Home Tech Media Wall Street Markets Strategy Sports Tools Travel Politics Video Latest
SEARCH
A A A
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: "There’s city after city full of empty streets and vast
government buildings, some in the most inhospitable locations. It is the modern equivalent of
building pyramids. With 20 new cities being built every year, we hope to be able to expand our list
going forward."
Here's a rendering of Zhengdong New District Wetland Park (people added with Photoshop)
Image: Panoramio
This city was built in the middle of a desert: Erenhot, Xilin Gol, Inner Mongolia
Half of Erenhot is empty. The other half is unfinished
It's a giant new development, which doesn't even have a name yet.
No cars in the city except for approximately 100 clustered around the government headquarters
The ghost city of Dantu has been mostly empty for over a decade
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.
Advertisement:
Reply
Reply
Reply
Reply
But before that, China still has more than the entire population of the US from their own countryside to fill unskilled labor jobs and they'll take care of their
own first. There is a huge oversupply of unskilled labor everywhere. Even here in the US. It's our cost of doing business that makes us uncompetitive, not a
lack of available manpower. The days of needing mass immigration to build economies are over. The industries are just moving to where the cost of doing
business is cheapest, rather than the labor moving to where the industries are. It's cheaper to move buildings and middle management than transport and
re-house and assimilate millions or billions of individual workers. Corporate headquarters will end up in resort nations with good security and schools.
The only exception are people whose education/skills/existing wealth put them way to the right of the bell curve in driving development. The two-percenters
who really are something special in the global marketplace.
Reply
Reply
Reply
Reply
You are wrong. Slavery is expensive because the people that own them have to pay for their housing and to feed them.
Reply
Reply
Reply
Look around, investigate. This is not ever found on the front pages of any newspaper. But it's there. It's in the US, Canada, all over Europe, South and
Central America, and all over Asia and Africa.
Slaves will usually live in a small room in their 'owner's' home (or someplace on the property), and how expensive are left-overs? Some people call them
'Servants', others might decribe them as some distant relative they are trying to help have a 'better life'. An Indentured Person will probably commute back
and forth, but on occasion will be afforded a small apartment on the property (maybe over a garage).
Reply
Slavery is alive and well in many places in the world. The middle east is built by slave labor.
High-earning Americans don't realize how good they have it and don't know how to work a hard day in their lives.
Reply
Anyway, with the exception of true slavery (as still practiced in certain parts of the world), talk of 'slavery' in the West is non-sense. Such talk is just an
excuse for failure, and a reason for the usual suspects to complain about Western civilization. Booooring!
Reply
Reply
Reply
Robt on Dec 14, 6:56 PM said: 53 4
@fred@#: Even those ghost cities look better than Detroit... Flag as Offensive
Reply
Reply
Reply
Reply
Reply
Reply
Reply
Reply
Reply
We are witnesses to a country building 64 million plus buildings that stand empty while they pretend it's a new era or some such thing.
This will one day be added to the "Extraordinary Popular Delusions and the Madness of Crowds" update.
Reply
Reply
Reply
Reply
Reply
Reply
But they are also greatly desired because they marvel at these women's extreme sense of entitlement. For it is very rare in less-fortunate countries like
China. Let us hope that sometime in the future, Chinese women get this same attitude towards life, for their own sake. And then China will truly have
become, a developed nation.
Reply
Reply
Reply
Reply
Reply
So I take it that even you agree that american women are FAT.
Reply
ptt on Dec 21, 6:10 AM said: 1 0
@vincentlaw: LOL vincentlaw! So they're fat AND feel entitled?? Flag as Offensive
Reply
I know they are many empty apts but 64 million must be with the BI math
Reply
Ordos, which sits in inner Mongolia and was built for 1 million citizens, remains sparsely populated after five years.
(http://blogs.wsj.com/chinarealtime/2010/05/12/revisiting-chinas-empty-city-of-ordos/)
China maintains a "If you build it, they will come" attitude toward development. What's often happened is, China will build a brand new spanking city near
an old one, where everyone's content to live at. The city initially sits vacated, but fills to the brim after some time. Of course they typically don't take five
years to fill, so Ordos is having trouble.
Because of China's red hot property market, prices have spiraled out of the pocket books of many Chinese. The 64 million empty properties referred to
earlier are speculative bets, picked up in effort to flip for a quick buck. They're not rented out because renting diminishes the value; many are vacant
apartments minus appliances, wiring, furniture, toilets and water pipes - empty space with walls.
