Comments by "D W" (@DW-op7ly) on "The Wall Street Journal"
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This guy best explains it
đ
Do China's ghost cities offer a solution to Europe's migrant crisis?
By Wade Shepard
* Even though there are between 20 and 45 million unoccupied homes across China, which account for roughly 600 million square meters of uninhabited floor space - enough to completely cover Madrid - these places are not the urban wastelands they are often posited to be. While many of China's new cities and urban districts are deficient in people they are not deficient in owners. Nearly every apartment that goes on the market in China is quickly purchased, often at exorbitant prices that commonly range into the hundreds of thousands of dollars. Far from being unwanted infrastructure that could seamlessly be doled out to refugees, those arrays of vacant high-rises are actually the proud possessions of people who paid a lot of money for them.
* A huge portion of the homes that are purchased in China function very much like stocks or a trade-able commodity. As an incredible number of new apartments are sold as unfinished concrete cavities without any interior fit out or even windows, they are in no way immediately livable.
Strange as it may seem, they are very actively bought and sold in this bare-bones form. In fact, investors often prefer them that way. In many ways they are purely economic entities, quantifiable placeholders of value that are traded on the open market akin to precious metals. Just as one doesn't need to mold a piece of gold into something usable, like a piece of jewelry, for it to have value and an economic function, an apartment in China doesn't need to have people living in it for it to be economically viable.
"Empty units leave flexibility for quick sales in a changing market or need to cash in quickly," said Barry Wilson, the founding director of Barry Wilson Project Initiatives, a Hong Kong-based urban design firm.
Another reason for the sheer number of unused apartments in China is the fact that there is often little financial incentive for owners to do anything with them after purchase. There is no yearly property tax in China, so vacant properties are not a financial drain on their owners. While the potential returns that could be had from renting them out (1 percent or so) is often not worth the hassle - especially because it costs tens of thousands of dollars to construct the interiors of new apartments in preparation for tenants.
This is combined with the fact that Chinese homeowners, especially investors who have multiple properties, are remarkably un-leveraged. According to Mark Tanner, over 80 percent of homes in China are owned outright. This means that most homeowners, especially the big investors with multiple properties, generally don't have any mortgages to pay off or any other leans, so there isn't as much financial pressure to make a profit from these homes in the short term.
Additionally many empty apartments have owners who intend to occupy them at some point. A huge number of China's new apartments are located in new development areas, which are, by definition, new. The thinking is if you buy property in these emerging new areas early, you can get a better price. So it's common for people to purchase homes in places that are not yet ready to support a large population with the understanding that they won't be able to inhabit them for many years.
Reuters
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Do China's ghost cities offer a solution to Europe's migrant crisis?
By Wade Shepard
* Even though there are between 20 and 45 million unoccupied homes across China, which account for roughly 600 million square meters of uninhabited floor space - enough to completely cover Madrid - these places are not the urban wastelands they are often posited to be. While many of China's new cities and urban districts are deficient in people they are not deficient in owners. Nearly every apartment that goes on the market in China is quickly purchased, often at exorbitant prices that commonly range into the hundreds of thousands of dollars. Far from being unwanted infrastructure that could seamlessly be doled out to refugees, those arrays of vacant high-rises are actually the proud possessions of people who paid a lot of money for them.
* A huge portion of the homes that are purchased in China function very much like stocks or a trade-able commodity. As an incredible number of new apartments are sold as unfinished concrete cavities without any interior fit out or even windows, they are in no way immediately livable.
Strange as it may seem, they are very actively bought and sold in this bare-bones form. In fact, investors often prefer them that way. In many ways they are purely economic entities, quantifiable placeholders of value that are traded on the open market akin to precious metals. Just as one doesn't need to mold a piece of gold into something usable, like a piece of jewelry, for it to have value and an economic function, an apartment in China doesn't need to have people living in it for it to be economically viable.
"Empty units leave flexibility for quick sales in a changing market or need to cash in quickly," said Barry Wilson, the founding director of Barry Wilson Project Initiatives, a Hong Kong-based urban design firm.
Another reason for the sheer number of unused apartments in China is the fact that there is often little financial incentive for owners to do anything with them after purchase. There is no yearly property tax in China, so vacant properties are not a financial drain on their owners. While the potential returns that could be had from renting them out (1 percent or so) is often not worth the hassle - especially because it costs tens of thousands of dollars to construct the interiors of new apartments in preparation for tenants.
This is combined with the fact that Chinese homeowners, especially investors who have multiple properties, are remarkably un-leveraged. According to Mark Tanner, over 80 percent of homes in China are owned outright. This means that most homeowners, especially the big investors with multiple properties, generally don't have any mortgages to pay off or any other leans, so there isn't as much financial pressure to make a profit from these homes in the short term.
