So, I know a lot of youtubers and news sites and other bloggers have already posted a lot of stuff about this issue, and so originally, I wasn’t going to cover it much.
It's a super controversial issue where to put the blame. I've seen a lot of debates/flame wars on the internet, where opinions have ranged from, "Damn those evil capitalists taking out all those loans and never paying it back!" to "This is all an American conspiracy to brainwash our youths with feminism so they don't have kids!" to "Well, everyone's going through a recession because of covid, it's natural that it's happening in China too."
Nobody really seems to blame communism specifically. Or even necessarily the CCP's policies, except in as much as people are scared and mad that they're not coming out with effective policies to deal with the bubble. I've seen criticism of overspending, especially on how much China spends on foreign aid. I've seen criticism of specific local government's over-reliance on land leases as an income source. But I haven't really seen people really say that the CCP is the primary person responsible.
In real life, I think the opinion I've encountered the most often is that the government accidentally left some loopholes, and evil capitalists have been taking advantage of those loopholes out of greed, and when the government got around to closing the loopholes, their business collapsed, and they're taking all these innocent homeowners down with them.
I mean, I also have a high growth portfolio largely invested into China and tech; I’ve pretty much written off the amount. If I make any returns it would truly be a miracle.
He's spent the last, like, decade trying to persuade all my extended family and all his friends to leave too, and literally only one person ever believed him. :(
Some of us are fated to be voices in the wilderness :')
That said, I had a quick chat with my portfolio manager and he actually thinks the macro situation in China is becoming clearer thanks to recent policy announcements and a major upcoming one next Monday at the Financial Policy Conference. Also, the real estate market isn't the key to China's stock market weakness, which is a small relief…
I've been hearing murmors about "China is a bubble, it's going to pop any day now" my whole life, and yet it keeps on growing. So I tend to just tune it out. Still, you're right, a bubble doesn't go away just because it grows bigger, it only gets worse.
Re: too many houses. It occurs to me that one way to solve that problem would be to grow the population. Has the Chinese government taken any drastic actions to raise the birth rate? Or encourage immigration?
I'm not sure I would call what they're doing currently "efforts". A lot of people have correctly pointed out that for all the Chinese government talks about "encouraging childbirth", that's all they've done. Verbally encourage people to have babies.
There are incredibly simple problems that they could absolutely solve, and yet they're not actually coming out with any policies of this nature. For example, pregnancy checkups and epidurals still aren't covered by insurance. For example, there's no WIC to ensure that people can afford formula and baby food. For example, there's no government grants for daycares or a way for people to claim it as a deductible.
A lot of people are repeatedly calling out to the government about how bad a problem the current birth rate is, and all the government's been doing is things that would only encourage people to not have kids. Like making it harder to get a divorce, or trying to ban bride prices. Or endlessly extending maternity leave. I think it's like a whole year now. All things that only screw you over harder if you try to have babies.
Chinese people aren't strongly opposed to immigration, because there isn't any immigration in China. Like, the numbers are low because China is one of the hardest countries to get into or stay in. It gives out only a couple of green cards a year. Because the government set those policies back when it was worried about overpopulation and then next fixed it.
But as far as I can tell, the only reason Chinese people are upset about African international students is because they're taking up Chinese people's spots in universities. They're not that upset about white people immigrants, except when they notice the police and the government don't screw white people over the way they screw Chinese people over (because they don't want some kind of an international incident). I think Chinese people would be more or less okay with South East Asians coming over, because for the most part they consider Vietnamese and Malaysian and Filipino people to be very similar to them in culture.
I think just about the only demographic that Chinese people are strongly against coming over to China is, like, Muslims?
You didn't mention "inflation" anywhere, although you did mention gold - what's the Chinese attitude toward inflation?
