youtube.com/watch?v=wcW_Ygs6hm0&feature=related

 

Mon, 09/27/2010 - 05:45 | Link to Comment jez
jez's picture

Dead right, FEDbuster. I've been saying the same thing for years, ever since seeing economics commentators on TV telling me that Hurricane Katrina would be good for the local economy, because of all the reconstruction work that would be needed.

So, let's give the Air Force some useful target practise. We obliterate one major US city every week. Why not nuke the San Andreas fault while we're at it? Pretty soon we'll all be rich! 

Mon, 09/27/2010 - 11:24 | Link to Comment FEDbuster
FEDbuster's picture

Vegas is the perfect example.  The avg. life of a casino is about 25 years, then they tear it down and build something bigger and better on the site.

Sun, 09/26/2010 - 19:46 | Link to Comment alien-IQ
alien-IQ's picture

The Chinese version of "Hiring one man to dig a hole and hiring another to fill it"?

I fear this will give many home builder lobbyist much ammo for charging towards a congressional mandate to do something similar here...because, obviously, this makes perfect sense?

Sun, 09/26/2010 - 20:34 | Link to Comment mikla
mikla's picture

Yes -- of course this makes sense.

People are getting too excited over this topic.

There is, of course, a very rational reason for this demolition.

These buildings were the wrong color.

Sun, 09/26/2010 - 20:44 | Link to Comment snowball777
snowball777's picture

Could also be along the lines of:

- Construction begins (quick, we got the loan, build, build)

- Inspection from (bought out or not) committee-approved inspector

- Glaring safety deficiencies are found (probably real, if you can judge by their env record)

- Reboot

Sun, 09/26/2010 - 21:30 | Link to Comment goldfish1
goldfish1's picture

Don't forget:

- Rotten drywall  http://www.newsinferno.com/archives/4700

Sun, 09/26/2010 - 19:46 | Link to Comment CrockettAlmanac.com
CrockettAlmanac.com's picture

FDR would be proud. This is digging a hole and filling it in again on a grand scale. If you want a New Deal you've got to bring down the house of cards first.

Sun, 09/26/2010 - 20:11 | Link to Comment tunaman4u2
tunaman4u2's picture

Great comment

Sun, 09/26/2010 - 21:29 | Link to Comment StychoKiller
StychoKiller's picture

The Broken Window Fallacy writ large!  Wait till those missed opportunity costs catch up wit'cha!

Sun, 09/26/2010 - 23:46 | Link to Comment FEDbuster
FEDbuster's picture

Well not all banks are sitting on their REO inventory:
http://www.youtube.com/watch?v=ZsgOaCZ2Lag

Sun, 09/26/2010 - 19:47 | Link to Comment jbc77
jbc77's picture

Just when you thought you've seen it all. Insta GDP boys and girls. You got to be shitting me...

The world is a fraud...

Sun, 09/26/2010 - 19:46 | Link to Comment Apostate
Apostate's picture

I'm sure glad that Il Duce is creating an infrastructure bank. Maybe we will catch up to our brothers in socialism soon with his guidance. 

Sun, 09/26/2010 - 19:50 | Link to Comment vainamoinen
vainamoinen's picture

Am I nuts or do those photos have an eerie resemblance to the events of 9/11?

China practicing "false flags"? And to what horrible end?

 

Sun, 09/26/2010 - 19:58 | Link to Comment Mercury
Mercury's picture

I foresee the imminent creation of a commercial real estate czar and I think I know what his favorite policy tool is going to be.

So what's the publicly traded U.S. demolition/explosives maker play?

Sun, 09/26/2010 - 19:57 | Link to Comment iota
iota's picture

Wait, wait, I think I have it. China is Sim City and currency manipulation is the money cheat?

 

Sun, 09/26/2010 - 20:07 | Link to Comment FunkyMonkeyBoy
FunkyMonkeyBoy's picture

But do they have 'natural disasters' set to on?

Mon, 09/27/2010 - 17:53 | Link to Comment iota
iota's picture

Man, I want some Godzilla action.

Sun, 09/26/2010 - 20:04 | Link to Comment frankTHE COIN
frankTHE COIN's picture

Short Seller James Chanos recently said that 60% of china's GDP is continual construction of housing, even though it has resulted in enough empty houses that can hold 200 million people. He stated they were on the treadmill to hell.

Sun, 09/26/2010 - 20:08 | Link to Comment Mercury
Mercury's picture

Great!  Someone tell the folks at ACORN to pack their bags - we know a place where affordable housing grows on trees!

Sun, 09/26/2010 - 20:23 | Link to Comment eigenvalue
eigenvalue's picture

Indeed, China is on the treadmill to hell. But how can you profit from it? Actually I think investing in agriculture products will turn out to be a good option. China doesn't have so much arable land as the USA. (you can check for confirmation). The construction rush has left so much land from agriculture and the bulk of it can never be re-ploughed again. Besides, the rubbles of demolished buildings in China are not recycled. Generally they will be buried in arable land too.

The construction rush and sweatshops in China have taken so much labour from the countryside that the people left planting crops are either above 60 or below 16.  Being a farmer is extremely unprofitable in China.

So if you want to profit from the China Collapse, buy agriculture products then..

