"How China fooled the world" debt 200% of GDP

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If something sounds too good to be true it usually is.... I remember before the last crash we were all thinking this doesn't add up.... It turned out it didn't. Surely China will hit the buffers, when it does it will turn out that it is too big to fail... So we will bail them out transferring our debts to them?

Could China crashing save the west?

wotsthat

cells wrote: »

How much did a house cost in the uk in the year 25 years ago vs today?

Wages in China are low now, GDP per capita is only $6k whereas in western nations it is closer to $40k.

In 25 years time GDP per capita in nominal terms will be corca $80k nominal whereas china will likely be closer to the $60k mark. This means china over the next 25 years will grow faster than the west which has been the case over the last 25 years.

with Chinese GDP per capita going up 10x so will the cost of most things in China. Bread eggs milk and homes.

So with homes costing 10x as much to build in 2040 as they do today it nakes good sense for china to build as many as she can.

and once more china is 20x the size of the uk or france. The UK has and needs about 500k empty homes so china needs 10m empty. That os a lot of empty homes nominally but not as a percentage

Have you been to 2040 or just making different assumptions?

Nothing disproves a different assumption that money may be being wasted on houses that will never be occupied.

mayonnaise

cells wrote: »

China cannot over build at this stage.

for instance she needs ~700m high quality homes by 2050 yet today has about 300m homes most of which are very poor and will need to be knocked down and rebuilt.

That means she needs to construct close to 1 million homes per MONTH. To give you an idea of the scale of that...it is a Birmingham every other week

That sounds a tremendous number, absurd even, but it is only a little higher than thr french buold on a per capita basis.

So an empty block or ten is nothing in china. The demand is there for 1 million new homes per month

Nonsense. China's population is about to decline from 2030-ish. The one-child policy has seen to that.
This policy was relaxed recently, but too little too late.
China is well and truly screwed.

cells

SunReader wrote: »

I'd be interested to hear your analysis as to why there are so many deserted cities in China. Peasants working in paddy fields can't afford to live in mock Victorian mansions overlooking replica Eiffel towers..

As for wage and commodity inflation over the next twenty years, yes very clever, probable but not a sure certainty if there is deflation (as japan suffered). Fewer houses per capita compared to France or Germany, sure but much less wealth per capita too, not enough to buy their own properties it would seem.

As just another layman's opinion on a forum I have no inside knowledge of the Chinese housing market, judging by your comments nor are you either. That's the deal with China, it is a secret corrupt society, and without open facts people speculate - in both senses of the word...

http://www.bbc.co.uk/news/magazine-19049254

What we know for sure is that nations tend to an occupancy level of 2.0 or lower

For instance germany is already at 2.0 and falling. France is at 2.1 and falling. The UK is at 2.3 and its the same with all nations.

Then it is simple math. Population over occupancy level tells you the future demand/need. For china you can take a population of say between 1.3B to 1.4B
you can take an occupancy level of 2.3 to 2.1

That gives you a range of demand with the lowest as 1.3B people over 2.3 ocupancy = 565 million homes to the higher range of 1.4B people over 2.1 occupancy = 670 million homes

so china is going to need 565-670m homes a figure she isn't close to today



as for the price of goods in 20-30years time. Do you know any developing nation where wages materials and goods were not substantially cheaper 30 years ago? Even in the UK prices for most goods including homes are considerably higher than 30 years ago.

so yes I am making assumptions but my assumptions are reasonable and very likely. Consider the alternative view which os simply that the fellow folk are too stupid to become wealthy and as soon as we stop buying plastic toys they will devolve into bacteria. ....

cells

mayonnaise wrote: »

Nonsense. China's population is about to declinepoint abou-ish. The one-child policy has seen to that.
This policy was relaxed recently, but too little too late.
China is well and truly screwed.

Ok so the population is going to very slowly fall from 2030...what is your point exactly? Their 1.3B or however many at that stage still need homes

cells

wotsthat wrote: »

Have you been to 2040 or just making different assumptions?

Nothing disproves a different assumption that money may be being wasargumentouses that will never be occupied.

How do you know they will never be occupied? You don't!

What we know to be sure is that like most nations china will twnd towards an occupancy of 2.0 or lower. That means china needs a Lot MORE homes. The only argumen you can try to make is that some of them are being built in areas that have little demand. Maybe they are i dont know but I suspect the Internet experts claiming this to be the case dint kbow either. Id rather believe that the chinese know what they are doing more than Internet experts

mayonnaise

cells wrote: »

Ok so the population is going to very slowly fall from 2030...what is your point exactly? Their 1.3B or however many at that stage still need homes

Very slowly :rotfl:

Look up some population forecasts for China from 2020-2030 onwards.
Do us all a favour and get clued up on the subject matter before making and further comments ok?

wotsthat

cells wrote: »

How do you know they will never be occupied? You don't!

What we know to be sure is that like most nations china will twnd towards an occupancy of 2.0 or lower. That means china needs a Lot MORE homes. The only argumen you can try to make is that some of them are being built in areas that have little demand. Maybe they are i dont know but I suspect the Internet experts claiming this to be the case dint kbow either. Id rather believe that the chinese know what they are doing more than Internet experts

I've admitted I don't know - but you don't know any better either.

However you look at it the existence of ghost cities is proof that there isn't currently demand for the housing being built. Maybe it's a shrewd move by the Chinese government to build housing now for an anticipated future demand. If the same strategy was adopted in the UK i.e. a couple of new cities were built in mid Wales and Lincolnshire in anticipation of a demand in x years it would be seen as a sign of madness.

If the justification for this was that occupation per house trends towards 2 and they'd only cost even more to build in the future we'd be arranging for the proposer to be sectioned.

cells

mayonnaise wrote: »

Very slowly :rotfl:

Look up some population forecasts for China from 2020-2030 onwards.
Do us all a favour and get clued up on the subject matter before making and further comments ok?

Can you please stop posting crap

china is supposed to go to 1303 million by 2050 a figure that is the same as china in 2005 so the population between 2005-2050 is going to be flat

What you don't understand is the occupancy rate must fall during this time.

Come 2050 china will probably need an ocupancy rate below 2.0

At an ocupancy rate of 2.0 a china of 1303 million needs 652 million homes. She hasn't close to this figure so needs to build millions and millions more.

cells

wotsthat wrote: »

I've admitted I don't know - but you don't know any better either.

However you look at it the existence of ghost cities is proof that there isn't currently demand for the housing being built. Maybe it's a shrewd move by the Chinese government to build housing now for an anticipated future demand. If the same strategy was adopted in the UK i.e. a couple of new cities were built in mid Wales and Lincolnshire in anticipation of a demand in x years it would be seen as a sign of madness.

If the justification for this was that occupation per house trends towards 2 and they'd only cost even more to build in the future we'd be arranging for the proposer to be sectioned.

Are you for real?

Over-building now in the UK now would be a fantastic thing and we can be sure of thr demand. The UK is heading for 70m before 2030 that means we need 35m homes yet only have 27.5m.

So we should be building 470k homes a year that would be building just enough. But we could build 600k a year which woild be slightly over building.

Unemployment would fall massively. Tax receipts would rise and government debt would fall relative to continuing to buold just 130k a year.


as for empty homes in china, so what. No market is 100% efficent. For instance something like 5% of the homes in France are empty. If 5% in china are empty it would be 30m plus empty but that is normal and actually required for a functional housing market.

If the empty figure was over 10% of the stock then maybe you could argue that there is an over building of homes but I am not convinced that 10% of china is empty. Not least the almost certainly that they need hundreds of million more homes to meet the need for lower occupancy levels