China may have the largest housing bubble in history
Investors are eagerly buying properties in new developments across the country. But there's a problem: The buildings don't have any residents.
The country may be experiencing the largest housing bubble in human history, Lesley Stahl reports.
On the outskirts of many major cities lie ghost towns -- vacant skyscrapers, new apartment towers with no residents, empty shopping malls that have never been used. But they aren't waiting to be sold. Most of the properties were eagerly snapped up by Chinese investors. But even in the most populated nation in the world, there aren't enough people to live in them.
The problem is that people in China's emerging middle class don't have many places to invest their savings. The government doesn't allow them to put money in foreign stocks and bonds. The banks offer poor returns and the Chinese stock market is a roller coaster, Stahl says.
The only place left to invest was real estate. So middle-class families were buying five or even 10 apartments at a time. Analyst Gillem Tulloch told Stahl that China is building as many as 24 of these new cities every year, and that has kept the economy growing at breakneck speed.
"The assumption is if you build it they'll come," Stahl said. "But no one's coming."
One problem is that the new apartments simply cost too much for most people to buy. Tulloch said an apartment could cost $50,000 to $60,000. There aren't many people with enough income to buy in, and those who can afford it certainly aren't going to jump into an empty city.
China has tried to clamp down on this bubble, even implementing a one-apartment policy in 2011. The policy did bring some construction to a halt, leaving something even worse than an empty ghost town: an empty half-completed ghost town.
No one in a lot of the big cities in China can afford to own a home. In Shenzhen (right next to Hong Kong) an apartment (condo) costs between $3,000 and $10,000 per square meter (roughly 10 sq feet). And since the minimum wage in Shenzhen has just been raised $260 per month and the average worker doesn't make over $1000 per month there won't be to many qualified buyers. And to buy a condo/apartment in China usually requires more than 30% down and the mortgage will be for only 10 years at most. So someone making $1000 a month has no chance to own anything.
And to An American, you are so correct on the "make work projects". China must keep 1.2999999billion of its 1.3 billion population actively occupied or bad things will happen to the ruling class. Kinda sounds like America, got keep the people occupied with sports, cheap beer and American Idol or else they will see what's happening to them and revolt!
Anyone who has lived or visited China has seen the numerous construction projects. The PRC will continue to promote building regardless of the actual need.
Why do you ask, because it keeps people working - esp. poor, uneducated, unskilled workers/laborers who could create unrest by demonstrations if not actively employed.
Vendors of raw materials and products such as concrete, doors, windows, elevators, steel reinforcing, plumbing, power/tel cabling and such are also part of the construction industry that must provide jobs to sustain growth.
The rapid creation of High Tech Zones to spur local economies to solicit foreign investment and industries to occupy/lease spec buildings is common.
Right on! Liberal politics and policies led to our housing bubble by forcing banks to extend mortages to people who had no hope of repaying them. No banker in his right mind would have written a mortgage to these unqualified buyers so in comes the federal government with Fanny and Freddy to guarantee these loans with the taxpayer's money. The rest is history. Welcome aboard China!
This is just one of many indications of mismanagement in Communist China, it is like a duck in water, on the surface it appears like everything is moving well, but under the surface you see quite a different story, corruption, lies, deception and chaos, a country that is clueless in how to govern itself. "An American in China is absolutely correct; I too have lived in China for the past eight years.
question: the people that bought, how can they maintain if there is no income?
Pretty much Marx was right.
There can be empty factories and homes in a city with hundreds of thousands of jobless, homeless workers straving to death.
Pretty much we need a new model for the economy.
Just like farming is now done by less than 2 percent of the population manufacturing can be done with less than 10 percent of the population.
The question is what to do with the 88 percent of the working population that is not doing anything.
Hmmm let's see 12 percent of the population really needed to get things done add in another 5 percent for emergencies etc. so 17 percent of the people are really working at any given time.
