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Tuesday, March 29, 2011

More on the Ghost Cities of China

Both the article linked to in the last post, and my own presentation shared some time back, mention the Ghost Cities of China, and how the world's economy seems to hang on their outcome. If you doubt the seriousness of this issue, the following video from the Australian TV show SBS Dateline may help you grasp the problem the Chinese government faces.





These are strange times, when we find ourselves hoping that Communist management will somehow work out for the best. After all, those unfinished malls and homes will hold a lot of wood products. If anyone ever moves into them.

But as one wood industry leader commented to me recently:

"... we're crawling all over each other trying to provide them the materials to [build more, just] to make a buck. In my opinion, we are going to regret this eventually.

For the average Chinese citizen, I'm not sure how satisfied I would feel living in a country where you have to work like hell just to get by and then have to look at all that nice new housing you can never afford to live in. If there is a bubble developing and they have a severe economic downturn as a result, look out."

In more idealistic times, we might have looked forward to the collapse of the Chinese communist system so that true, unfettered capitalism might take root. Now, however, the implications of that occurrence are terrible to contemplate, both for the Chinese people, and for the other economies of the world, including ours.

Anyone have any ideas?

2 comments:

Anonymous said...

China was trying to carry out economic reform a decade ago, but failed. Most "hot money" has no where to go, but only invest in house market. Even China has largest manufacturing industry in the world, the profits is barely to make a living, because of intense interior competitions, lacking control of industrial chains in the world trade and innovations.

The bubbling house market attract more and more money which suppose to invest in manufacturing, food, etc. are all flowing into house market. And here it is today, inflation...all bad things happens. An interesting example is : A hundred farmers realized investment in house market and doing nothing else can make much more profits than working hard in farm. They abandoned planting crops, gather enough money to buy a house in cities. Even I know how dangerous that could be......, but the world is pretty crazy, let's see who can hang on longer....

Chuck Ray said...

Thanks for the insight and the great farmer story, Anon...