News & Analysis
China: That Urban Empty Feeling
And Now Presenting: Amazing Satellite Images Of The Ghost Cities Of China ... The hottest market in the hottest economy in the world is Chinese real estate. The big question is how vulnerable is this market to a crash. One red flag is the vast number of vacant homes spread through China, by some estimates up to 64 million vacant homes. We've tracked down satellite photos of these unnerving places, based on a report from Forensic Asia Limited. They call it a clear sign of a bubble. – BusinessInsider
Dominant Social Theme: Nothing to see here. Just investments.
Free-Market Analysis: Even at the height of the mortgage boom in America, US builders were not erecting empty cities, were they? Did we miss something? In China, apparently they are. In our quest to present what's going on, we've documented some uncanny occurrences over the past two years, including the vacant city of Ordos in Mongolia. But what BusinessInsider has provided us, courtesy of Forensic Asia Limited is a series of satellite images that prove that Ordos is not a unique event.
China is actually littered with what Business Insider calls ghost cities, and the satellite pictures provided would seem to prove it. It's a pretty amazing presentation, showing how the power of the Internet, when married to space technology, can come up with important results. Here are some photo captions from the article:
• Here's China's biggest ghost city: Zhengzhou New District Like Ordos, Zhengzhou New District has glamorous public buildings -- EMPTY
• See that orange area to the north-east of the Xinyang? It's a giant new development, which doesn't even have a name yet. No cars [here] except for approximately 100 clustered around the government headquarters
• The ghost city of Dantu has been mostly empty for over a decade. In most neighborhoods of Dantu, there are no cars, no signs of life
• The mostly empty city of Bayannao'er, which boasts a beautiful town hall and World Bank sponsored water reclamation building
• Now here's Kangbashi, a new city with capacity for 300,000 -- that houses 30,000
• Finally, here's a giant new campus for Yunnan University, which was built to accommodate 2.3 million students. It has 11,000 enrolled.
The crazy photos march past, each one more surprising than the next. Whole swaths or empty developments, unrolling for what appears to be miles. Desolate city centers. Empty modern art museums. The largest mall in the world has now sat empty for nearly a decade now. Ordos has been vacant for years as well. Other "ghost cities" with little or no habitation. The argument is that these developments will fill up.
Chinese speculators are buying apartments – perhaps sight unseen – that exist in empty cities, are unfurnished and perhaps not even hooked to utilities; and we would think this sort of news would be on the cover of every business magazine in existence. It's a darn important story. Here are some headlines we can think of: China Bust Will Topple Western Economies Into Even Deeper Depression; What Happens to the Wretched World When China Founders?
OK, let's try to make our point a different way. Here's a fictional conversation between a reporter at a major, mainstream publication and his editor:
Reporter: I've been trolling through the Internet. I've noticed there are nearly 65 million unoccupied homes in China.
Editor: 65 million houses. Whoa! That would house nearly one-fifth of the Chinese population.
Reporter: Whole cities are empty. Not just the one that got some coverage.
Editor: Yeah, I read about it. Ordos? Pretty funny. You mean there's more?
Reporter: They're building 20 new cities a year! Seems like Chinese inflation is out of control. What happens when the Chinese begin to tighten?
Editor: They already are. They'll try for a soft landing.
Reporter: Food prices have gone vertical. Europe's having a rough time with austerity. American unemployment is 20 percent. If China goes down, we're talking about a huge setback for the rest of the world.
Editor: Hm-mm. Kind of a double dip recession if you ask me.
Reporter: So I should get on it, boss?
Editor: (Long pause, thinking hard.) Nah, it's the holiday season. We're not so interested in the international stuff. Weren't you scheduled to cover the Macy's Parade?
OK, fictional license and all that to strengthen the argument. But every day we read how the Euro-crisis is coming under control; how the Germans have summoned up the invincible, iron will to do what is necessary to salvage the both the euro and EU via bailouts. In America, we've just been subject to a spate of articles about how CEOs are optimistic going into the new year and the stock market itself is reflecting that optimism. Where's the balance? What about a few articles on the increasing downside to the Chinese Miracle? One begins to feel ... promoted.