Say the average person lives until they are say 65 and able to work. So of those 65 years someone only needs to work 17 percent of the time to get everything done.
The answer is now obvious everyone has to work about 11 to 12 years after which everything is free to them as they have contributed their part to the hive.
In order to stop the everyone works at the slowest person's level there should be about 3 tiers of work available
1. The worker level - moving things around, digging holes, farming, lawyers, politicians no real skills needed.
2. The skilled worker level - able to work heavy machinery, delicate processes like electrical wiring anything that you need training for and medical nurses etc.
3. The intellegent worker level - able to create new machines or programs to produce items faster cheaper easier, doctors ,
Each level has about 8 levels of earned work credits. With the last 4 levels overlapping the first 4 levels of the next level.
So a Worker earned work credit level 8 would equal the skilled worker level 4 earned work credit.
The worker earned work credit level 1 would be something like a 1,000 sq foot house , food , medical care , X amount of fun monies to spend.
Each level up would add more benefits like a car , bigger house more X amount for fun monies.
The details as to what each level would contain will have to be determined but you get the general idea.
And if someone wanted to go back after having worked 11 years and work some more they would get a higher level of earned work credit.
So if you were lazy you would work 11 years after you got out of school 18 and by age 29 could not work anymore the rest of your life.
If you wanted to learn a skill another 2 years in school you would be retired by 31.
Or if you liked work you could work until you were like 40 and have twice the lowest earned work credit.
The Hive work ethic is about the only way we have of going forward.
All other economic models are obsolete and backwards
I am wondering where are these cities located on a map of China . China has 100's of cities with 1million + population. there is also no given number of condos available. I had helped to build thousands of very expensive condo units in Chicago that went up for auction when the banks demanded there (our) money back ! they were selling at 25% of the orignal price .!!!! The buyers got them at cost of construction as it shoud have been priced in the first place!!!
THE CYCLE OF INEVITABILITY
Birth: A civilization is born out of a void. People work hard and gain from their efforts.
Growth: More people come and work hard. Prosperity comes because everyone works hard and makes gains.
Maturity: Pariah come; make laws so there are lawyers, taxes so there are bookkeepers, money so there are bankers and financiers, bureaucracy so there are politicians, paper so there are administrators.
Decline: People get tired of working so lawyers, bookkeepers, bankers, financiers, politicians and administrators can usurp all power and use corruption to suppress the masses into servitude. Civilization crumbles.
Death: The people rise up and destroy all pariahs.
Re-Birth: A new civilization is born out of the void. A “No Pariah” sign is posted. People work hard and enjoy life.
We the People of the United States of America and as registered Citizens do declare the sitting President, members of Congress and the Supreme Court as incompetent; conspiring and colluding with banks and the Federal Reserve to conquer us financially and thereby make their Will exceed our Constitution. We demand that all of these people step down immediately and without device. Their politics, parties and persuasion is hereby abolished and banned from future practice. The United States of America will set in place a new vote to replace all these individuals, employing every registered citizen of this nation 18 years of age or older that is validated alive and conscious. All banks and the Federal Reserve will be shuttered immediately and forthwith to be reconciled and wholly regulated to segregate money handlers. All Stock Exchanges will be closed and all assets reconciled. All monies assigned as debt to the People of the United States shall be reconciled against holdings and cancelled. All Law Firms will be abolished as they are as much militia as any terror group or sect. We the People of the United States of America will restore our economy, balance and stability as a democracy and never again allow one person or group to have Will over our majority. I am a registered citizen of the United States of America and demand these things on this date (write date) and validate this with my printed name and signature.
I SEE ALOT OF HATER - THEY GETTING NEW HOUSE TO LIVE IN WHERE IN THE USA THE HOUSE IS 200 YEAR AND PAYING 500000 FOR STUPID BUYER....ALOT OF HATER BUT CHINESE PEOPLE ARE HAPPY WITH THEIR LIVES WITH NEW HOUSE ..
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