I'm not a economist, but it seems like a lot of the problems could be "solved" by printing more money. It's like a way to take value from people who save in RMB and who loan in RMB, and give it to people who have non-RMB assets and who borrow in RMB. (Or alternatively, a way to magically transform any other financial problem into the different problem of "inflation".) If everyone were instantly getting paid 100x what they're getting paid now, all the old debts would fade into background noise. It wouldn't be a long-term fix unless the underlying broken system got fixed at the same time, but it seems like a simple way to push out the disaster another decade or two...
That's not a fantastic idea for a country relying so much on the manufacturing industry, which is mostly sustained by the export economy. Not to mention, people are already presenting a trend where they're incredibly eager to save up money instead of spend it, and a desire to convert RMB into gold precisely to protect themselves against inflationary threats (and also the banks losing all their money, like it's happened with some people).
The main way to cause inflation for the government is to lower interest rate and get people to take out more loans or spend more money on credit cards, and people have so little faith in the market that China's already got a lot of policies encouraging people to take out loans and they're not really working. Basically, people are too uncertain about tomorrow and too scared by the amount of layoffs and unpaid wages going around to take on any loans.
And even if they took out loans, there's not a whole lot to spend it on. Like, houses? In this climate? No way. This isn't a great time to start a business either, with how everyone's reducing spending at the moment. Investing? The stock market's performing terribly, but actually doing shorting still requires more expertise than most people have. In the end, all people are really spending their money on is bare minimum daily necessities, and the amount of loans generated by that just isn't enough.
I mean, it's an idea. Maybe there's some clever way to pull it off. But the old Federal Reserve trick of lowering interest rates all around isn't going to be enough in China's case, I don't think.
In principle the government could set a price floor simply by credibly promising that they would buy any house at such-and-such a price per square foot; this would prevent houses from dropping below that price. Whether they could afford to do so is a separate question.
Super interesting and really ties together so many other issues that have cropped up (tofu dreg construction, the difficulty in getting hukou, the preference for urban living, etc.) I remember hearing about all the houses that were never built in the news and it still blows my mind that people don't really have any recourse. I know the joke is that america is super litigious, and we absolutely are, but in cases like this even a settlement in civil court for partial restitution would be better than nothing.
They could sue in civil court. The problem is, those houses aren't being built because the real estate developers don't have the money to build them. So they definitely don't have the money to pay you back either. And even if you sued and won, whatever assets they have left is going to go towards paying their biggest debtors first--the banks. As an individual homeowner, you don't have a chance of getting anything at the end of the day. I think the same would happen in American courts--except that, of course, it's a lot harder for things to get that bad to begin with in America.
But yeah, this is why in the few other countries with pre-sold houses (Hong Kong being one), there are incredibly tight laws about when companies are allowed to access the funds and what they're allowed to spend it on. But China doesn't have those laws, or at least if it did, there's no enforcement at all because it's such a connections society.
The reason this doesn't happen in America is that it's routine to use tranches and escrow.
Basically, let's say you want to buy a unit in an apartment complex that isn't built yet. What happens is that you hand your downpayment to an escrow company which is a third party that is legally bound to only release the money if certain conditions are met. Usually delivery of the apartment or just before (like when they're picking the tiles or something at the very end). If the apartment is never finished then the escrow company would just give you your down payment back. This happened a lot in 2008 and is the reason why most of the financial damage of a real estate collapse was concentrated in the banks. Still not good, of course.
My understanding is that in China you literally just wire your downpayment to the construction company. This is basically illegal in the US to the point that anyone who asked for it would get reported as a scam. Also, my understanding is you start making payments immediately. This isn't normal in the US either. Instead you usually don't start paying the mortgage until you take possession of the unit.
Right, yeah. Something else that's ~*~cool~*~ about China [sarcasm] is that declaring bankruptcy doesn't actually free you from your mortgage. If you bought a house for 3 million, for example, and then in a couple of months, its value falls to just 1 million, but you're still stuck paying 2.5 million in mortgage, for example, and you lose your job because of the down turn in the economy. I think in America, you can let the bank foreclose on your house, declare bankruptcy, take a hit to your credit score, but still come out of it mostly okay. Another reason most of the financial damage of a real estate collapse will be concentrated in the banks.
