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There's an economist from Tsinghua University named Patrick Chovanec who used to do an amazing job of documenting China's explosive growth and the many ways in

There's an economist from Tsinghua University named Patrick Chovanec who used to do an amazing job of documenting China's explosive growth and the many ways in which it might have been artificially inflated (easy credit, shadow banking, fudged numbers, empty skyscrapers, etc.). His blog is still up, but unfortunately he switched from blogging to Tweeting in 2013 and it's been impossible to follow his train of thought since then. It's a pretty fascinating read (assuming you find dry economic posts fascinating) if you start sometime around the 2009 entries and go from there: https://chovanec.wordpress.com/ https://chovanec.wordpress.com/ Some of the ones I found most interesting: Beijing’s Bad Debt Bailout: Problem Solved? https://chovanec.wordpress.com/2011/06/02/beijings-bad-debt-bailout-problem-solved/ https://chovanec.wordpress.com/2011/06/02/beijings-bad-debt-... Big Losses Hidden on China’s Bank Balance Sheets: https://chovanec.wordpress.com/2009/09/23/big-losses-hidden-on-chinas-bank-balance-sheets/ https://chovanec.wordpress.com/2009/09/23/big-losses-hidden-... Even though they're almost a decade old they still give you an interesting look into how things work in China.

oblio 9y ago
My guess is that China is inflating its numbers, but even so, the growth they've had is impressive and a lot of it is real. And even with further inflation of their numbers, I don't think they will be a paper tiger with nukes, like the USSR was.
- digi_owl 9y ago
  I can't help wonder if China is what the USSR could have been had not the hardliners come after Gorbachev, leading to turmoil and dissolution of the union.
- gwern 9y ago
  They can only systematically inflate a little bit. By the exponential nature of economic growth, if you overestimate the annual 8% by, say, 2% for a decade, by the end that results in a huge absolute gap between the nominal and real GDP. But the estimates from other methods or just going to China show that the official estimate is fairly reasonable, certainly not off by 10x or anything. Which supports the smoothing interpretation: they do fiddle the numbers a lot each year but in different directions and so the net is minimal.
- seanmcdirmid 9y ago
  Much of it is real, China's growth has been outstanding! Then you encounter the occasional ghost mall or notice that many of the apartments in your complex are empty and wonder a bit about how much of it is real (probably a lot) and how much of it is just a bubble (probably a significant portion also). A lot of China's GDP growth is tied up in asset growth (e.g. appreciated real estate). So if/when that bubble pops, they will take a hit. Accordingly, in the Chinese news, they talk about supporting and nurturing what they call the "real economy" as a counter to that danger.
  - IkmoIkmo 9y ago
    I'm not sure if the ghost stuff is really indicative of a failing economy. I mean, China is about 20% of the world population, you're bound to find emptiness. We're talking about city planning on a massive scale. 220 cities of >1m people are expected by 2025. (SF at 0.8m by comparison). China has multiple cities bigger than countries like the Netherlands, multiple cities 4x bigger than Norway that was recently in the news. It has 280m (rural) internal migrants. Compare it to the US working age population of is just 200m. The numbers are insane. In the US, we move 11x in our lifetimes of ~80y aka 13% of our population moves each year. Apply that average to China and you're looking at 170m migrants annually. And unlike US (a lot of urban to urban), in China there's a gigantic one-way rural->urban traffic, i.e., two people aren't switching urban houses and calling it 'moving', two people are leaving behind a rural home and needing an entirely newly built urban home. How do you accommodate that many people in new homes. Do you start building homes only after they're needed? Or do you build some capacity at a surplus, to cover expected growth? Probably the latter. It isn't much different from any company stocking surplus inventory. That's not an immediate indication of a failure of economics and a