Political Crossfire Forums

Just watched this on 60 minutes. Unreal. I also don't think it's an if, more of a when it bursts. I'm also of the opinion this is going to make our real estate bubble look tame by comparison.

NAB please convince me I'm not being paranoid.

http://www.cbsnews.com/video/watch/?id=50142079n

You're probably not paranoid, because, with China, everything is bigger. There are a lot of dumb developers over there (encountered a few myself) who don't properly do their market studies before building some of these projects. I can't tell you how many times I've talked Chinese developers into changing their pro forma because they were out-kicking their coverage. The big thing the Chinese government is doing right now is "expanding West", so to speak. As in they are pushing development away from the relatively overbuilt eastern coast of the country. Might merely be an attempt to hold off the inevitable.

Meanwhile, Russia, Ukraine, South America, and Turkey are starting to get us busy again. Hurray.....

On an interesting side note, we've actually chased a few projects with SOHO China and one of my other partners has met with Zhang Xin. Our Beijing office is even in one of their developments. They are the smart, experienced type of developer we tend to do work with.

1.344 billion.

That's China's population.

Math quiz: If China's population grew by one half of one percent in one year, how many new people would that be?

Answer: 6,720,000.

That equates to more than two percent of the US population.

That's a lot of houses and apartments you need to build every year.

It would not be extraordinary in any way if China built apartments and houses for 5 million people too many when you consider these facts. They have to build like crazy just to keep ahead of the curve.

And that would not be a "bubble" by Chinese standards.

So...what's the current Chinese housing inventory, in months?

The concept of finite does not recognize national borders.

People are buying up those houses because you can't get your Chinese parents to approve of your marriage if you don't own a house.

Yeah, but NAB this isn't new to China either. The government has been trying to cope/deal with property values for a while (And with lots of anger from residents as well). If there's been no bubble yet I don't see official (Chinese) or independent (HSBC PMI, other outside observers) numbers that indicate any significant deviation in the market. Relatively speaking, numbers out of China have been weak and getting weaker with the new target for the year standing at 7.5% growth. I get that those cities are large and empty but it being a much larger country might affect our sense of scale.

@G5000, the only thing that concerns me is the reliability of the figures from both official and independent analysts. Data capture just isn't there. Which is why the "but what if you're wrong!" line always works and is probably why there's so many Chinese bears. I personally don't see it. You had all that commodity stockpiling (Copper, Steel, Iron) and the amazing plunge in Iron Ore last year that was, at the time, mainly attributed to demand dropping in China and Australian mines cutting back. And I swear I just read about a Mongolian copper mine stopping (They have the largest one in the world there) but that might've been due to social unrest/concerns moreso than any market fundamentals.

So if you're right Winchester I basically have to be wrong about the last decade of growth in China. It's all a lie. But I'm not seeing it...I think the slowdown in growth is appropriate for a country trying to tackle the property issue and the shadow banking sector while weighing social unrest (since the party obviously doesn't want to lose power).

It's complicated.