
China's Ghost Cities and Malls - elptacek
http://www.sbs.com.au/dateline/story/about/id/601007/n/China-s-Ghost-Cities
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beilabs
Lived in a ghost estate in Dalian, China for about 2 years. Could have loud
music and parties and was never really bothered by anyone. Moved to Beijing,
real estate in 2007 was at a premium. Its even more so now since the Olympic
games. Apparently prices have risen dramatically, the demand is incredible.

The same cannot be said for the rest of the country. Many apartments are owned
by companies anticipating renting the rooms to their workers. One of the
buildings I was initially staying in was a dorm room sharing with other
developers in my team. With wages so low it was difficult if not impossible
for many of them to afford an apartment.

Many other apartments are owned by overseas Chinese, investing in their
locality, awaiting their return.

~~~
markkat
My wife is from Dalian. I've spent a lot of time there, -nice city.

I just returned from Shanghai and Sanya. There are a lot of dark apartments in
Shanghai at night. I know a few Chinese who own multiple apartments, some more
than 10, most of these are empty. There are limits to how much they can invest
overseas, and I believe investment in real-estate is greatly increased by
this.

I feel they have a real-estate bubble of incredible proportions. Everyone
talks real-estate too much, and there are too many advertisements for new
developments. I don't think this will end well.

~~~
PakG1
I live in China right now, Shenzhen. It's amazing to see how many real estate
agencies there are here. Every single street corner has one, they're more
prevalent than any fast food chain. Inside each agency, there are maybe four
to a dozen people working. All trying to sell apartments.

One of my friends is a real estate agent. She told me recently that she and a
friend had purchased a condo.

Me: Oh, so you're going to move in there soon?

Her: No, no.

Me: Oh, you're renting it out to tenants?

Her: No, no. If someone lives in it, then the value goes down. So we're going
to keep it empty and then sell it next year or in a couple of years.

This cannot end well.

~~~
klenwell
Serious question: how do I buy a Chinese credit default swap?

~~~
markkat
I don't believe it is possible. I've considered alternate ways of leveraging
this. Right now the Australian dollar is supposedly propped up high by selling
commodities to China:
[http://www.ibtimes.com/articles/128654/20110330/australian-d...](http://www.ibtimes.com/articles/128654/20110330/australian-
dollar-all-time-high.htm) That seems one way for a non-Chinese investor to put
chips on that number.

Geez investing is so cynical. :/

~~~
jacques_chester
You could also short our two big mining companies, BHP Billiton and Rio Tinto.

~~~
bioh42_2
But most of China's raw materials importing is driven by their huge expert
market, how would a collapse of domestic spending affect that? Isn't it
everyone _else_ that's buying Chinese goods that's driving the demand for
resources?

~~~
jacques_chester
China already has a large and fast-growing domestic market.

Insofar as they want to build apartment blocks and manufacture cars for
Chinese consumers, the Chinese need steel. For that they need iron ore, and
for iron ore Australia and Brazil are the main sources.

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edw
What occurred to me while reading the article was this: There is a value in
cities, and much of that value is density i.e. concentration. Not just of
people but of industries: NYC and fashion, publishing, finance—everything,
really. Silicon Valley and technology. And so on. I've recently read—wish I
had the reference at hand—that even smaller cities provide concentration
value.

As I drive into NYC and the skyline comes into view it humbles me as a
Philadelphian. But then I think about those infographics—featured on HN, of
course—showing how China is birthing a New York every twelve days or whatever
the duration is, and I wonder: Will NYC cease to be relevant?

There is more than a little home-town pride at stake, and not the way you
think: in the (nonexistent?) fight between NYC and the Valley, I am New York
all the way. I deeply want New York to matter.

And so that colors my thinking, but, back to this article, I wonder: Building
an city, or even building and filling a city with people, does little if it
doesn't sort people and industries out in a way that makes them more
efficient, more vital.

Again, I'm a Philadelphia. Everyone from West Philly says, "Oh, I love West
Philly. The trees! The parks!" I love trees, I love nature, whatever that is.
But I disagree with these people with their love affair with Philadelphia West
of the Schuylkill River. I love people, people in quantities and densities
that don't exist over there.

I don't discount the benefits of living in West Philly, or even a Chinese
ghost city—all night parties without neighbors!—but you—we, society,
humanity—lose something, or you don't gain something, when we put people in
close proximity to each other in ways the lead to fruitful exchanges.