Reply
Reply
Reply
Reply
Reply
Reply
Reply
Brewskie on Dec 17, 1:15 PM said: 2 1
@Rich: First, wild speculative bubbles always fuel insanity-laced spending sprees - though the Chinese seem to be taking it to the Flag as Offensive
next level. Second, the developers aren't thinking about tomorrow, they're thinking about making money today while the going's good
now. Third, the problem stems from the CCP - at the national and provincial and local levels - who try to keep GDP numbers up through endless
construction and infrastructure projects built at breakneck speed. Provincial and local bosses are under lots of pressure to meet growth target. (Who wants
to be the mayor who didn't meet 8% growth or whatever?)
Anyway, unlike the other China bears, I actually don't wish any ill will on China nor am I intimidated by her rapid development, or her prospects of
overtaking the US. In fact, I think China's long-term outlook is good, and I think she'll eventually overtake the US economy. But wild real estate market and
manic banking system (plus the CCP's hand meddling), I just don't see her getting there without getting a good dose of economic reality biting her in the
face first.
Reply
It coeporatism, or to take Mossolini, fashism - the merg of Government and Buniness, where Government turns omnipotend
it is Fascism, but to take Mussolini's definition - corporatism, the merge of government and business, turning government into Omnipotent power. We just
witnessed the formation and bust us American housing bubble, and now we witness the exact same developments in red China. They got all the
ingredients which it took to form the American bubble, the main difference is the size of this monstrosity, as this monstrosity is a gazillion times larger
than the American housing bubble and close to the forming US dollar bubble, which is partly fueling this development in China too.the best of this baby will
be surely big enough that even destabilize Chinese Communist Party regime once and for all. So, the outcome of this might be even a promising one, but it
sure will be paid for which is more than hefty price, that's probably not worth what we get for it. But I fear there will be no other way around.
Reply
Reply
Reply
Reply
Reply
Reply
Reply
Reply
Reply
Reply
Reply
Reply
And if these Chinese cities are modern equivalent of the pyramids, then eventually people will have some use for these cities too. Perhaps these cities will
become a major tourist attraction in the future.
Reply
More importantly is that the pyramids represent a massive destruction of human labor value and time and cost. The Egyptians were stupid enough to
waste 20 centuries building worthless temples in the sand while they barely contributed anything to the advancement of humanity. I'm sure Ra is very
pleased though; oops, they worship a different god these days. America has contributed more technology, science, innovation, and rational ideas to the
planet in 200 years than Egypt did in 5,000 years (and for those idiots that want to attack that point by saying America only contributes war, blah blah
blah, you should start with China / Japan / Germany / Britain / France / Russia / Rome / Egypt on those points, they've all killed radically more over their
durations in war and slavery).
The pyramids are the greatest waste of value in the history of the planet. The only thing even remotely close would be Obama's stimulus.
Reply
Our central planners aren't a whole lot smarter, they just wear snazzier clothes and some have corporate titles.
The author is confusing an overhang in infrastructure and housing with monument building.
Reply
Also, the engineering required for the temples and pyramids they built contributed to the "advancement of humanity," and the only way to really figure out
new techniques and make those kind of discoveries is by applying the science and "doing it." Thanks to the rich who sponsored these types of building
projects, engineering such as this spread throughout the world via trade routes.
Reply
About the engineering advancements: I'm pretty sure we still don't know how the pyramids were constructed. There are theories, but they don't completely
explain how perfectly the stones of the pyramids were set. Some have gone as far as to say the pyramids were built for/by aliens!
Reply
Beyond the age of the Pyramids, Egypt was the home of the library of Alexandria. This library was perhaps the most important collection of knowledge in
the entire history of the world. It was the literal birthplace of science, where the scientific method was invented and first used. To insult their culture by
saying they haven't contributed as much technology & science as America, when they actually invented science, is laughable.
Reply
Reply
Et tu Blonde
Reply
Reply
Reply
Reply
Southvalley on Dec 17, 5:42 PM said: 2 5
@Jonathan: Then that would apply to Notredame in your "mind" because these were spiritual edifices as well. Flag as Offensive
And will last when we're all dust.