In China, if you're stuck paying the 2.5 million in mortgage, you can let the bank foreclose on your home, probably sell it off cheap in a bank auction for like 500K or something, and then get stuck for the rest of your life having to figure out a way to pay the rest of the 2 million back. Meanwhile, not only can the bank file to seize any income you make, but you'll also be put on a blacklist that bans you from any "luxury spending", including buying high speed rail tickets or plane tickets, hotels, rent office space, send your kids to private school, buy insurance, have credit cards, etc, etc. And your children can't pass background checks for jobs that require it if you're on the blacklist for owing money.
Really? In most of the world (not just the west or the US) a mortgage is a secured loan which means that if you fail to pay the bank reclaims the collateral (ie, the house) but that's the end of it. You don't even need to declare bankruptcy.
You'll take a huge blow to your credit score because the bank will report that you walked away from your mortgage. And you lose the house. But that's it. The bank will auction your house, pay off any debts, and if there's any money left they'll send it to you (though there almost never is). This isn't something unique to advanced economies either. It's how mortgages work in Mexico and even places like Saudi Arabia.
Suddenly China's banks making ridiculous loans make sense. Even if the mortgage doesn't work out you can just hound the money out of the person for the rest of their life. Much less incentive to make sure the person is a good borrowing risk.
Is it like that with business debts too? Does bankruptcy exist?
I don't think it's the case with all debts, bankruptcy still exists for businessmen. But I don't know if mortgages are the only debts that work like this. I've never heard of anyone getting the life ruined by Chinese student loans, for example.
Another cool fact--for some reason that isn't clear to me, almost all mortgages in China default to floating interest rate, whereas most American mortgages are fixed interest rate. So theoretically, you owe 2 million in mortgage or whatever, but there's no way to really predict how much you're gonna end up paying back on it.
That's common outside the US. The US government encourages fixed rate mortgages as a matter of policy. Basically, the government offers financial incentives to banks to produce fixed rate mortgages for primary home buyers (ie, buying the house to live in it). They don't do the same for variable rate. The belief is that this helps secure household budgets, help families build wealth, and provides a cushion against economic shocks that hopefully keeps people off the welfare rolls.
In places without government intervention a variable rate is more common. Including Britain and Germany, for example.
The political elite is to blame though. China was building so much real estate because export-led manufacture was attracting rural population to cities. That export was possible due to access to Western markets and foreign investors who after Nixon's visit and Deng's reforms brought capital and technology.
Chinese leadership blew that in two main ways: first by ripping off foreign investors in a million ways, second by picking unnecessary fights with every country, especially since Xi became president, until they pissed off the americans which is always a bad idea and also became isolated on the international stage. The current Washington consensus is that China needs to be put back in her place and all the talk of Chimerica has been replaced by the need for decoupling and reshoring.
This means that manufacturing is not growing so there is no need for more rural workers in the cities so there are fewer buyers for those apartments. Hence real estate sales slumping.
I agree with you that nothing extraordinary will happen, but the period of explosive growth is probably over and chinese GDP will grow at a more normal 2-3%.
Oh, absolutely! The trade war is absolutely pouring oil on the fire. It's cutting China off from the most obvious solution to this whole problem--relying on foreign loans/investment to get itself through the collapse of the bubble.
But like, there also is an objective oversupply of housing in China. I mean it literally when I say there are more houses in China than there are households in China. In fact, there are probably twice as many houses as there are households in China. With or without the trade war, there would be too many houses and not enough buyers. This is because of a policy that...I'm not sure how to translate, it's "land usage rate"? Where when you buy, say, an acre of land, you have to guarantee there's so many square feet of living space on it when you're done developing it. Usually, this number would be the lowest for single-family homes, and much higher for skyscrapers, because you're using vertical space too.