~~~
gaius
You have to get the people there. This is something that "organic" cities like
London, New York and Paris can do well, because there is a "virtuous circle"
in action - people want to be at the centre of culture, culture costs money,
these cities can attract the wealth creators who want to spend their wealth,
and so it continues. Culture being whatever you're into, art, opera, fashion,
publishing, fine dining... Cities like these are dynamos of both productivity
and pleasure.

But in a sterile, planned city, that is initially empty... How do you get the
ball rolling? How do you initially attract the people who can work anywhere in
the world? The three cities I mentioned, and a few others, have solved that.

~~~
locopati
You say solved, but there was nothing to solve in your example cities since
they were not planned or built from whole cloth (yes there were plans - the
NYC grid, the Paris hub-and-spoke - but the cities, as you point out, grew and
evolved).

~~~
gaius
Of course there was something to solve. London is 2000 years old, but NYC is
much more recent. How did it become the hub for finance and media when there's
Boston to the north and Washington to the south?

~~~
evgen
NYC had a better port. Back when this mattered, a deep-water port at the end
of the Hudson river was a big deal (D.C. was never in the running, but up
until 1815 or so Boston and Philly were bigger commercial centers than NYC.)
For the first 100-150 years of its existence the early colonies traded more
with England than with each other, so a good port was a necessity for a city
but it did not need much else beyond that. Post-revolution most trade was
still external rather than internal but England and France shut down most of
this trade during the Napoleonic wars. At this point the advantage went to NYC
because by sitting at the end of the Hudson river it was able to serve as the
trans-shipment point for goods coming down from the Hudson river valley out to
the other states. After the Gibbons v. Ogden court case established federalist
supremacy over interstate commerce the maritime merchants of NYC were better
positioned than their competitors in Boston, Philly, or Baltimore to take
advantage of this explosion of commercial opportunity.

The reason people gathered at a certain buttonwood tree in lower manhattan was
to trade shipping interests -- early finance was all about commercial shipping
and the fact that NYC was an early leader in shipping led to the development
of a finance hub and the two sides of the same coin propped each other up.

~~~
gaius
So how would you do this today? A better airport?

Here in England there is growing concern that Heathrow is stifling growth in
London as it doesn't have capacity anymore and expanding it is politically
infeasible. So it's not a far-fetched scenario...

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dublinclontarf
They have a "build it and they will come" policy. But really I can't
understand how apartment prices keep rising here so quickly, surely there must
be a crash.

~~~
yannickmahe
There will undoubtedly be a crash. Prices are rising for two reason:

-Speculative buying (that's the cause of all the empty appartments in places no one wants to buy)

-Cultural reasons. When a guy wants to marry a girl, he has to own his own appartment. No when, no ifs, no but. If a girl were to marry a guy with no apartment her whole family would lose face. Because of the sex imbalance in China, there is a large "demand" of girls, and little "supply", so the "price" (quality, location and numbers of appartments) keeps rising. So this means parents of boys are constantly upping the ante, to get more and bigger appartments to try and ensure their son gets married. (my girlfriend is Chinese, so I am very aware of these issues...)

While the first reason would seem to indicate that the bubble would burst
sooner rather than later, the second one seems to indicate that demand for
appartment won't fall anytime soon.

~~~
olalonde
Was your girlfriend born in China? It seems this kind of mentality has
gradually changed with the rise of the communist regime. China is now one of
the most feminist countries in the world with women and men on equal feet in
most spheres of society. My girlfriend is also Chinese, has always lived in
China and as far as I know, her family doesn't care whether I own an apartment
or not. Perhaps the rules are different for foreigners...

~~~
yannickmahe
Probably depends on the family. In my case (she was indeed born in China),
it's not so much her parents as her who cares a lot about that.

~~~
xtqctz
When discussing the characteristics of their ideal husband, Chinese girls will
occasional joking (not really) say, "有车，有房，父母双亡”。 Which means, "[He] has a
car, a house, and both of his parents are dead." Filial piety is hard work.

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math
There is an excellent presentation by high profile short seller James Chanos
on betting against China: <http://www.youtube.com/watch?v=99HNFCn5RP8>

(from a year ago). About an hour long, but well worth it.

Edit: I meant to say, the focus of his talk is mainly details of the property
bubble. Great information.

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tintin
I wonder if such places will end up like Kowloon walled city. When there is no
one around it's easy to sneak in. And the poor are in need of a home (because
they demolished there home building these cities).

(<http://en.wikipedia.org/wiki/Kowloon_Walled_City>)

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duck
Why have I not heard about this before? This really makes me doubt China's
growth (which is _all_ you hear about these days) even more.

