commanderkai wrote:
To start, I want to keep this a lot shorter, since, well, typing up walls of texts just makes us both repeat the same things over and over, getting things down to small points of contention that maybe you can show me your logic or thought process would be better than just writing giant walls of text. As much as we disagree plenty Boots, you're an intelligent poster, and you do provide insight in a way that's educational, and not like two people swinging baseball bats at one another's head.
Thank you, likewise. That's one reason I enjoy debating on here with people like yourself is because it doesn't degenerate into name-calling and other BS.
commanderkai wrote:
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For example, we recently knocked down a shopping mall in SW Edmonton and developers are in the process of building a ton of apartment buildings on the site – it is expected to house almost 30,000 people. With the economy the way it is, these units are not moving as fast as they would have in 2007/08. Should Edmonton have waited until we were desperate for housing (like we did in 2005 when prices jumped double digits), or does it make sense for Edmonton to build them now, to ease boom times in the future?
I don't think so - and neither do most Edmontonians.
I agree with you. It does make sense to build real estate when times are rough, in order to prepare for the future. In your case, it's (I'm assuming) private investors making the investment in these properties in the hope that, when the real estate market goes up, they'll make money. Until they do, they will be suffering a bit of a loss. From what I've been reading in the few articles that were posted, the situation is a bit different, at least, from my understanding.
In Ordos' case, the city was built during that region's booming economic times, since the region's natural resources are in extremely high demand in the economy. As such, the government decided to build this subdivision/suburb/city.
Now, none of what I said above is a problem to me. Using the wealth from (I thought is) a booming economy to improve the lives of the citizenry is a good thing. Better that than it just being in a small grouping of connected individuals. This is where it gets iffy for me.
Once the cities are built, the real estate are purchased by investors, and, making said purchases during a booming economy is questionable, but logical if you capitalize on your investment A.S.A.P., be it through renting it to individuals, or improving the property's value through interior decorating, and then selling it at a higher price. What is happening, at least, from my understanding, and what I read, is that these investors are purchasing these properties and neither renting, or improving them, but rather holding onto them to sell them off in the future.
Anything confusing, or wrong about this statement? Right now, these ghost cities are not being purchased by average residents or citizens, but rather a few wealthy individuals, in the hope to cash in the future. Having infrastructure for the future is good, but this city, or suburb, or subdivision, whatever you want to call it, just seems to be a housing bubble of artificially inflated prices.
Well, like I said, this report seems to have an agenda to me and isn't very balanced IMHO.
I wish that regular people were buying these condos, but for the most part, yes, they are being bought by the wealthy as an investment.
But I don't see it as a bubble. Unlike in the US, where people bought houses they couldn't afford with sub-prime mortgages (and then lost them and their downpayment/equity), the Chinese are buying these outright. So, there is no bubble to burst because they own them 100%. There is no bank to come calling and say, "If you don't make your payments, we're taking away your condos."
While you're seeing a potential problem today, tomorrow or next week, the Chinese are seeing opportunity next year, next decade and so on. The Chinese are focussed on the long term, while we in the West usually seem to focus on the short term. It's kind of like mutual funds - it may have ups and downs - but over the long term, it goes up. That's the rationale I'm seeing here.
I agree with most of what you are saying, but after having seen how big these developments are in reality, which is much smaller than the report makes them sound, I simply don't see it as much of an issue.
commanderkai wrote:
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Sorry, but you’re letting your politics show through – the apparatchik may be wealthy in China, but they aren’t the only ones. Lots of Chinese have gone overseas, gotten advanced educations and gone back to China to make five and six figure incomes. You’re confusing China in the 2011 with China in 1961.
Wouldn't many of those who were able to obtain an education outside of China be slightly more connected than the average citizen who emigrated China to start new lives in the West?
Like I said, you're confusing 1961 China with 2011 China.
I've met lots of people who have either immigrated to Canada or came here for an MBA degree who are just regular people back home. I'm sure some of them might have some friends in high places, but generally those that do go to Harvard, Yale or some other top 10 business school, not the University of Alberta here in Edmonton. That's because the well-connected can afford to go to those schools (charging $100,000 or more for an MBA), while regular 'middle class' Chinese people struggle to come up with the $20,000 or so the UofA charges for an MBA.
I agree that the apparatchik exist and that they do comprise a hefty portion of China's wealthy (or are connected to China's wealthy), but not everyone who comes to North America to get an education is an apparatchik. I would bet that they are the minority in fact.
After all, as an apparatchik, you probably have a life of wealth and/or privilege, so why bother learning English to come here to get an MBA when you can just go to the best school in China and have a fantastic life in Beijing?
commanderkai wrote:
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I’m sure the region was booming, just as Alberta was until 2008. Natural resource driven economies (like Alberta and Ordos) took a beating because the demand for resources dried up, just as the demand for manufactured goods did. But the place is obviously on the rebound (like Alberta), and they are trying to get ahead of the game by the looks of it.
Did China's economy suffer as much as our did because of the real estate bubble burst in North America? China's GDP growth certainly didn't slow all that much. Even though manufactured goods might have slowed, the coal/natural gas Ordos area wouldn't be as affected due to China's growing need for electrical power generation.
Actually, their economy did suffer - though not as much as we did in North America. But because demand in Europe and North America for their manufactured goods fell, I'm guessing so too did energy consumption (and therefore coal production.
commanderkai wrote:
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Again, you’re thinking like a Westerner.
Most Chinese don’t get married at 20 and go buy a house with a 30 year mortgage. They go to school, get a job and live at home until they get married. Then they rent a cheap little apartment (usually from the company which they work for) and save every cent they can – then they buy a place in their 40s or even their 50s. The ones who buy earlier are the ones who are making five/six figures incomes, which in China is not limited to just the apparatchik (as you seem to believe).
I personally know half a dozen or so Chinese people who got an MBA in Edmonton and then went home – all of them are making close to six figures (after converting it to CDN $). They will be able to afford a place like the ones featured in this video in a couple of years. BTW, none of them are members of the party.
None of them were friends of somebody in the Party? I mean, being sent to a Western school can't exactly be all that cheap. Either way, no, I didn't assume that just the apparatchik were those with the wealth, even though certainly they have a nice, juicy chunk of it, but I am a bit skeptical that none of these people that you knew (even assuming they didn't just lie, because I don't think advertising being members of the Chinese Communist Party in Western countries would go off too well) had absolutely no connection whatsoever.
But, even if they don't have any connection, if what you say is true about the Chinese middle class, they aren't the ones who are making these major real estate purchases in cities like Ordos, because it'd be highly unlikely they can make such an expensive investment just to not move into it. If these properties were being bought up and moved into by the middle class, there wouldn't be a "ghost city" but an inhabited one, no?
No, the issue is not China's middle class, but China's extremely wealthy who are making these purchases of real estate within these cities, which, well, turns them into "ghost cities". I don't see China's housing bubble being anything good for anybody in China, rich, middle class, or poor.
See above...
CKA Uber 