Well, the Chinese government sets the minimum standards of land usage rate really high, so that in order to meet the target, developers have to build skyscrapers. This is because they can justify selling the land for a lot more money if skyscrapers are going to be built on it. Nobody would ever buy a plot of land for a million dollars if they're just gonna build a single family home on it, you know.
This creates this fucked situation where even in my hometown, as rural and backwaters as it gets, where there's plenty of...well, not necessarily unused land, but certainly just subsistence farming land all around, people still live in units in high-rise buildings. And of course, this kind of building logic means there's gonna be a whole lot more houses than there are people who want houses.
Like I said, I'm not saying the political elite aren't to blame. Like, a huge portion of the money they got from land leases are being wasted on corrupt projects to funnel money to their own accounts or their own family. I just thought that POV had been covered enough already, and people are already aware of all the CCP's corruption, so I'd talk about it from the other point of view.
I was using Wikipedia's list of countries by GDP per capita, which claims to not account for the differences in cost of living. Over on the list of countries by PPP per capita, China has about 23K, which still makes it slightly poorer than Belarus and Libya.
Either way, I'm not too worried about the precise accuracy of the numbers. I was just trying to communicate that, like, people's perception that China is on par with America or even better off than America is nowhere close to accurate. And China certainly doesn't have the kind of money to throw around on pretending like it's on par with America, which is what it's been doing.
Holy smokes, what a way to end this, your dad was on fire!
Culturally, where do you see Chinese citizens placing the blame right now? Like, is it
"these are the natural consequences of excessive capitalism",
"this is what happens when communism tries to reassert dominance over markets",
"this is just a one time screwup due to specific real estate policies",
or some completely different thing?
It's a super controversial issue where to put the blame. I've seen a lot of debates/flame wars on the internet, where opinions have ranged from, "Damn those evil capitalists taking out all those loans and never paying it back!" to "This is all an American conspiracy to brainwash our youths with feminism so they don't have kids!" to "Well, everyone's going through a recession because of covid, it's natural that it's happening in China too."
Nobody really seems to blame communism specifically. Or even necessarily the CCP's policies, except in as much as people are scared and mad that they're not coming out with effective policies to deal with the bubble. I've seen criticism of overspending, especially on how much China spends on foreign aid. I've seen criticism of specific local government's over-reliance on land leases as an income source. But I haven't really seen people really say that the CCP is the primary person responsible.
In real life, I think the opinion I've encountered the most often is that the government accidentally left some loopholes, and evil capitalists have been taking advantage of those loopholes out of greed, and when the government got around to closing the loopholes, their business collapsed, and they're taking all these innocent homeowners down with them.
I mean, I also have a high growth portfolio largely invested into China and tech; I’ve pretty much written off the amount. If I make any returns it would truly be a miracle.
Bless your dad (and every other ancestor who had the grit and foresight to yeet)
He's spent the last, like, decade trying to persuade all my extended family and all his friends to leave too, and literally only one person ever believed him. :(
Some of us are fated to be voices in the wilderness :')
That said, I had a quick chat with my portfolio manager and he actually thinks the macro situation in China is becoming clearer thanks to recent policy announcements and a major upcoming one next Monday at the Financial Policy Conference. Also, the real estate market isn't the key to China's stock market weakness, which is a small relief…
Very interesting! thanks.
I've been hearing murmors about "China is a bubble, it's going to pop any day now" my whole life, and yet it keeps on growing. So I tend to just tune it out. Still, you're right, a bubble doesn't go away just because it grows bigger, it only gets worse.
Re: too many houses. It occurs to me that one way to solve that problem would be to grow the population. Has the Chinese government taken any drastic actions to raise the birth rate? Or encourage immigration?
The birth rate is a major concern in China that the government would love to raise: https://www.theguardian.com/world/2022/aug/17/chinese-government-birth-rate-policies-abortions-population - their current efforts aren't working though. The pressures in the opposite direction are too hard to overcome.
