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Here's the twist. What if they build a ton of houses and get the second tier cities hooked up to infrastructure such that they create housing booms further inl

Here's the twist. What if they build a ton of houses and get the second tier cities hooked up to infrastructure such that they create housing booms further inland at the expense of costal property. New capital is always being created and developed and the central planners in China aren't that bad at this. You just have a different set of winners this time around with the marginal profitability of Shanghai slowing down in favor of the Inland cities. In the US urban infrastructure is garbage outside of a few major metros so all the money piles into those and the rest is is ignored and then bubbles and pops. China actually does development like they mean it and is expanding out thousands of miles of roads and trains building out new markets so the new money injected can find a way to profitably invest itself.

seanmcdirmid 11y ago
So my wife lives in Chenzhou, which is a small inland 3rd/4th tier city by Chinese standards; we visit sometimes. Speculators will speculate, and there is a huge surplus of apartments as a result, with no hope anytime soon of really selling them off and putting them into use...new capital wasn't created, it was just sunk into these buildings. They won't create new capital until they are occupied, those people with jobs doing things to create value. Just building them doesn't create capital. It does create jobs for migrant workers, which I guess is the primary goal. And the houses are poorly constructed concrete monstrosities, no central heating (I hate visiting in the winter). You just can't help but think they'll be torn down in 10 or 20 years before they are actually used. Even in Beijing, an apartment building built 5 years ago would be considered decrepit by western standards. I was looking for a new apartment to rent and came away thoroughly depressed...the prices were high sure, but there was nothing even close to what I wanted anyways. So I stayed put in my current flat, whose rent hasn't gone up in the 3 years I've been renting it. Chinese urban infrastructure would love to have US urban infrastructure problems. Trains are wonderful, roads are great also if you want to cut down on 10-day long traffic jams. But they are nowhere near the states in terms of infrastructure, and much of it are white elephant projects that will never contribute to the economy in any meaningful way.
- seanmcdirmid 11y ago
  Wife's mom lives in...not wife lives in. Yikes.
- narrator 11y ago
  I believe you that the construction probably isn't great, but how does it compare to living out in rural areas, or wherever people moving to the cities used to live? There are still a lot of Chinese who are not urbanized and all this building should be a step up for them.
  - seanmcdirmid 11y ago
    Those apartments are being bought by speculators, not urbanizing farmers. Those farmers can't really afford these apartments though, nor can they send their kids to local schools even if they buy them (China hasn't reformed the huko system yet). So they come to the cities as migrant workers, leaving their families behind, living in cheap dormitory accommodations or even in basements (lookup "ant tribe"). China will have to sort out this imbalance before urbanization can drive much of the economy, and speculation doesn't really help here (maybe they could eventually afford a $200k apartment, but $1 million? Really?)

seanmcdirmid 11y ago

So my wife lives in Chenzhou, which is a small inland 3rd/4th tier city by Chinese standards; we visit sometimes. Speculators will speculate, and there is a huge surplus of apartments as a result, with no hope anytime soon of really selling them off and putting them into use...new capital wasn't created, it was just sunk into these buildings. They won't create new capital until they are occupied, those people with jobs doing things to create value. Just building them doesn't create capital. It does create jobs for migrant workers, which I guess is the primary goal. And the houses are poorly constructed concrete monstrosities, no central heating (I hate visiting in the winter). You just can't help but think they'll be torn down in 10 or 20 years before they are actually used. Even in Beijing, an apartment building built 5 years ago would be considered decrepit by western standards. I was looking for a new apartment to rent and came away thoroughly depressed...the prices were high sure, but there was nothing even close to what I wanted anyways. So I stayed put in my current flat, whose rent hasn't gone up in the 3 years I've been renting it. Chinese urban infrastructure would love to have US urban infrastructure problems. Trains are wonderful, roads are great also if you want to cut down on 10-day long traffic jams. But they are nowhere near the states in terms of infrastructure, and much of it are white elephant projects that will never contribute to the economy in any meaningful way.

seanmcdirmid 11y ago
Wife's mom lives in...not wife lives in. Yikes.
narrator 11y ago
I believe you that the construction probably isn't great, but how does it compare to living out in rural areas, or wherever people moving to the cities used to live? There are still a lot of Chinese who are not urbanized and all this building should be a step up for them.
- seanmcdirmid 11y ago
  Those apartments are being bought by speculators, not urbanizing farmers. Those farmers can't really afford these apartments though, nor can they send their kids to local schools even if they buy them (China hasn't reformed the huko system yet). So they come to the cities as migrant workers, leaving their families behind, living in cheap dormitory accommodations or even in basements (lookup "ant tribe"). China will have to sort out this imbalance before urbanization can drive much of the economy, and speculation doesn't really help here (maybe they could eventually afford a $200k apartment, but $1 million? Really?)