Sun, 09/26/2010 - 20:21 | Link to Comment Eureka Springs
Eureka Springs's picture

I wouldn't shed a tear if we blew up our nasty big boxes, strip malls and 90 percent of our fast food/shopping infrastructure... which look like a bad elementary school sim city paper mache' project nightmare. Bring back quality and style... and do it with genuine environmental consciousness.

Notice the air quality in all but one of the photos.

Sun, 09/26/2010 - 20:29 | Link to Comment tmosley
tmosley's picture

I think you would be crying when you saw just how much American made goods (which will be just as low quality as Chinese items, by the way) cost.  $50 for a bag of tube socks is just the beginning.

Sun, 09/26/2010 - 21:31 | Link to Comment StychoKiller
StychoKiller's picture

Do those nasty big boxes include the Congress building, Pentagon and White House?

Sun, 09/26/2010 - 21:50 | Link to Comment Eureka Springs
Eureka Springs's picture

I live 40 miles from Bentonville.. I think I will complain about wal-mart architecture first

Sun, 09/26/2010 - 22:15 | Link to Comment Cathartes Aura
Cathartes Aura's picture

"wal-mart architecture" perfect non-sequitur.

eureka springs however, is lovely. . .

Sun, 09/26/2010 - 20:18 | Link to Comment Prof Quagmire
Prof Quagmire's picture

 

  I don't see anything new or innovative here.  The US has spent trillions over the last 65 years on weapons for wars that never occurred.  When the weapons become obsolete/wear out, they are junked at 2 cents on the dollar or given away or "sold" to select allies.  Then new weapons systems can be invented and produced and paid for by the taxpayers.  That's progress.  The only problem is that now the US can't produce anything competitive except systems that create megadeath and facilitate genocide.

Mon, 09/27/2010 - 00:57 | Link to Comment Real Estate Geek
Real Estate Geek's picture

Well, we produce pretty good porno, and . . .

No, that's it.   Just porno.

Sun, 09/26/2010 - 20:24 | Link to Comment Thunder Dome
Thunder Dome's picture

None of this changes the fact that my kids are going to learn to speak mandarin.

Sun, 09/26/2010 - 20:26 | Link to Comment Careless Whisper
Careless Whisper's picture

that's so they can drive taxis in shanghai

Tue, 09/28/2010 - 06:57 | Link to Comment Colonel Sun
Colonel Sun's picture

No. To open up American Laundries in Shanghai.

 

Ya'll wants starch in them shirts?

Mon, 09/27/2010 - 00:48 | Link to Comment NoVolumeMeltup
NoVolumeMeltup's picture

Yes, the same way I learned Japanese in '88. Assclown.

Sun, 09/26/2010 - 20:25 | Link to Comment RobotTrader
RobotTrader's picture

I was recently in Baja Mexico.

The amount of infrastructure spending down there is enormous.  Virtually every major highway is getting expanded and repaved.

Thousands of new jobs are being created.

Any wonder why the Hispanics are fleeing California in droves and heading back to Mexico?

If Obama would have started demolishing buildings, rebuilding highways, sewer systems, subways, etc. instead of handing out TARP money, we would be out of this recession and into boom times already.

Eventually, the RE boom in China will top out, and investors will stop investing in real estate and start buying stocks instead, sending the Shanghai to new, world record highs.

Just waiting to see if 2,700 gets cleared in the next 30 days, then it will be off to the races.

 

Sun, 09/26/2010 - 21:27 | Link to Comment kathy.chamberli...
kathy.chamberlin@gmail.com's picture

robo your my man. keepin it   U   P  *_*

Sun, 09/26/2010 - 21:44 | Link to Comment Matt
Matt's picture

whats up with the volume? for nearly two years it is consist at 4,294,967,296. or is that the highest number Yahoo! Finance can represent?

Sun, 09/26/2010 - 22:34 | Link to Comment steve2241
steve2241's picture

Carly Fiorina, is that you?

Sun, 09/26/2010 - 23:47 | Link to Comment Rick64
Rick64's picture

+100 , but he doesn't work for the people.

Mon, 09/27/2010 - 08:02 | Link to Comment Cui Bono
Cui Bono's picture

Robo- I spent two weeks late this spring across southern Baja. First- Baja has 1 major highway. Second, you pave that friggin thing every week and it does NOTHING to help the economy the moment the work is done. Tourism- the lifeblood of the southern towns, is down 85% according to everyone we asked. It was rare to see an American outside of the Dos Cabo airport. Further, do you know anything about the fresh water situation down there? In a world of just in time delivery Baja is the absolute anus mundi if things get even a bit worse. You can make a case for hearty people who have long existed on little will survive with even less- but you still need to eat and drink everyday. At this point Baja serves as an example of what we might have to look forward to in America but it is terrible as an example of useful stimulus spending. And yes, I saw construction, mostly stopped in its tracks, all over the place.... CB

Mon, 09/27/2010 - 20:24 | Link to Comment kathy.chamberli...
kathy.chamberlin@gmail.com's picture

yeah, i was in cabo and YIKES get me out of that place. the ocean isn't hardly do_able. plus, they built a new (not natural) marina. it was an estuary, before and beautiful. the crap high rise hotels along the coast. i can't imagine they are sold out. what a zoo. the ride to the airport is just plain old stark. i did like san jose, stayed in a boutique hotel,  p a r t y  time.