bubble. And do you only build in existing popular cities and just try to add to the periphery, or do you build-up new cities? Probably the latter, too. Plenty of other countries do it as well. Incheon developed very much due to overdevelopment in Seoul. Or here in the Netherlands, we now have close 0.8m people living in so called Vinexwijken. They're a development centered on a new ordinance concerning housing development between 1995 and 2005. Since 1995 our population grew by 1.6m or so, apparently half our growth went to these new locations created out of nothing. And we always have discussions about structural emptiness, big malls being built and remaining 75% empty for years. But the scale is smaller, the country is 75x smaller than China. We had issues with structural vacancy rates at a new 100k 'village', scale that up to 75x and you have a similar story. Yet the biggest ghosttown in China ia Ordos, planned for 1 million people, scaled back and built for 'only' 300k, and currently houses more than 100k and climbing. That's what is consistently called the biggest ghost town in China. For Chinese, both the size of the project as well as the timeframe (10 years of vacancy) is a rounding error. Don't get me wrong, there's definitely an asset bubble. But we've also been saying that for who knows how many years and I feel we tend to focus too much on symbolism of the ghost town narrative.
- xeeeeeeeeeeenu 9y ago
  What makes you think that USSR was a paper tiger?
  - oblio 9y ago
    The fact that there were shortage of basic necessities in its last years of its existence. The fact that the majority of its exports were oil and gas based, like those of a petro state. This comic describes it very well: https://goo.gl/GAn5fi https://goo.gl/GAn5fi
    - thephyber 9y ago
      > The fact that the majority of its exports were oil and gas based, like those of a petro state. What has changed?[1] I would argue that this neither confirms nor refutes your defense of the "paper tiger" assertion. [1] https://en.wikipedia.org/wiki/Economy_of_Russia#/media/File:2014_Russia_Products_Exports_Treemap.png https://en.wikipedia.org/wiki/Economy_of_Russia#/media/File:...
      - oblio 9y ago
        Russia is still a paper tiger. Its economy is smaller than Spain's. There are two factors keeping it in "the game": - that huge stack of nukes - the ruthlessness of its mostly autocratic leader(s) Neither of those bode well for their future... ("it's the economy, stupid", and all that).
    - m0llusk 9y ago
      No toilet paper anywhere. Imagine that. Eleven time zones of no toilet paper. International Hotels in the center of Moscow had little stacks of 2 inch square wax paper if you were lucky. This was a completely dysfunctional and failed state.
ameister14 9y ago
Ning Zhu has an interesting book on it: https://www.mhprofessional.com/9781259644580-usa-chinas-guaranteed-bubble-group https://www.mhprofessional.com/9781259644580-usa-chinas-guar...
digi_owl 9y ago
About those empty skyscrapers i think in part they are a gamble on workers migrating from the interior to the coast. But in recent years their government has started a program aimed at transferring some of the coastal activity inland. How effective that will be is hard to tell, but there are already interesting stories of hotels that have entrances on multiple floors because the city was funded in a valley between multiple hills. End result is that new roads go between the hills on bridges, passing right by the hotel. Sounds like one crazy place to live.
- rainbowmverse 9y ago
  That sounds interesting. Are any of these stories available online in English?
  - digi_owl 9y ago
    Well yes, i think the one i read was a blog or travel story from someone that visited the place. BTW, i believe the city in question is Chongqing. But sadly i didn't keep a bookmark of the story itself. https://en.wikipedia.org/wiki/Chongqing https://en.wikipedia.org/wiki/Chongqing
goondabba 9y ago
Interesting piece on the empty skyscrapers https://www.youtube.com/watch?v=pbDeS_mXMnM https://www.youtube.com/watch?v=pbDeS_mXMnM
- baursak 9y ago
  Seems like an outdated report. https://www.forbes.com/sites/wadeshepard/2017/06/30/ordos-chinas-most-infamous-ex-ghost-city-continues-rising https://www.forbes.com/sites/wadeshepard/2017/06/30/ordos-ch...