Just like a con, art means nothing to you except money
Reply
Reply
Reply
The Chinese aren't even commies or socialists anymore. They're fascist sellouts, just like the US. In the absence of brute force, fascism only works for so
long before the people getting knuckled-down on get wise and opt out. The US hasn't needed mass immigration in a long time. Decades probably. Illegals
are mostly a market reaction to all the authoritarian distortions. The lazy don't have to work, and the willing/able aren't able to keep enough of their own fruit
to make it worth the effort.
Collectivism fails in the end because it isn't all that strong in the species to begin with. Putting society ahead of family or self is learned rather than
instinctual behavior. We're pack animals by nature, not hive insects. Collectivism gets started when the family unit is destroyed by cliques. Cliques appeal
to our venality and result in bigotry. After the family unit is broken down, bigotry of all kinds, and bullying become the norm. The whole global socialist thing
is really more cliqueish than individualist, IMO. Millions of people being convinced by the media that they'll be more enlightened and richer than their
parents if they accept indoctrination into that belief system. That's why it's so strong. When we get stressed we fall back on collectivism and then
individualism. It takes near constant brainwashing and behavioral psychology conditioning to induce the groupthink necessary to force people into
collectives.
Plenty of evidence in the fall of other civilizations to suggest the masses will choose hunting and gathering or a return to subsistence farming over usury
and slavery. Only way to keep socialism going is promise unearned rewards that end up penalizing producers/achievers. When that breaks down, they
always resort to fascism which increases forced aspects of compliance. All governments eventually go stale and fall back on fascism. Fascism works
more efficiently for awhile, but requires an ever expanding supply of oppressed classes to exploit and bogeymen to scare the masses back into herd
mentality. Eventually the protected classes run out of scapegoats and scarecrows. At that point, you get a Marx or a Wallace or a Robespierre, and a
popular revolt. Police state crackdowns ensue. The gov't fallsl back on gulags or mass executions or the slaves overthrow their masters.
Collapsing Empires usually result in increased freedom for most at the cost of material gain. Collapsing nation-states create a power vacuum and end up
REALLY badly (think 'Al Qaeda' or 'Yugoslavia'). That's why I'm a bit leery about globalism and the power vacuum being created. We're essentially setting
ourselves up for further power consolidation into regional or global oligarchy or dictatorship. I'd say the banksters are making a pretty strong play in that
direction. Plutarchs are the worst of the worst.
Reply
Reply
Reply
Reply
Reply
Reply
Reply
They're destroying a trillion dollars of capital per year in real estate construction that is just massively losing value as it sits there and rots, empty. And that's
before their bubble explodes, wiping out a nice $10 trillion in national wealth that they can't afford to lose.
A few years from now when the bill comes due, we'll see how their brilliant command economy model is working out.
Reply
Reply
"By 2025 China's urban population is expected to rise to 926 million from 572 million in 2005. By 2030 that number will increase to a billion."
Reply
Reply
Reply
Reply
Grease_Lightning on Dec 18, 11:57 AM said: 6 0
@MWeber: Well, even if your estimates about the population are true, they will not be able to live in these houses. In 15 or 20 years, Flag as Offensive
the houses will need extensive repairs due to natural forces.
Reply
Reply
Communism serves up yet another example of its superiority over capitalism and free markets.
Reply
Reply
Reply
Reply
Reply
Reply
Reply
Reply
Disagree. If pyramids can actually connect you to your afterlife, or aliens, then it is not a waste of time. At least, that's what people believed at that time. So,
from that perspective, it is logical.
Fast forward to today, "technology, science, innovation, and rational ideas to the planet" are good until a nuke war happens or computers programs control
people's lives. 30 years of advancements since computers are certainly a good thing. However, you cannot judge its impact and assume it is good for the next
5000 years.
At least the Egyptians haven't skewed our planet so far, which is already a big accomplishment. Obviously, "wasting" time or life on pyramids is part of it.
Reply
here it is:
Are they expecting massive relocation of people to china? maybe for jobs/ new found boom?
Are the Chinese about to switch officially away from communism and do some type of hybrid authoritian capitalism?
Are the Chinese about to create milllions of new jobs and new middle class folks who will want to live here?
if so...the bears are BLOWN out in being constantly negative about emerging markets
Reply
Reply
Reply
Reply
Reply
As the world economies explode, small and large, China is preparing to accept another billion....they are preparing for accepting the future masses as they
leave the destroyed Europe and elsewhere.