Sun, 09/26/2010 - 20:25 | Link to Comment tmosley
tmosley's picture

The only real question here is--how are these new projects being funded?  If it is from cash accumulated from profits, then fine.  If it is from 100% financing, then they are in a bubble.  Though one should look at where the loaned money came from.  If it is loans from savings, then all is still well, if it is from government sources, or otherwise being conjured into existence, then they are in BIG trouble.

I have yet to see much evidence of the latter, though I certainly can't preclude it.  Until I had a definitive answer on that issue, I would avoid investing in China.  

Sun, 09/26/2010 - 20:39 | Link to Comment eigenvalue
eigenvalue's picture

I can tell you. The funds are mainly from bank loans. The real estate developers and governments are highly levered.

By and by, even if the loans are from savings, that will still be malinvestments. The interest rates in China are kept artificially low. According to the Austrian School, malinvestments will rampage. And that's what we see now in China.

Sun, 09/26/2010 - 22:00 | Link to Comment tmosley
tmosley's picture

Do you have a source for your comments? 

Sun, 09/26/2010 - 22:24 | Link to Comment eigenvalue
eigenvalue's picture

http://www.chinarealestatenews.com/news/2010-06-24/97330/

This is one source.

Actually if you google "China local government financing platform", you will know how high the leverage of the Chinese local governments is.

In China, local governments cannot levy taxes and can hardly issue bonds. As a result, in order to boost GDP figures and have some income, local governments sell land. But in order to make land available for real estate development, local governments borrow from banks through financing platforms.

As for real estate developers, one of my friends is actually Chinese and works at a Chinese bank. She told me about it. Besides, you can google many other sources for confirmation.

Sun, 09/26/2010 - 23:44 | Link to Comment tmosley
tmosley's picture

Thank you for the information.  

I have been questioning the Chinese financial structure since I heard about their loan sharks who were absorbing the costs imposed on homebuyers by the government, and doing so under the table.  Without such entities, there wouldn't have been an unsustainable Chinese housing boom.  Their market is just so opaque to my eyes that I can't tell what is going on, and whether China is entirely a bubble, or if their progress is mostly a byproduct of industrialization, the growth profile of which looks EXACTLY like a bubble, and will tend ot have a blow off top, but reset to a much higher level than before the "bubble" started.

If I could have invested in China in 2000, I would have.  After they started adopting Hong Kong economic strategies, their growth was inevitable.  Sadly, there is no way to tell if the new equilibrium is higher or lower than the current level, at least I can't see it..

Sun, 09/26/2010 - 23:52 | Link to Comment eigenvalue
eigenvalue's picture

China is a BUBBLE, which is gospel truth. You can just google "Andy Xie", who was the ex-economist at Morgan Stanley. He has written great articles about China. His predictions and analyses are generally correct although the timing is not so accurate.

Sun, 09/26/2010 - 22:31 | Link to Comment eigenvalue
eigenvalue's picture

If you really want to profit from the Chinese economy, pls invest in agriculture. Not in China, but in the US. Because China will need loads of agriculture products in the future as the Chinese are converting their precious land into useless buildings and polluting their own environment.

Sun, 09/26/2010 - 20:42 | Link to Comment Careless Whisper
Careless Whisper's picture

okay, invest in the place that spends its tax dollars bailing out jp morgan, goldman, and aig, among other banksters, instead of this:

http://www.youtube.com/watch?v=eyHrXfP2YKc

 

Sun, 09/26/2010 - 21:56 | Link to Comment tmosley
tmosley's picture

I don't invest in America either.  I'm frontrunning the world into the next world reserve currency.

Mon, 09/27/2010 - 00:08 | Link to Comment BorisTheBlade
BorisTheBlade's picture

The only real question here is--how are these new projects being funded

Developers have to be really stupid to put their own equity in such quantities under the risk:

  • resi should be funded from pre-sales + bank loans
  • hotels - bank loans
  • offices - bank loans and in some cases pre-sales or pre-leasing commitments
  • infrastructure (like the bridge) - most likely government money

So, it's a combination of some sort, maybe with lower LTC than in the US, but still bank financing is a big part of it. It's hard to say when it comes to China what is the source of the funds and one has to be really careful making any ascertions regarding this, just remember Dubai: one guy told me in the beginning of 2008 that Dubai is 90% equity financed and no repercussions from financial crisis will follow, many believed that.

If it is loans from savings, then all is still well

Until some point, when the bubble bursts, a lot of savers will get badly burned and then a whole hell breaks loose for CPC.

Sun, 09/26/2010 - 20:26 | Link to Comment Harbourcity
Harbourcity's picture

I just imploded my pants after wearing this underwear only 1 day. 

Mon, 09/27/2010 - 00:13 | Link to Comment G-R-U-N-T
G-R-U-N-T's picture

+1

Sun, 09/26/2010 - 20:28 | Link to Comment whereismyorange
whereismyorange's picture

Big deal...

I used to do this with legos

Sun, 09/26/2010 - 21:32 | Link to Comment MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Build up a really big tower of blocks...Look at it for a moment or two...Smash it.  Then, do it again.