Sixty-five million homes are vacant in China and the estimate is that the country is still erecting 20 new cities a year. Now even if these are small cities, that's still a lot of real estate. The idea of course is that China wants to urbanize about 400 million impoverished farmers who still haven't benefited from China's march to modernization. That's the reason for this frenetic pace. With a billion people urbanized, China would be in a better position to build a full-on American-style economy. (People in apartments needs to buy TVs and microwaves and little knickknacks to make the walls pleasant.)
Yes, in fact it has occurred to the elves lately (they were brainstorming one afternoon after lunch) that what is actually going on in China is a desperate attempt to build a consumer society before they run out of countries to export to. Seen from this perspective, the Chinese Communist Party is not acting out of ideological goodness but from a sense of self-preservation. Urbanized populations are easier to control; they are more malleable and consumerist.
In order to urbanize, the Chinese leadership has inflated rapidly. The Chinese central bank has obviously been printing money 24-hours a day. And foreign currency continues to flood in as well. The Chicoms have supercharged the economy in order to herd the remaining Chinese into these new, suburban environments before the economy becomes unmanageable and price inflation spreads beyond food and real estate to every other part of the economy.
Four-hundred million Chinese – a population the size of the United States – are what have the Chicoms worried. It is also a safe bet that many of these Chinese are not "Han." The Han are the leading Chinese ethnicity and got to the goodies first. Therefore, add elements of racial tension to the mix. And add inflation too, and its consequences. The Chicoms are starting to pull out the stops and just announced a significant tightening.
The Chinese can also let the yuan float fully against the dollar, raising the value of yuan. The argument is that the yuan will go from strength to strength instead of depreciating. But this, again, presents a fundamental misunderstanding of what inflation is. Inflation, defined classically, is a MONETARY phenomenon. The inflation that China is experiencing is from printing too many yuan. Raising the price of the yuan against the dollar will do nothing to diminish the amount of yuan circulating. It likely will not have much of an affect on price inflation either.
When China crashes – as we believe it must – Asian economies will go down with it. Japan is struggling now but will be in a much worse position if China sinks into depression. And the Asian Tigers (as they were once known) will have plenty of problems as well. But that will pale in comparison to the problems that Europe and America will face when China finally lapses economically. (We freely admit we cannot provide a timeline.)
Ultimately, these central-banking-based consumerist economies are non-starters. Keeping these kinds of economies going is like running an elaborate juggling act with the knowledge that sooner or later all the balls will be dropped – that such a result is an inevitability. We return therefore to the uncomfortable insight that the Western power elite is well aware of the eventual fate of nation states that practice central banking (most of the world these days) – and that this may be one reason for the moratorium on Chinese economic speculation.
What's going on then in our view is merely a delaying tactic. We have noted a sense of urgency and even desperation emanating from the West's leadership class. We would have to believe, then, that they are not quite ready to move ahead with the implementation of global governance, or even a one-world currency. This is the reason for the deadly silence about the faltering Chinese economy and the attempts to salvage the euro and re-inflate the American business sector. More time is needed; yet perhaps time is running out. And of course, as we regularly point out, the truth-telling of the Internet is complicating the task tremendously.
The Chicoms have done their people no favors by adopting the Western consumerist model. We cannot see how it ends well, in fact. Sooner or later, China must slip into "recession." What then do a billion Chinese do? Stare at the walls of their expensive condominiums, decorated with tasteful knickknacks as they lose their jobs and they watch the purchasing power of their savings erode. THESE Chinese? We kinda doubt it.
Conclusion: We have suggested in the past that the Chicom government is living on borrowed time. The Great Leap Forward – and subsequent starvation – was strike one. The Cultural Revolution was, perhaps, strike two. Modernization, in the Western tradition, complete with hyper-industrial central banking, may prove to be the third.
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Posted by Peter Leg on 07/02/11 06:34 PM
I think you are on the wrong track. I would say some of the photos of empty cities are from the cities that have been built in Sichuan after the earthquake, to house the people who lost everything.
Usually in China the whole construction project will be finished before anybody is allowed in. You can walk around and have a look at the place but you can't move in until after the opening ceremony. The opening ceremony is the cutting of the red ribbon and then people just stream in.
This year is the 90th anniversary of the Chinese Communist Party and on Chinese TV they show achievements that the party has done over the years. And they show the beautiful cities that have been built to re-house the Sichuan earthquake survivors. I mean some of these cities are cities I'd be proud to live in. They interview people showing how they lived before the earthquake and how they live now in the beautiful new city. They always remember the people who didn't make it through the earthquake.