Chinese people are also generally quite opposed to immigration: https://thediplomat.com/2020/12/chinese-attitudes-toward-immigrants-emerging-divided-views - China currently has one of the lowest levels of immigration of any country in the world.
I'm not sure I would call what they're doing currently "efforts". A lot of people have correctly pointed out that for all the Chinese government talks about "encouraging childbirth", that's all they've done. Verbally encourage people to have babies.
There are incredibly simple problems that they could absolutely solve, and yet they're not actually coming out with any policies of this nature. For example, pregnancy checkups and epidurals still aren't covered by insurance. For example, there's no WIC to ensure that people can afford formula and baby food. For example, there's no government grants for daycares or a way for people to claim it as a deductible.
A lot of people are repeatedly calling out to the government about how bad a problem the current birth rate is, and all the government's been doing is things that would only encourage people to not have kids. Like making it harder to get a divorce, or trying to ban bride prices. Or endlessly extending maternity leave. I think it's like a whole year now. All things that only screw you over harder if you try to have babies.
Chinese people aren't strongly opposed to immigration, because there isn't any immigration in China. Like, the numbers are low because China is one of the hardest countries to get into or stay in. It gives out only a couple of green cards a year. Because the government set those policies back when it was worried about overpopulation and then next fixed it.
But as far as I can tell, the only reason Chinese people are upset about African international students is because they're taking up Chinese people's spots in universities. They're not that upset about white people immigrants, except when they notice the police and the government don't screw white people over the way they screw Chinese people over (because they don't want some kind of an international incident). I think Chinese people would be more or less okay with South East Asians coming over, because for the most part they consider Vietnamese and Malaysian and Filipino people to be very similar to them in culture.
I think just about the only demographic that Chinese people are strongly against coming over to China is, like, Muslims?
You didn't mention "inflation" anywhere, although you did mention gold - what's the Chinese attitude toward inflation?
I'm not a economist, but it seems like a lot of the problems could be "solved" by printing more money. It's like a way to take value from people who save in RMB and who loan in RMB, and give it to people who have non-RMB assets and who borrow in RMB. (Or alternatively, a way to magically transform any other financial problem into the different problem of "inflation".) If everyone were instantly getting paid 100x what they're getting paid now, all the old debts would fade into background noise. It wouldn't be a long-term fix unless the underlying broken system got fixed at the same time, but it seems like a simple way to push out the disaster another decade or two...
That's not a fantastic idea for a country relying so much on the manufacturing industry, which is mostly sustained by the export economy. Not to mention, people are already presenting a trend where they're incredibly eager to save up money instead of spend it, and a desire to convert RMB into gold precisely to protect themselves against inflationary threats (and also the banks losing all their money, like it's happened with some people).
The main way to cause inflation for the government is to lower interest rate and get people to take out more loans or spend more money on credit cards, and people have so little faith in the market that China's already got a lot of policies encouraging people to take out loans and they're not really working. Basically, people are too uncertain about tomorrow and too scared by the amount of layoffs and unpaid wages going around to take on any loans.
And even if they took out loans, there's not a whole lot to spend it on. Like, houses? In this climate? No way. This isn't a great time to start a business either, with how everyone's reducing spending at the moment. Investing? The stock market's performing terribly, but actually doing shorting still requires more expertise than most people have. In the end, all people are really spending their money on is bare minimum daily necessities, and the amount of loans generated by that just isn't enough.
I mean, it's an idea. Maybe there's some clever way to pull it off. But the old Federal Reserve trick of lowering interest rates all around isn't going to be enough in China's case, I don't think.
In principle the government could set a price floor simply by credibly promising that they would buy any house at such-and-such a price per square foot; this would prevent houses from dropping below that price. Whether they could afford to do so is a separate question.
I'm not entirely sure how that would work out, when half of the government's income also comes from real estate, actually...