That's the image I get too...

Sun, 09/26/2010 - 20:37 | Link to Comment FischerBlack
FischerBlack's picture

Why does bulding a structure add to GDP, but destroying one doesn't subtract? Oops, my bad. The answer is, because then Cash for Clunkers would have looked like the sham that it was.

Sun, 09/26/2010 - 20:44 | Link to Comment eigenvalue
eigenvalue's picture

Because in China, bureaucrats are evaluated by their superiors not voters. The most important criterion is GDP, gross GDP to be precise. Destroying one building only reduces net GDP not gross GDP.

Mon, 09/27/2010 - 00:40 | Link to Comment BorisTheBlade
BorisTheBlade's picture

Because GDP is a measure of aggregate output, not the aggregate asset value. You probably add to GDP every time you flush the shit down the toilet.

Sun, 09/26/2010 - 20:39 | Link to Comment Perseid.Rocks
Perseid.Rocks's picture

I've said it before.. we need to drain the gulf of mexico, start deep-water drilling on dry land.. think of all the job creation.. think of all that real estate. China could not even hope to match that endeavor.

Sun, 09/26/2010 - 21:06 | Link to Comment Max Hunter
Max Hunter's picture

That's a great idea.. I had no idea the GOM was like bathtub and could simply be drained..

Sun, 09/26/2010 - 20:48 | Link to Comment nmewn
nmewn's picture

An enigma, wrapped in a riddle, shrouded in a mysterious cloud of dust, turns out to be no question at all...LOL.

Sun, 09/26/2010 - 20:58 | Link to Comment surfsup
surfsup's picture

Great post Tyler...   Hong Kong had an airport which went the way of the dust as well:

http://www.squidoo.com/kai-tak   The videos on this site are ridiculous.   A friend who landed there in the 70's said the runway was so short as the 747's came in they'd gun their engines ever ready to do a touch and go!  Captain would come on and tell folks this is normal for this airport, yelling "Brace, brace yourself!"  Many jet a nacelle sparked on that runway and the cross winds were nasty...   

 

The famous (or infamous) Kai Tak International Airport, Hong Kong, had one of the most challenging, exciting and hair-raising airplane landings in the world. 



Located almost in the center of densely-populated Kowloon in Hong Kong, Kai Tak Airport forced pilots to make a sharp right turn at an altitude of under 700 feet -- just above Kowloon's high-rise apartment blocks.

 


Passengers would see the steep mountains with which Hong Kong abounds. Then came the sharp right turn and banking of the aircraft. Finally, they would look out  the windows and could almost touch the billboards covered with huge Chinese characters as the plane rapidly made its final descent.

The airport was closed on July 5, 1998, but the nostalgic memories remain!

Sun, 09/26/2010 - 21:35 | Link to Comment Atomizer
Atomizer's picture

Hmmm, flew in on Cathay Pacific. All ready for a adrenalin rush. I was disappointed taxiing to gate. There were no announcements about fear/brace yourself during landing or take off.

Sun, 09/26/2010 - 21:46 | Link to Comment surfsup
surfsup's picture

The stronger the cross wind the further to the left of the runway the pilot had to come in from to compensate and make a last minute set up -- you were lucky -- or apparently not...  : > 

http://www.youtube.com/watch?v=z2fzJ5Xjcmg&feature=player_embedded

Sun, 09/26/2010 - 21:04 | Link to Comment Shakes
Shakes's picture

So I go long AkzoNobel?

Sun, 09/26/2010 - 21:04 | Link to Comment Atomizer
Atomizer's picture

November 2009

China's economy is continuing to grow despite the global recession, helped by a massive government stimulus package of $585bn.

http://www.youtube.com/watch?v=0h7V3Twb-Qk

Sun, 09/26/2010 - 21:07 | Link to Comment freshman
freshman's picture

Americans should do the same thing, just blow up half of the buildings and rebuild them. Unemployment rate should go down to 5% in no time. With Dr. Ben printing money, financing should not be a problem.

Sun, 09/26/2010 - 21:20 | Link to Comment Gordon Freeman
Gordon Freeman's picture

you'll never get people to take the jobs...

Sun, 09/26/2010 - 21:28 | Link to Comment kathy.chamberli...
kathy.chamberlin@gmail.com's picture

tyler, your the shit†

 

Sun, 09/26/2010 - 21:34 | Link to Comment carbonmutant
carbonmutant's picture

I'm missing the part about how the investors who bought this property profit from this demolition.

Sun, 09/26/2010 - 22:00 | Link to Comment nmewn
nmewn's picture

You to huh?...LOL.

Sun, 09/26/2010 - 21:42 | Link to Comment blunderdog
blunderdog's picture

So on one side of the planet, we build buildings to create debt-vehicles for banks which will be defaulted on but can be used to maintain electronic balance sheets.

On the other side of the planet, they build buildings to create obstacles to destroy because they're in the way of other buildings that need to be built.

It all makes sense to me--wouldn't have it any other way.  Opportunity abounds in this world of limitless potential.  Paradise is just around the corner.

Sun, 09/26/2010 - 21:52 | Link to Comment bobert
bobert's picture

Some of those buildings were tilting as they fell. That's not appropriate. Proof perhaps that the Chinese didn't do 9/11.