Maybe we should all pick out our new homes in China...when we go there to survive the coming difficult times...
Reply
Reply
andrewp111 on Dec 14, 10:06 PM said: 4 5
Maybe the ChiComs will turn those empty cities into military bases, or into military weapons research cities the way the USSR did. Or Flag as Offensive
perhaps, even into prisons. They will find a use for them eventually.
Reply
Reply
One of the most enviable strengths of the Chinese is the homogeneity of its populace.
We, in America, can only imagine such an utopian experience that is the reality of the Japanese.
Reply
Or maybe VD refers to Japanese homes, which sound like some of the descriptions above: external bits falling off in a few years, many corners cut (unless
you were their to supervise, constantly, the construction). Of course, when land is the main cost, the house gets built with whatever money remains. Voila:
instant mass-produced identical shlock.
Reply
For all the ignorant speculation about China eating our lunch in the coming years, I will offer the perspective of the US in the 1950s. We had no idea that a
social upheaval and battle for environmental rights was on the horizon. China is already and will increasingly feel the stresses of social upheaval and
conflict that will make our civil rights battles of the 60s pale in comparison. Even more damaging, the effects of their environmental pollution and their
resistance to addressing those concerns will increasingly make China unlivable. As recently as two months ago, the US state department warned US
travelers and embassy workers in Beijing that air quality was so bad that even being outside for a short time could cause serious damage to lungs and/or
trigger serious medical conditions.
So before you buy into the myth of China's superiority, take a step back and examine the facts. Another interesting fact- China currently owns about 8-
10% of outstanding US T-Bills. Significant to be sure, but the vast majority of US debt (about 70-75%) is held by US banks, businesses and average
Americans as part of their 401k investments portfolios.
Bottom line- calm down, and do not count out the US. And for the bonehead who said the only greater waste of government spending besides the pyramids
was the recent stimulus passed almost 2 years ago, I say go ahead, move to China. Remember that 40% of the $830 billion in the stimulus bill was tax
cuts. The bulk of the remaining funds went to state governments to pay firefighters, teachers, cops and other essential government services. The remainder
went towards much needed infrastructure projects. Stop drinking the Fox News cool-aide made by Rush, GB and the other tools of the rich. You are being
played and all the Tea Party hopefuls are gonna be really disappointed when they figure that out.
Reply
Reply
Comment flagged as offensive.
Reply
But Google satellite images doesn't mean it looks always like this...
... just the moment it was shot.
I have been only a couple of times to China yet, so I can't judge it. But it's the first time I heard this...
... don't we try to create news out of thin air right now?
I have never seen this and I have never been told about it either. Maybe I overlooked something. I am not a China expert, was just a tourist there.
Reply
Reply
if these are sham investments, like CDOs, created to generate bonuses for chinese banking employees.... then the same
thing that happened in the US could happen in China when they realize these 'sound investments' are all worthless.
and remember how many of our banks 'advised' the chinese? Henry Paulson spent a lot of time over there, and he
was the CEO of Goldman while it was creating all these GSAMP subprime securitizations.
on top of this, the saddest thing is that all this money could have gone to increase workers wages and safety. instead it went to these worthless empty
buildings.
Reply
Reply
Reply
Reply
One thing we do know -- this was not built except by government plan
Reply
Reply
kid
do u get a hard up when they grope ur nuts ?
http://tinyurl.com/232a7pc
i dunno whether its comical or pathetic ...parents gleefully recording their daughters being molested !
http://tinyurl.com/2cn4427
Reply
Reply
Reply
hmm imagine if every Chinese bank holding this junk on it's balance sheet went the way of Lehman.
oh did you know that Chinese banks have purchased big slices of US banks? no? ha ha
Reply
Reply
Reply
Innocent Bystander on Dec 16, 3:10 PM said: 6 0
Thought this was going to be about the old Chinese ghost cities....ones that were created during the Japanese occupation in WW2. But Flag as Offensive
this was fascinating - these planned cities have been going on for almost 20 years - it's amazing to see how these cities have been built
and populated in GuangDong province. Places like Dong Guan and Shenzhen that was a vast wasteland in 2000are now now completely rebuilt. Places where
a single hotel stood alone 10 years ago is completely obscured by the surrounding neighborhoods. 15 years ago, there were 8 lane highways supporting 1
lane traffic - today, it's more like 6 lanes and growing. At the same time, China is investing hugely in hi-speed rail transit that connects a lot of the hi-growth
centers because that's the only way to move people efficiently for CNY
The central planners are obviously expecting more growth and migration from the countryside to these areas....these developments serve as a ready, make
work solution for 10's of millions of people without access to the factory jobs that are predominant along the coast. They also serve as economic growth areas
for factories that want to exploit cheaper labor in these new enterprise zones. The domestic market has been primed by export growth....I think there's a
critical mass of economic/physical infrastructure in place to start meeting the consumer demands of China's growing middle-class who are demanding the
same types of products that the Western World has been buying for decades. Turns out, Chinese are capitalists like the rest of us...who knew?