Welcome to the next superpower. Check out his article
Click to view link
Check out his article
Click to view link
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Posted by KS on 12/29/10 04:45 PM
This article is spot on and well said. This is exactly how it is. It is nice to see that some people are getting it right. Great article.
Reply from The Daily Bell
Thanks.
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Posted by Mark R. Spengler on 12/28/10 06:11 PM
Keep your eye on the Chinese military buildup . . .
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Posted by Thanatos on 12/20/10 10:37 PM
Brilliant plan to deal with surges of refugees if required.
Having that kind of "instant city – just add people" capacity would be quite handy in the even of major trouble...
Just sayin...
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Posted by Lance Winslow on 12/19/10 02:58 AM
Wow, that is very interesting indeed, and flying over China on Google Earth, it is amazing all of the buildings and civilization, it sure adds questions. Very interesting my friends, very interesting indeed.
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Posted by Kenn on 12/18/10 01:14 PM
Chinese TARP, Too big to fail Bail Outs and 151 weeks of Unemployment Insurance seem to be in order here. Has anyone ever considered more sinister reasons for these 'cities'? Remember the FEMA camps is the US that don't exist? How about those new Russian emergency shelters? Could the ChiComs want more user friendly concentration camps. :))
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Posted by Vauung on 12/18/10 03:21 AM
Thanks Bill Ross. Talking to a local friend last night I tried to get a sense of the way people are seeing all this. After mentioning the ghost cities business I asked:
"So do you think these empty cities signal a coming real estate crash?"
"Not in Shanghai."
"But what about the market pressure from all the unused space"
"They're not for living in, they're for investment."
"But what kind of investment is a ghost town?"
"Oh I don't know, they're mainly just an opportunity for money-laundering ..."
That added an element I hadn't factored in. No idea how it plays out.
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Posted by JM on 12/18/10 01:33 AM
@Zenbillionaire
In answer to your last question "Where do these people intend to take us, and why should I believe its a good idea to go there?" I can give you my interpretation.
The goal of the global elite is world domination and control of all resources, wealth and remaining populace via a series of UN Agenda 21 scenarios.
They have been steadily accumulating the wealth of individuals through boom and bust cycles (how many have lost their house in the last couple of years), taxes, fees and mandates such as Obamacare. Entire countries are also targeted via the IMF forcing unpayable debt onto them in the guise of development loans, then demanding the country's resources in payment when the debt can't be repaid. Our national parks, I understand, are UN biosphere areas under the United Nations Biodiversity Treaty. And under the Wildlands project, private land in the U.S., primarily in the western states, is being bought up by the government and connected private interests to be positioned for non-human habitation.
Click to view link
Next is to reduce the world's human population by about 5-plus Billion which has also been underway for some time via wars, famines, poisoned food, water and air, and the Medical Mafia's "treatments" (have you ever notices that they don't CURE disease, they TREAT it--clever folks with the semantics), especially for cancer, and heart disease, and their vaccines which have no scientific proof of preventing or curing disease (according to researchers like Michael Dye and Gary Null), but do seem to be linked to deaths and conditions such as autism and Guillain-Barre syndrome. The remaining living will have been dumbed down and docile from these assaults and from the hijacked school system and corporate media brainwashing.
Now, the final step of your "same script": the remaining humanity, would be herded into crowded urban centers where they would live and work. Since half of them have no private property left and the other half are too brain dead to care, controlling them via the electronic surveillance grid which is now in place will be quite easy. They can sit in their government-owned apartments and watch the latest message from Janet Napolitano on their big screen TV's.
So, are the empty cities in China just waiting for this final step? Not sure, but it does seem to fit.
As to why you should believe its a good idea to go there, that's something you will have to work out for yourself.
I recommend everyone become acquainted with Agenda 21. There is much information on the internet. I just put it into my search engine and received "198,999,134 matching results". Enough for a weekend.
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Posted by ScipioNasica on 12/17/10 05:09 PM
I've always felt one card the Chinese leadership had to play when the other shoe falls, would be: blame America. Say the US and it's Wall Street banks caused all of it. With a homogenous population that is so traumatized, it should work. The wealthy who didn't fall in line would be consumed by a new aggressive and fiery nationalism. What action a nationalist China would take next is a mystery to me, but I ultimately I see war, and in the end an Asian Union.