Sun, 09/26/2010 - 21:59 | Link to Comment suteibu
suteibu's picture

And then you have some buildings in China that just fall down on their own.

http://www.chinadaily.com.cn/china/2009-06/27/content_8330067.htm

Sun, 09/26/2010 - 22:02 | Link to Comment FischerBlack
FischerBlack's picture

We're executing the Great Depression timeline point-by-point. The problem is, right now we're only just getting started with 1930 (Smoot Hawley Tarrif Act).

 Buckle your seat belts for this one. :)

 

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aMwQIqFSAAMc

Sun, 09/26/2010 - 22:06 | Link to Comment Segestan
Segestan's picture

With the huge number of persons living in China ... demolition is probably a good policy.

Building costs must be less than the cost of renovation? Plus they keep the construction industry healthy.

So long as China has a trade surplus they can do this sort of thing.

Sun, 09/26/2010 - 22:11 | Link to Comment Oligarchs Gone Wild
Oligarchs Gone Wild's picture

Great video from 2009 - empty cities in China just waiting for people to show up (and of course to hit 8% GDP).

http://www.youtube.com/watch?v=0h7V3Twb-Qk

 

Sun, 09/26/2010 - 22:38 | Link to Comment tom
tom's picture

The latest figures I saw was Chinese bank lending is up to $7 trillion for a $5 trillion GDP economy. That compares to $9.25 trillion of bank credit in the US's $14.5 trillion economy. But China doesn't have nearly as many or as big alternatives to traditional banking.

A trade surplus is worth a lot, but China can't carry on expanding credit at 20%/year. The system is near cracking point and there are already tugs of war going on within the upper echelons over whether to keep trying to carry on, or attempt a soft landing while it's still possible. A couple months ago the austerity side seemed to be taking the upper hand, but already those guys seem to have been sidelined. The banks are again being encouraged to pump it up.

Sun, 09/26/2010 - 22:35 | Link to Comment Bankster T Cubed
Bankster T Cubed's picture

they could have accomplished so much more creative destruction had they crashed passenger jets into them first

Sun, 09/26/2010 - 23:08 | Link to Comment chindit13
chindit13's picture

.

Mon, 09/27/2010 - 20:25 | Link to Comment kathy.chamberli...
kathy.chamberlin@gmail.com's picture

i junked you, only to get your attention.

Sun, 09/26/2010 - 22:42 | Link to Comment Madhouse
Madhouse's picture

WTF ???

Sun, 09/26/2010 - 23:20 | Link to Comment JW n FL
JW n FL's picture

They have to maintain an 8% growth rate to put all those farmers moving into the City's to work... 8% or they are going backwards...

 

Our stock market is 10k...

 

So who's jerking who off? Is anyone really paying attention, does anyone here other than like 10 of us really know what the fuck is going on and why?

Sun, 09/26/2010 - 23:35 | Link to Comment Midas
Midas's picture

Wow!  Looks like I started one hell of a discussion with my first post.  I think I am going to have some fun here.

Let me try another one.  Anyone who thinks aapl is undervalued raise your hand.

Mon, 09/27/2010 - 00:37 | Link to Comment fresbee
fresbee's picture

This blog is fast approaching its optimum level of "dumbness". 

Tak a step back and see the post again. Just cause a country demolishes a few buildings and continues its frantic pace of construction in rest of the country, it does not mean it is is creating magic in its GDP. China has 2 billion people and it is bound to be growing at 9%. It is only surprising it is not growing at 13% or 14%. 

 

Look at India. 1.2 billion people and 1.2 trillion in GDP and growth of 8% consistently. Why dont you guys go and hunt for building crashes their and then say India too is fudging its numbers. 

 

The merging markets are growing and that is the fact obviously not easy for people 2 levels removed to understand. 

 

There is only one loser in the world today and that is US and it is purely cause of the deleveraging consumer in the US. But the world has now moved on as its set of 300 mn folks out of which 35 mn have negative networth and hence not much use. Rest are in cowering fear of depression. On the other side of the world, the mood in China is super hot right now. In Bombay, the markets are racing away. The growth and the ambition and the desire to excel is evident even from a school kid. Then there are the giant corporation of China and India. Both India and China advance tax numbers are 30% higher than last yuear and they are visible in their growth as economic super powers.

 

I cant get it when blogs like zero hedge (Apparently run by smart folks) try to run them down. To them, the world is one deflated balloon!!

Mon, 09/27/2010 - 00:51 | Link to Comment Tyler Durden
Tyler Durden's picture

We'll be sure to reevaluate our "deflated balloon" outlook on merging markets following this wise advice of super hot chinese moodyness. Curious as to what your take on Chinese solar companies is.

Mon, 09/27/2010 - 01:45 | Link to Comment fresbee
fresbee's picture

No offense meant but China continues to defy American wisdom. Doesnt it?

I dont care much about solar companies anywhere in the world.

Why dont you have a poll on China. Am pretty much sure most of the readers will be negative on China. Then there are absolute nuts like Chanos who see the China overvalued by 2600 times. And that just shows why China is not ready to crack. 