Assuming we don't blow this world up in the meantime, it would be fascinating to revisit these cities in 10 years and see how much utilization there actually is.
I won't be shocked if they are completely occupied.
Reply
While our cities are a testament to poor city planning and urban decay, Chinese cities are a model of urban development...except for the pollution. Of
course much of the pollution is a result of massive construction, and in just a few years, China passed up every country in the world to be the leader in
green technology production. I really wish publication like Business Insider would stop spreading misinformation. The resulting warped perception is
making Americans look like complete idiots. I'd be willing to bet that the author has never even visited China and is basing their opinion on anti-Chinese
propaganda. Anyone that has visited China will tell you that the cities there are actually overcrowded. The propagandists at Business insider should be
ashamed of this lame attempt.
Reply
Here's a factoid that puts China's growth in perspective. Brick production. Total bricks produced - 800 Billion. In 1994. I imagine that annual number is 3-4x
that today. It amazes me to see mountains with literally 1/2 the aggregate missing. They got converted into buildings....
Reply
none of the workers have money to move to these places, they are stuck in ipod city doing 80 hour weeks in dorms.
we actually have plenty of planned communities in the US, they are built by oligarchies just like in china to make profits
by selling bonds. wonder if the chinese securitized their bonds?
it has nothing to do with dwellings for workers or any of that stuff. they stick the workers in hovels made
with bad concrete and bad drywall and let them die of cancer.
Reply
Reply
Reply
Reply
Reply
I like how he skips around the reasons for urban decay in the US. Also, how he ignores areas that don't have this blight, and why. All in the name of supporting
a system that is happy to make you do whatever at the point of a gun. We're not (quite) there yet, but the Chinese have been there for decades.
I'd almost call Jake "Walter Duranty" but that would be maligning a known liar.
Reply
I encourage you to visit China. It will dispell many of the myths commonly held by Americans. Sure, the Chinese government is more authoritarian than the
US, but it is also not nearly as bad as you seem to think. People in China are generally quite happy with the direction their country is headed. A Pew poll
found that the Chinese government has an 85% approval rating, and the fact that an American company was allowed to conduct such a poll at all is rather
remarkable.
Reply
China just put a guy in prison for his website about tainted baby milk. his name is Zhao Lianhai. they harass his entire family. why?
He is reporting on basic economic information, like that their version of the FDA is a joke, and the people harmed by the scandal
are getting shafted.
Reply
China has hell-hole villages full of millions of displeased peasants. America has mansions full of people in debt up to their nostrils, and a smug attitude about
paying their own personal debt, let alone the national debt.
The question oughtn't be limited to "who will live in those ghost cities?" It ought to include who will live in the slums?
Reply
hey
u're so cute kiddie
whats that dude holding in his hand hehehe
http://tinyurl.com/fqpck
*We're not (quite) there yet, but the Chinese have been there for
decades.*
listen up kid,
*Given enough time, there is nothing an American won't come to accept
in the name of "security". *
http://tinyurl.com/3a6yebe
http://tinyurl.com/35uyt5z
http://tinyurl.com/2cn4427
http://tinyurl.com/mumupz
like the man says,
they dont need no guns on the sheeples hehehe
Reply
Reply
Never!
Reply
Reply
Reply
Some of the pictures have people in the back ground - they could have easily taken these pics during some holiday the car market is still growing - I you have
a new house in China you probably still have a bike not a car yet.
Reply
Reply
Reply
More Comments
* Copyright © 2011 Business Insider, Inc. All rights reserved. Registration on or use of this site constitutes acceptance of our Terms of Service and Privacy Policy. | Disclaimer
Redesign by Intersect, Inc. | Powered by MongoDB | Hosted by Datapipe | Web analytics by Empirical Path