Additionally many empty apartments have owners who intend to occupy them at some point. A huge number of China's new apartments are located in new development areas, which are, by definition, new. The thinking is if you buy property in these emerging new areas early, you can get a better price. So it's common for people to purchase homes in places that are not yet ready to support a large population with the understanding that they won't be able to inhabit them for many years.
Reuters
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The other option is rich Chinese buying their 4th and 5th homes right about nowâŚ.
China could easily over heat the markets/economy and have another decade of bubbles
The Chinese did that in 2008 as the US subprime prime crisis crashed the world markets
And put 27 million out of work and /shuttered 100 thousand factories in China
In response the Chinese Government got the banks to loan out 580 billion dollars
That created overheated bubbles where their Government had to come in and shutdown and regulate
That 580 billion created a big ball of money that went From Real Estate, Shadow Banks, Underground economy, Commodities, Stocks, Bonds and then back to Real Estate
In China in 2008 around 70% of the people in their real estate markets were buying their 1st homes in their cities
By 2018 around 70% of the people in their real estate markets were buying their 2nd and 3rd homes in their cities
Thatâs why you are hearing about problems with their property developers these days. Because back in 2010? Their Central Government started cutting of money flow to these developers.
Thus why you heard about Shadow Banks and Underground Economy back then, that their Government had to come into to shutdown or regulate.
Even then, It took them almost 14 years to get their overheated real estate under control
Heck they were about to introduce a nation wide property tax, but then trump started the trade war in 2018
Why is their Central Government doing this?
Because there are still a few hundred million poorer rural folk they still expect to move to the cities to join their more well off urban city folk countrymen.
Problem is these property developers were building higher end homes, and not building the affordable homes these rural migrants will need
In China
Owning a home in the city you migrate to? Affects your employment, health, education and even marriage prospects donât have a house you donât get married
Thus the common prosperity push and the crackdown on the overt displays of wealth in China
Their Government probably figured out you disenfranchise the people at the bottom of your society they are the ones most likely to act out in protest
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 @Polit_BurroÂ
s why did you pick 1979?
1972 Nixon went to China to get them to open up their economy
Sure the Americans may have lost 7 million manufacturing jobs from the height of their manufacturing days.
But they gained 53 million service sector jobs
33 million of them higher paying jobs than their manufacturing jobs
So with more jobs, more higher paying jobs, and added savings from imported goods
did the average American Invest, save, or even throw that money under the mattress????
No
they spent those added earnings, and thenborrowed to spend some more
đ
The U.S. Lost 7 Million Manufacturing Jobs--And Added 33 Million Higher-Paying Service Jobs
Itâs also nonsense. The truth is that America has lost some 7 million manufacturing jobs and added some 53 million jobs in services. This is just what happens with advanced economiesâitâs easier to increase productivity in manufacturing than it is in services, this is the heart of Baumolâs Cost Disease. As it was easier to increase productivity in agriculture through mechanising it than it was in manufacturing. Thus, over time, the proportion of the workforce engaged in agriculture falls, so too does the proportion in manufacturing. And given that services (with a couple of small adjustments for mining, construction and utilities) is the name we give to all the rest of the economy therefore an increasing portion of the labour force ends up in services.
Further, of those 53 million new jobs some 62% of them were in higher paying occupations than those âhigh paying good jobsâ in manufacturing we lost. Yes, really, 33 million higher paying jobs came along to replace those 7 million lost. Which does, when you look at those numbers properly, seem like rather a good deal.
Forbes
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 @bigmedgeÂ
Sure the Americans may have lost 7 million manufacturing jobs from the height of their manufacturing days.
But they gained 53 million service sector jobs
33 million of them higher paying jobs than their manufacturing jobs
So with more jobs, more higher paying jobs, and added savings from imported goods
did the average American Invest, save, or even throw that money under the mattress????
No
they spent those added earnings, and thenborrowed to spend some more
đ
The U.S. Lost 7 Million Manufacturing Jobs--And Added 33 Million Higher-Paying Service Jobs
Itâs also nonsense. The truth is that America has lost some 7 million manufacturing jobs and added some 53 million jobs in services. This is just what happens with advanced economiesâitâs easier to increase productivity in manufacturing than it is in services, this is the heart of Baumolâs Cost Disease. As it was easier to increase productivity in agriculture through mechanising it than it was in manufacturing. Thus, over time, the proportion of the workforce engaged in agriculture falls, so too does the proportion in manufacturing. And given that services (with a couple of small adjustments for mining, construction and utilities) is the name we give to all the rest of the economy therefore an increasing portion of the labour force ends up in services.
Further, of those 53 million new jobs some 62% of them were in higher paying occupations than those âhigh paying good jobsâ in manufacturing we lost. Yes, really, 33 million higher paying jobs came along to replace those 7 million lost. Which does, when you look at those numbers properly, seem like rather a good deal.
Forbes
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