The GDP numbers may not be adding up and there may be 100 indicators that confound the investment managers. But China has 2.3 trillion dollar reserves, has the world largest army, has over 2 billion people at a demographic far more superior to US. That is the bottomline. Look at the electiricity growth, broad band numbers, Telecom penetration and they are all an indication that the Chinese GDP is not overstated. Yes they are building a few empty buildings but thats far better use of capital that keeping your reserves in dollar.

So China is not a bubble but an opportunity of a lifetime as it decouples from the US (It already has with only 18% of exports to US and the Chinese already indicating that yuan is on its way up) That is the surest indicator that China and India are ready to get away from the US and its paltry 250 mn apparently "rich" consumers.

What bugs me is the sheer plethora of one sided analysis at zero hedge. Be it S&P at 800 or 1200, there is one underlying theme here and that is of gloom. Its almost as if all of aUS unemployed have logged on here. :)

 

Mon, 09/27/2010 - 03:26 | Link to Comment eigenvalue
eigenvalue's picture

Have you ever lived in China for more than 6 months and talked with common Chinese citizens? If you had, you would probably not think China would be an opportunity of a lifetime.

By and by, China has only 1.3 billion people not over 2 billion and the demographic picture is far worse than that of the US because of the "One Child" policy.

Mon, 09/27/2010 - 04:27 | Link to Comment fresbee
fresbee's picture

Why do I need to live in China to invest thr? Please explain when you say "ou would probably not think China would be an opportunity of a lifetime."

Why, the chinese citizen has some great to contribute to the stats? or he thinks he is too poor to compete? 

That is the opportunity and that is how money flows from a land where it is abused to a land where it is needed and will grow. Basics!!!

Let me also indicate the shanghai index is going to outperform every other index over the next 24 months as China shrugs away bears. All this while, HFT are going to take S&P to the cleaners.

Sorry on the population of China. What I meant is India and China are large economies with tremendous scale. They are not bubbles as the post implied. I know India inside out and looked closely at China. I would love to take opposites to Chanos and bet his house that China will rape his fund. 


Mon, 09/27/2010 - 07:55 | Link to Comment eigenvalue
eigenvalue's picture

OK, first of all, China is not a market economy. If you are Chinese with no relationship with the government, you can hardly succeed in becoming rich by starting your own business. The tax burdens in China are among the highest in the world. Cronyism, kickbacks and briberies are everywhere.

As for the official GDP figure, you don't need to care. The statistics in China are mainly rubbish. I have direct connection in the National Bureau of Statistics of China. He told me that the majority of the data are either overstated (GDP, etc) or understated (CPI, etc). One example is if you add the GDP figures of all the Chinese provinces, the sum is much larger than the Chinese GDP as whole.

As for the Shanghai index, have you ever invested in the Chinese market before? Do you know which stocks perform the best in China? If you want to make money, pls forget about those large caps like ICBC, etc. The best-performing stocks in China are highly speculative small caps like DALIAN YI QIAO MARINE SEED-A (002447.CH, P/E ratio almost 100) Do you think that's a healthy market?

It seems I can hardly convince you. I guess you really have some bind faith in China. Then I wish you good luck if you can beay Chanos..

;-)

Mon, 09/27/2010 - 10:21 | Link to Comment fresbee
fresbee's picture

Those are all run down argument which have been made zillion times. 

 

Which is why I said bottom line it has 1.3 bn people, 2.3 trillion reserves and the world largest army and now slowly getting a powerful navy that is challenging the US everywhere. 

 

China GDP numbers are off by a few decimal thats all cause if u look at all the other numbers like tele density, internet penetration retail sales etc....they all make u wonder why is the GDP only 9% and not 13%. Getting my point? China is not a bubble. It is so huge that it has confounded most investment managers cause all they can see is a few empty buildings.

 

Mon, 09/27/2010 - 03:34 | Link to Comment The Real Fake E...
The Real Fake Economy's picture

hello everyone - been reading the site for a while now from both NYC and now in Shanghai and must say am a big fan.

couple of things on this article and related China things:

let's assume for a second Chanos is right and there is a glut of capacity of some 200M vacant residential properties in China. Though I live in Shanghai, and have seen vacancies here, in Beijing, Chongqing and Hangzhou, these are typically on the outskirts of center city, not sure they are quite that high.

Follow me....

It's no secret that China has huge ambitions in building inter city high speed railroads that should more or less be complete by 2014-15 chabuduo (for those of you who don't speak Chinese, that means: "almost" or "more or less")  High speed trains from shanghai to nanjing to beijing, to shenzhen and every major city on the coast and some more up and coming cities slightly more west should be completed by this time.  

We also know there is massive poverty in the rural areas of China, and land/soil just isn't as fertile to grow things outside of rice and specific veggies at certain times of the year as in the US.  Fine

Most western people believe their homes to be their biggest assets (or in the case of the US, biggest liability)  At the same time everyone believes China cannot advance their people until safety nets are put in place to provide for their well being, especially for the elderly after their prime working years.  

What a lot of people don't know is private developers, sometimes state owned or singaporean/taiwanese through a JV with a SOE buy land and nicely ask the poor people in the middle of the cities to move out.  Let's say it's often like the mob where they are given an offer they can't refuse, but to be honest these poor people make out, not only because they are placed in these homes built just outside the city, but because they are now also provided with a recently built home and money.  their "net worth" has just grown tremendously.  These people may not be rich now, but voila, there's your safety net.  