Super interesting and really ties together so many other issues that have cropped up (tofu dreg construction, the difficulty in getting hukou, the preference for urban living, etc.) I remember hearing about all the houses that were never built in the news and it still blows my mind that people don't really have any recourse. I know the joke is that america is super litigious, and we absolutely are, but in cases like this even a settlement in civil court for partial restitution would be better than nothing.
They could sue in civil court. The problem is, those houses aren't being built because the real estate developers don't have the money to build them. So they definitely don't have the money to pay you back either. And even if you sued and won, whatever assets they have left is going to go towards paying their biggest debtors first--the banks. As an individual homeowner, you don't have a chance of getting anything at the end of the day. I think the same would happen in American courts--except that, of course, it's a lot harder for things to get that bad to begin with in America.
But yeah, this is why in the few other countries with pre-sold houses (Hong Kong being one), there are incredibly tight laws about when companies are allowed to access the funds and what they're allowed to spend it on. But China doesn't have those laws, or at least if it did, there's no enforcement at all because it's such a connections society.
The reason this doesn't happen in America is that it's routine to use tranches and escrow.
Basically, let's say you want to buy a unit in an apartment complex that isn't built yet. What happens is that you hand your downpayment to an escrow company which is a third party that is legally bound to only release the money if certain conditions are met. Usually delivery of the apartment or just before (like when they're picking the tiles or something at the very end). If the apartment is never finished then the escrow company would just give you your down payment back. This happened a lot in 2008 and is the reason why most of the financial damage of a real estate collapse was concentrated in the banks. Still not good, of course.
My understanding is that in China you literally just wire your downpayment to the construction company. This is basically illegal in the US to the point that anyone who asked for it would get reported as a scam. Also, my understanding is you start making payments immediately. This isn't normal in the US either. Instead you usually don't start paying the mortgage until you take possession of the unit.
Right, yeah. Something else that's ~*~cool~*~ about China [sarcasm] is that declaring bankruptcy doesn't actually free you from your mortgage. If you bought a house for 3 million, for example, and then in a couple of months, its value falls to just 1 million, but you're still stuck paying 2.5 million in mortgage, for example, and you lose your job because of the down turn in the economy. I think in America, you can let the bank foreclose on your house, declare bankruptcy, take a hit to your credit score, but still come out of it mostly okay. Another reason most of the financial damage of a real estate collapse will be concentrated in the banks.
In China, if you're stuck paying the 2.5 million in mortgage, you can let the bank foreclose on your home, probably sell it off cheap in a bank auction for like 500K or something, and then get stuck for the rest of your life having to figure out a way to pay the rest of the 2 million back. Meanwhile, not only can the bank file to seize any income you make, but you'll also be put on a blacklist that bans you from any "luxury spending", including buying high speed rail tickets or plane tickets, hotels, rent office space, send your kids to private school, buy insurance, have credit cards, etc, etc. And your children can't pass background checks for jobs that require it if you're on the blacklist for owing money.
Really? In most of the world (not just the west or the US) a mortgage is a secured loan which means that if you fail to pay the bank reclaims the collateral (ie, the house) but that's the end of it. You don't even need to declare bankruptcy.
You'll take a huge blow to your credit score because the bank will report that you walked away from your mortgage. And you lose the house. But that's it. The bank will auction your house, pay off any debts, and if there's any money left they'll send it to you (though there almost never is). This isn't something unique to advanced economies either. It's how mortgages work in Mexico and even places like Saudi Arabia.
Suddenly China's banks making ridiculous loans make sense. Even if the mortgage doesn't work out you can just hound the money out of the person for the rest of their life. Much less incentive to make sure the person is a good borrowing risk.
Is it like that with business debts too? Does bankruptcy exist?
I don't think it's the case with all debts, bankruptcy still exists for businessmen. But I don't know if mortgages are the only debts that work like this. I've never heard of anyone getting the life ruined by Chinese student loans, for example.
