Sunday, September 28, 2014

Why there are so many empty buildings in China?

The Chinese economy is growing thanks to two main engines:

  • Export
  • Real estate

Unfortunately with the global crisis and as Chinese salaries got higher, export went down...
China found a parade: made in China in Africa... This could somehow keep up part of the economic growth and create some job.

Only real estate leftBut most China was left with one engine: real estate!
Without the real estate the economy would crush. It means: no more growth, no more jobs, no more money.
Therefore the government must continue building appartments buildings.

Too many buildings= empty appartments
There are too many buildings. The offer far exceeds the demand!
As a consequence real estate price started to go down. Though the government is afraid to lower the real estate price too much, as it could trigger some panick! Chinese newspaper even talk about the real estate price going down as some kind of opportunity to buy now!
A strict control over civil servant who used their position to acquire appartments doesn't help as they try to sell their second, third appartments before any control occurs. Thus increasing the offer of available appartments on the market.

Trying to have farmers move to citiesThe Chinese government tries to move farmers from the countryside to big cities. Still 50% of Chinese people are farmer. The main idea is to move them to big cities.
On one side they would buy new appartment and fuel the real estate engine.
On the other side the government can take their land! They can assemble small farms into huge farmland under the control of some multinational company...

In fact this must be one of the biggest scam ever. We have lived this before in western countries. In the countryside, a few multinational took over the land and grow GMO using pesticide and machine!
In big cities, a few real estate multinational companies build modern appartment and control the real estate, with the complicity of bankers and loans to enslave man.

Transition from industry to service failed!
We have all heard that the economic development follows a path: first agriculture, then industry and then service...

Now what if this was a whole lie? What if once it was a dream, but it became a broken dream?
The truth is China failed its transition from industry to service.
But there is more to it. It is not only about China. In fact there is no such thing as development. Growth destroys jobs! There are less and less jobs as multinational companies move where labour is cheaper and as machine progressively replace all human labour! The service industry might create some growth but it can never supply jobs for all!
And there is worst: in a finite world, there is no such thing as growth!
Now one question remains for China and for the world: when will this crash down for good?
How many years do we have left before leaders accept to take action or before the global chaos?


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  2. I can't believe that there is a lack of demand for apartments in China. There are so many people there and a lot of them live in conditions that don't fit simple demands. More over when you will try to rent the apartment at you won't find any. I don't understad this situation at all.