Then I believe the plan is to continue to bring more and more of these migrant workers from rural areas, pay them virtually nothing for what they build, but provide them housing and thus you have just enriched these people as well.  In essence you are weeding out those living in remote locations and eventually placing everyone in a home in large cities and voila, they now too have a safety net.  

And you ask, what will these people do, how will they find work?  Well, your answer partly lies in the above pictures in that previously poorly constructed projects can be demolished and put back up led by those singaporean/taiwanese developers who set far better building standards than the chinese developers anyway.  anyone who has seen chinese construction can attest to the horrid quality of the fixtures and simple things like doorknobs and sinks.  

Besides that, there are massive projects underway in Chongqing to build I believe 3 more metro lines (they currently have only 1,) they just broke ground on setting up metro lines in Hangzhou, Shanghai's metro system will be the biggest in the world by 2020 and the same thing is happening in other major and still developing cities in China.

So in essence that's it in a nutshell - rich people are buying properties in city centers with large deposits/all cash, the existing poor people from city centers are being "asked" to move out of the city centers (these are usually entrepreneurs who will sew on a button, sell you pulled noodles, take you on their bikes for 5 kuai, clean rich people's apartments, so there is no shortage of work for them and these people don't think they are above this kind of work) but at the same time given subsidized housing and more money than they've ever seen before.  rural/migrant workers are working on these new projects in exchange for subsidized housing and moving closer to large city centers.  all the while these people are being hired to build railroads, highways, , bridges, damns, tunnels, expand metro systems, work on high speed rails, modernize airports and basically relocate closer to large cities.  This subsidized housing by the gov't gives them the ability to save more of their money for safety nets (because unlike Americans, these people don't need the newest Lexus or LCD to prove their worth....oh and yeah, they're making those too.)  It's a grand plan and sounds like FDR's New Deal of the 1940's on steroids, but trust me, it's happening, and no one is going to tell them they need or should re-peg their currency until this dream is realized.  (his GI Bill largely helped build the consumer driven economy of the US but I'll get to that some other time)

This is a 20 plan to get all these things done, but at the end of this, China will have the most sophisticated network of transportation, modern cities, it's people cared for through non-conventional methods (by western standards) and it's population dwindling to about 1billion people.  After that, who knows, but I can't wait to find out.

Mon, 09/27/2010 - 03:49 | Link to Comment eigenvalue
eigenvalue's picture

Then I believe the plan is to continue to bring more and more of these migrant workers from rural areas

--------------------------------------------

One flaw with this plan is that the Chinese population is dwindling because of the "One Child" policy. Besides the younger generation from the countryside, those born after 1980, are much less willing to do the dirty work, like building and cleaning, as their parents. Do you know a term called "Lewis Turning Point"? The Chinese academia is debating over this topic. You can check it out.

Mon, 09/27/2010 - 04:51 | Link to Comment The Real Fake E...
The Real Fake Economy's picture

i agree that kids within the cities won't and refuse to get their hands dirty perhaps the way their parents did, and no doubt, the one child rule has a lot to do with that.  But there are still plenty of kids in rural, remote areas who don't go to school because they simply live too far from one and so from a young age those kids have known virtually nothing but hard labor, but from watching and doing.  that gives China a huge pool of workers to choose from today and in the future.  

America's poor watch super sweet 16 and believe they are also entitled to that life and aren't always willing to work for it.  Perhaps isolating China from western/outside influences isn't all that bad.  China is changing and advancing so rapidly it's scary.  You see many older folks who might remember when Mao was around and can barely speak Mandarin and so have to speak their local dialects.  Such a stark contrast to today's kids in big cities who not only speak Mandarin, but start learning english in the 2nd grade (rich kids sooner)

 

Mon, 09/27/2010 - 08:01 | Link to Comment eigenvalue
eigenvalue's picture

 But there are still plenty of kids in rural, remote areas who don't go to school because they simply live too far from one and so from a young age those kids have known virtually nothing but hard labor, but from watching and doing.  that gives China a huge pool of workers to choose from today and in the future.  

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Have you been to the rural areas in China? I should say that you really need some data updates. I have been to Sichuan, Shaanxi and Xinjiang. The potential labour supply is far less than you imagine.

Mon, 09/27/2010 - 09:26 | Link to Comment The Real Fake E...
The Real Fake Economy's picture

i've been to rural villages in jiangsu, anhui and zhejiang.  if you'd like I can ask ZH if they would allow me to post pics of my recent trips there.  

if you believe wiki and stats the Chinese gov't puts out, their rural population was 64% of the entire country's population in 2001, and down to 53% in 2009.  This supports my statements above and shows there's tremendous on going urbanization in China.  53% is still an incredibly high number of people and thus large pool of labor to pick from.  Not to mention the fact that migrant workers who are bought in from rural areas aren't counted as part of the census for those major cities until they permanently relocate with their families, so for those who haven't or can't for a variety of reasons, the split is already probably more like 50/50.

ps - I have a friend who does charity work for an organization here in China to support the building of new schools for kids in rural areas.  these kids are beyond poor and so far removed from almost everything, that they don't have access to schools even.  