Another cool fact--for some reason that isn't clear to me, almost all mortgages in China default to floating interest rate, whereas most American mortgages are fixed interest rate. So theoretically, you owe 2 million in mortgage or whatever, but there's no way to really predict how much you're gonna end up paying back on it.
That's common outside the US. The US government encourages fixed rate mortgages as a matter of policy. Basically, the government offers financial incentives to banks to produce fixed rate mortgages for primary home buyers (ie, buying the house to live in it). They don't do the same for variable rate. The belief is that this helps secure household budgets, help families build wealth, and provides a cushion against economic shocks that hopefully keeps people off the welfare rolls.
In places without government intervention a variable rate is more common. Including Britain and Germany, for example.
Amazing blogpost.
The political elite is to blame though. China was building so much real estate because export-led manufacture was attracting rural population to cities. That export was possible due to access to Western markets and foreign investors who after Nixon's visit and Deng's reforms brought capital and technology.
Chinese leadership blew that in two main ways: first by ripping off foreign investors in a million ways, second by picking unnecessary fights with every country, especially since Xi became president, until they pissed off the americans which is always a bad idea and also became isolated on the international stage. The current Washington consensus is that China needs to be put back in her place and all the talk of Chimerica has been replaced by the need for decoupling and reshoring.
This means that manufacturing is not growing so there is no need for more rural workers in the cities so there are fewer buyers for those apartments. Hence real estate sales slumping.
I agree with you that nothing extraordinary will happen, but the period of explosive growth is probably over and chinese GDP will grow at a more normal 2-3%.
Oh, absolutely! The trade war is absolutely pouring oil on the fire. It's cutting China off from the most obvious solution to this whole problem--relying on foreign loans/investment to get itself through the collapse of the bubble.
But like, there also is an objective oversupply of housing in China. I mean it literally when I say there are more houses in China than there are households in China. In fact, there are probably twice as many houses as there are households in China. With or without the trade war, there would be too many houses and not enough buyers. This is because of a policy that...I'm not sure how to translate, it's "land usage rate"? Where when you buy, say, an acre of land, you have to guarantee there's so many square feet of living space on it when you're done developing it. Usually, this number would be the lowest for single-family homes, and much higher for skyscrapers, because you're using vertical space too.
Well, the Chinese government sets the minimum standards of land usage rate really high, so that in order to meet the target, developers have to build skyscrapers. This is because they can justify selling the land for a lot more money if skyscrapers are going to be built on it. Nobody would ever buy a plot of land for a million dollars if they're just gonna build a single family home on it, you know.
This creates this fucked situation where even in my hometown, as rural and backwaters as it gets, where there's plenty of...well, not necessarily unused land, but certainly just subsistence farming land all around, people still live in units in high-rise buildings. And of course, this kind of building logic means there's gonna be a whole lot more houses than there are people who want houses.
Like I said, I'm not saying the political elite aren't to blame. Like, a huge portion of the money they got from land leases are being wasted on corrupt projects to funnel money to their own accounts or their own family. I just thought that POV had been covered enough already, and people are already aware of all the CCP's corruption, so I'd talk about it from the other point of view.
This was so interesting, thank you so much.
In "here’s an official government breakdown" was the "here's" supposed to be a hyperlink?
Nah, I was referring to the earlier link in the same sentence.
That GDP per capita figure uses the 4 yuan = 1 dollar PPP rate, which I believe you've said elsewhere you don't think is an accurate rate.
I was using Wikipedia's list of countries by GDP per capita, which claims to not account for the differences in cost of living. Over on the list of countries by PPP per capita, China has about 23K, which still makes it slightly poorer than Belarus and Libya.
Either way, I'm not too worried about the precise accuracy of the numbers. I was just trying to communicate that, like, people's perception that China is on par with America or even better off than America is nowhere close to accurate. And China certainly doesn't have the kind of money to throw around on pretending like it's on par with America, which is what it's been doing.
Thank you! This was a fascinating read.