oblio 9y ago

My guess is that China is inflating its numbers, but even so, the growth they've had is impressive and a lot of it is real. And even with further inflation of their numbers, I don't think they will be a paper tiger with nukes, like the USSR was.

digi_owl 9y ago
I can't help wonder if China is what the USSR could have been had not the hardliners come after Gorbachev, leading to turmoil and dissolution of the union.
gwern 9y ago
They can only systematically inflate a little bit. By the exponential nature of economic growth, if you overestimate the annual 8% by, say, 2% for a decade, by the end that results in a huge absolute gap between the nominal and real GDP. But the estimates from other methods or just going to China show that the official estimate is fairly reasonable, certainly not off by 10x or anything. Which supports the smoothing interpretation: they do fiddle the numbers a lot each year but in different directions and so the net is minimal.
seanmcdirmid 9y ago
Much of it is real, China's growth has been outstanding! Then you encounter the occasional ghost mall or notice that many of the apartments in your complex are empty and wonder a bit about how much of it is real (probably a lot) and how much of it is just a bubble (probably a significant portion also). A lot of China's GDP growth is tied up in asset growth (e.g. appreciated real estate). So if/when that bubble pops, they will take a hit. Accordingly, in the Chinese news, they talk about supporting and nurturing what they call the "real economy" as a counter to that danger.
- IkmoIkmo 9y ago
  I'm not sure if the ghost stuff is really indicative of a failing economy. I mean, China is about 20% of the world population, you're bound to find emptiness. We're talking about city planning on a massive scale. 220 cities of >1m people are expected by 2025. (SF at 0.8m by comparison). China has multiple cities bigger than countries like the Netherlands, multiple cities 4x bigger than Norway that was recently in the news. It has 280m (rural) internal migrants. Compare it to the US working age population of is just 200m. The numbers are insane. In the US, we move 11x in our lifetimes of ~80y aka 13% of our population moves each year. Apply that average to China and you're looking at 170m migrants annually. And unlike US (a lot of urban to urban), in China there's a gigantic one-way rural->urban traffic, i.e., two people aren't switching urban houses and calling it 'moving', two people are leaving behind a rural home and needing an entirely newly built urban home. How do you accommodate that many people in new homes. Do you start building homes only after they're needed? Or do you build some capacity at a surplus, to cover expected growth? Probably the latter. It isn't much different from any company stocking surplus inventory. That's not an immediate indication of a failure of economics and a bubble. And do you only build in existing popular cities and just try to add to the periphery, or do you build-up new cities? Probably the latter, too. Plenty of other countries do it as well. Incheon developed very much due to overdevelopment in Seoul. Or here in the Netherlands, we now have close 0.8m people living in so called Vinexwijken. They're a development centered on a new ordinance concerning housing development between 1995 and 2005. Since 1995 our population grew by 1.6m or so, apparently half our growth went to these new locations created out of nothing. And we always have discussions about structural emptiness, big malls being built and remaining 75% empty for years. But the scale is smaller, the country is 75x smaller than China. We had issues with structural vacancy rates at a new 100k 'village', scale that up to 75x and you have a similar story. Yet the biggest ghosttown in China ia Ordos, planned for 1 million people, scaled back and built for 'only' 300k, and currently houses more than 100k and climbing. That's what is consistently called the biggest ghost town in China. For Chinese, both the size of the project as well as the timeframe (10 years of vacancy) is a rounding error. Don't get me wrong, there's definitely an asset bubble. But we've also been saying that for who knows how many years and I feel we tend to focus too much on symbolism of the ghost town narrative.
xeeeeeeeeeeenu 9y ago
What makes you think that USSR was a paper tiger?
- oblio 9y ago
  The fact that there were shortage of basic necessities in its last years of its existence. The fact that the majority of its exports were oil and gas based, like those of a petro state. This comic describes it very well: https://goo.gl/GAn5fi https://goo.gl/GAn5fi
  - thephyber 9y ago
    > The fact that the majority of its exports were oil and gas based, like those of a petro state. What has changed?[1] I would argue that this neither confirms nor refutes your defense of the "paper tiger" assertion. [1] https://en.wikipedia.org/wiki/Economy_of_Russia#/media/File:2014_Russia_Products_Exports_Treemap.png https://en.wikipedia.org/wiki/Economy_of_Russia#/media/File:...
    - oblio 9y ago
      Russia is still a paper tiger. Its economy is smaller than Spain's. There are two factors keeping it in "the game": - that huge stack of nukes - the ruthlessness of its mostly autocratic leader(s) Neither of those bode well for their future... ("it's the economy, stupid", and all that).
  - m0llusk 9y ago
    No toilet paper anywhere. Imagine that. Eleven time zones of no toilet paper. International Hotels in the center of Moscow had little stacks of 2 inch square wax paper if you were lucky. This was a completely dysfunctional and failed state.

ameister14 9y ago

Ning Zhu has an interesting book on it: https://www.mhprofessional.com/9781259644580-usa-chinas-guaranteed-bubble-group https://www.mhprofessional.com/9781259644580-usa-chinas-guar...

digi_owl 9y ago

About those empty skyscrapers i think in part they are a gamble on workers migrating from the interior to the coast. But in recent years their government has started a program aimed at transferring some of the coastal activity inland. How effective that will be is hard to tell, but there are already interesting stories of hotels that have entrances on multiple floors because the city was funded in a valley between multiple hills. End result is that new roads go between the hills on bridges, passing right by the hotel. Sounds like one crazy place to live.

rainbowmverse 9y ago
That sounds interesting. Are any of these stories available online in English?
- digi_owl 9y ago
  Well yes, i think the one i read was a blog or travel story from someone that visited the place. BTW, i believe the city in question is Chongqing. But sadly i didn't keep a bookmark of the story itself. https://en.wikipedia.org/wiki/Chongqing https://en.wikipedia.org/wiki/Chongqing

goondabba 9y ago

Interesting piece on the empty skyscrapers https://www.youtube.com/watch?v=pbDeS_mXMnM https://www.youtube.com/watch?v=pbDeS_mXMnM

baursak 9y ago
Seems like an outdated report. https://www.forbes.com/sites/wadeshepard/2017/06/30/ordos-chinas-most-infamous-ex-ghost-city-continues-rising https://www.forbes.com/sites/wadeshepard/2017/06/30/ordos-ch...