 

 

Mon, 09/27/2010 - 10:11 | Link to Comment eigenvalue
eigenvalue's picture

Jiangsu, Anhui and Zhejiang? They are richest provinces in China! The workers in the sweatshops are hardly from these places. You should go to provinces like Sichuan which provides the majority of farmer workers.

Of courses, there are poor places in China. But whether the number of poor kids there is large enough to support the sweatshops is still questionable.

Finally do you know the Hukou system in China? Suppose a young man from the Sichuan countryside works in a sweatshop in Shenzhen. Every year, he spends the bulk of the time in Shenzhen but he has no Shenzhen Hukou. As a result, technically he is still regarded as a farmer in Sichuan and not part of the urbanisation calculation.

See what I mean? The urbanisation process in China is highly understated. Investors are still being lured into real estate by myths like urbanisation.

Mon, 09/27/2010 - 20:33 | Link to Comment kathy.chamberli...
kathy.chamberlin@gmail.com's picture

well, i tried to walk the great wall of china. egads, you could hardly get through all the chinese tourists. plus they are all talking on their cell phones and not really even taking in the site, all i could ask them was this, "Can you hear me now". chinese people in huge groups with the group leader having a flag to wave. i have never seen such domestic tourism. even at the temple of heaven. yikes, just massive chinese people in groups, kinda of dressed all the same. all the cars just honk their horns, all day. noisy really noisy. hardly saw any white people. i rode a bicycle all around. like a tsunami wave, get in the flow and go.

Mon, 09/27/2010 - 03:54 | Link to Comment Coldfire
Coldfire's picture

The thing is, China may well be able to survive the collapse of a real estate bubble (if that's what it is) in no small part because the administration there discouraged - as a policy - the abuse of credit derivatives that tied the crash of the US housing market to the broader financial system and zombiefied the money center banks. The Chinese aren't Huckleberries. And maybe China was lucky not to drink so deeply from the Ponzi well. But it's not China's fault that the Federal Reserve's inept central planning fucked up - and continues to fuck up - the US economy. The US and China are vastly different systems. There are lies, damn lies and statistics. Then there are government statistics. But the qualitative aspects of Chinese growth amount to nothing less than a second Industrial Revolution. You can argue with it or you can get on board and make a ton of money. China has problems, no question, but the situation is net positive and its best days are ahead.

Mon, 09/27/2010 - 09:50 | Link to Comment LadyH
LadyH's picture

Right.  And Manhattan is entirely as it was in 1892 right?  I suggest you look at comparable phases of development in New York, London and Chicago.  Besides which, a building that cost 250m years ago is depreciated to dick all now. Why not turf it up?

Mon, 09/27/2010 - 18:33 | Link to Comment Buck Johnson
Buck Johnson's picture

This doesn't look good.  Destroying buildings half finished and then rebuilding them, that is a sign of desperation.

Tue, 09/28/2010 - 07:27 | Link to Comment Colonel Sun
Colonel Sun's picture

Anyone can post images of a few buildings being knocked anywhere and claim the same.

 

What matters is the stats and it's hard to tell what's real and what is not when it comes to the data.

 

Probably a bubble, but when it will pop and what the effects will be remains to be seen.

Wed, 09/29/2010 - 21:32 | Link to Comment Political Athiest
Political Athiest's picture

Emperor Shennong ~2700 B.C. First documented use of medical marijuana.

Paper

Wood block printing

Moveable type

Bookbinding

The bell, lacquer, the oar,  (neolithic age)

Wooden coffin (5000 BC)

Fork - invented before chopsticks (2400 BC )

Noodles

Cultivation of rice (11,900 BC)

Acupuncture

Land mine

Pinhole camera

Restaurant menu (Song Dynasty 960-1279)

Tofu

Explorer Zhen He discovered the new world before Columbus

Bruce F*****g Lee bitchez!

Yeah, you're right Weiner. The Chinese haven't created, discovered, invented anything of value. Just ask Marco Polo.

 

 

 

 

 

Wed, 02/23/2011 - 01:48 | Link to Comment shawnlee
shawnlee's picture

No, not clean enough. The Chinese government need to call Inside Job Demolition Crew to implode buildings to collapse PERFECTLY in their footprint at free fall speed.
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Wed, 04/20/2011 - 05:30 | Link to Comment shawnlee
shawnlee's picture

I've said it before.. we need to drain the gulf of mexico, start deep-water drilling on dry land.. think of all the job creation.. think of all that real estate. China could not even hope to match that endeavor.

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Mon, 04/25/2011 - 07:09 | Link to Comment george22
george22's picture

That explains a lot, thanks Tyler, that's one of the most interesting pieces I've read recently on ZH or elsewhere. From that you can pretty much see the character of the next criris as the moral hazard and imbalances are still there.That explains a lot, thanks Tyler, that's one of the most interesting pieces I've read recently on ZH or elsewhere. From that you can pretty much see the character of the next criris as the moral hazard and imbalances are still there.Fuel Injector

Thu, 05/12/2011 - 03:12 | Link to Comment designerhandbag...
designerhandbagsoutlet's picture

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