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Posted by Alan on 12/17/10 03:54 PM
After the wall came down in 1989 more than 10 per cent of the East German population moved to the West. This caused a massive property boom in the West and the market was very tight in the major urban centres for years. In the East many people bought properties as investments but the demand for living in them never materialised. A lot of fingers were burnt.
Tens of thousands of older block buildings have been knocked down in the last ten years but still there is a surplus of property in the East especially in smaller towns many of which are almost deserted.
in the West, however, major urban centres are booming, rents are rising and people are moving into them from smaller towns becasue this is where the jobs are.
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Posted by Al on 12/17/10 06:57 AM
Interestingly the tame Murdoch/Packer press in Australia have pushed the idea on to the average Australian ( which is 90% of the population) that good times are here again because the Chicoms are buying great swathes of Australian minerals and will continue to do so for the next decade.
I wonder what will happen to the Australian economy when China implodes ? or stops buying US T-bills ?
needless to say that the Real Estate industry here has a vested interest in keeping the shell game going for as long as it can.
I wonder who will get lynched first ? the banks or the Real Estate agents ?
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Posted by Bill Ross on 12/17/10 06:28 AM
@DB, Vauung
"Schumpeter is a kind of phony Misesian"
Elite credibility, memes (in general, elite fake reality) can be considered as existing capital, the product of massive media, educational and political subversion investments (pumped by elites, dumped by reality), which is rapidly being obsoleted by the creative destruction of the internet's truth telling.
Have to side with Vauung (really enjoyed hearing your POV). The process is a blend of Schumpeter's CD and elite ID (Intentional Destruction).
I will go so far as to state: The inner methodology of elite ID bears some of the hallmarks of mimicking CD when currency / financial assets is swapped for political fraud / lie assets which is what coerces real financial drivers.
The two go hand in hand and, CD can and is working as a counter force to ID.
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Posted by Twittering As Stocktradr on 12/17/10 03:04 AM
"What Happens to the Wretched World When China Founders?"
should not it be: ... Flounders?
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Posted by Vauung on 12/17/10 02:57 AM
Jason, I'm genuinely interested, because I see nasty little drive-bys like yours all over the net: What motivates someone to drop in, abuse comment hospitality, and make an aggressively hostile remark completely devoid of additional content? Is it even imaginable that an intervention of this sort could lead to anything productive? It's just cultural pollution, isn't it? Why?
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Posted by Jason on 12/17/10 02:40 AM
Guess that's what I get for being critical- a big typo. But still true even if my mobile typing skills are not perfect.
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Posted by Jason on 12/17/10 02:22 AM
Someone really school go back to school, even public school, cause this article reads like a 7th grader wrote it.
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Posted by Michael on 12/17/10 01:54 AM
Quick question -does anyone have any idea what is hosted at "Click to view link" Very strange...
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Posted by Vauung on 12/17/10 01:22 AM
"That does not make them any less profoundly authoritarian."
Fully agreed.
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Posted by Vauung on 12/17/10 01:16 AM
@Wayne
"After all, China is Communist, and the US is Fascist.
Both are totalitarian regimes ..."
Both are flexible fascist / semi-socialist regimes (as is every other society on earth today). Neither is totalitarian. Both have vibrant but profoundly compromised market-economies that feed the fat parasite (= the State).
Totalitarianism is North Korea today, or Maoist China yesterday, where the private sphere is entirely abolished. Pretending the USA or China is anywhere close to that does nothing to advance understanding or realistic criticism.
Reply from The Daily Bell
Both are flexible fascist / semi-socialist regimes (as is every other society on earth today). Neither is totalitarian. Both have vibrant but profoundly compromised market-economies that feed the fat parasite (= the State).
That's good. The elites are nothing if not flexible, and the systems are as well. That does not make them any less profoundly authoritarian.
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Posted by Zenbillionaire on 12/17/10 01:05 AM
@ Nonplused
"Wikipedia describes them as "moderately dangerous" to humans and needing 3 millimetres of aluminum shielding to protect modern electronic equipment. Not exactly Chernobyl fallout."
Magnetic fields. Keep thinking magnetic fields... and polysilicon :)
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