Empty Buildings: China’s GDP-driven Real Estate Boom


A while ago, my friend Dfzh posted an article on Facebook.  It initiated a round of discussions among a few friends, with a focus on the recent property boom in China.

Some Chinese economists who argue for the merits of a Keynesian style market economy have openly defended the Chinese Government’s position.  They claim that an over-priced property market is a small price to pay for preventing a sharp rise in unemployment.

I am not an economist.  I cannot put forward a technical argument against this kind of fallacy.  My friend Dfzh is not an economist either.  However, he does represent a middle-class group in China.  This group neither owns capital nor controls the State.  Instead, they derive their income and status from service and management.  Like many Chinese people in his socio-economic group, Dfzh has become increasingly disenchanted over the Chinese Government’s economic policy, as well as the CCP’s strong grip on power.  He has regularly expressed to me his concern about a widening gap between the rich and the poor, and how this is creating social instability.

The following is what Dfzh says about the recent property market boom in China:

Two years ago when we happened to see a 120,000 RMB (some 18,000 USD) per square metre residential apartment (湯臣一品) just on the bank of Huangpu River (黃埔江) in Shanghai, we just saw it as a joke, and then took some photos so that we might be able to share this joke with others later.  The complex was made up of several plain buildings alongside the river, and it had never hooked any large fish by then. We would have ignored it if someone in a guard room had not chatted with us about it.

Now it seems we are the joke instead.  According to recent reports, many of these incredibly expensive houses have been sold.  More and more cities, such as Beijing and Shenzhen, are selling houses with price tags of over 100,000RMB (15,000 USD) per square metre. The most exorbitant record has been produced recently in Shanghai, where a residential apartment is selling at a price of 160,000RMB (23,500 USD) per square metre! Wel laway!  Standing in front of these unbelievably ultra-luxurious houses, we are speechless!

In a country where one billion peasants and “peasant-workers” or “migrant workers” are earning some 1,000RMB (146 USD) a month if they have jobs, who can afford to buy these golden houses that some said are even more expensive than prime properties in New York or other big cities in the developed world?! 20 years ago we called a rich man “10,000-yuan-family (萬元戶)” because he had assets of over 10,000RMB (1,460 USD).  For the super-rich, we called them “millionaires (百萬富翁)”. That’s to say: one could afford most things he wanted, not to mention a house, if he owned that sort of money.

Today, what can one do with a million RMB? Not much really. One can’t even settle down in a house in the city! Yet how long does it take for one to earn a million RMB in China today?  If you are a “peasant-worker”, that would be more than 80 years. If you are a common white-collar worker who earns 2,000-3,000RMB a month, the time frame will be reduced to 25-40 years. So, you know by now who are the prospective buyers of those houses? They are definitely not common people.  They are not even rich people in a conventional sense.  They are the upstarts, who are mainly CCP’s powerful members and their families, as well as businessmen who are colluding with those in power for licences to exploit the general public.

This way of looting people by producing inflation is much more malicious than highway robbery.  Few Chinese people are aware of the extent to which their wealth has plundered when prices continue to rise. Some people are naive enough to think that they are getting richer because their houses have appreciated in value. Hoot! Stupid Chinese people! Black-hearted CCP bandits!

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11 Responses to Empty Buildings: China’s GDP-driven Real Estate Boom

  1. Pingback: Tweets that mention Empty Buildings: China’s GDP-driven Real Estate Boom « Under the Jacaranda Tree -- Topsy.com

  2. justrecently says:

    I’d say there is a bit of good news in this too, though. It should become cheaper to find a place to live in China’s cities in the near future.

  3. conscienceinchina says:

    In china, “10,000-yuan-family (萬元戶, who owned 10,000 yuan)” 20 years ago=millionaire (百萬富翁, who had a million yuan)” 10 years ago, due to the rampant inflation. Perhaps by now 10 million yuan would be equal to that value. You can imagine how terrible the depreciation is. The CCP gets rich by cheaply selling out all our resources and then insists on claiming the merit of cheap RMB. It’s really an absurd theory! According to this theory, would China get rich by selling out all its resources for free? Gosh! I just see it as a disaster to Chinese people. Cheap Chinese products not only confuse and strike the world market, but deeply hurt China itself and its people by producing horrible pollution, over-exploitation and poverty.

  4. Joe Unlie says:

    “In china, “10,000-yuan-family (萬元戶, who owned 10,000 yuan)” 20 years ago=millionaire (百萬富翁, who had a million yuan)” 10 years ago, due to the rampant inflation. Perhaps by now 10 million yuan would be equal to that value. You can imagine how terrible the depreciation is.”

    It’s not nearly so bad.


    After punching their inflation statistics into my spreadsheet and figuring what compound inflation has done to the yuan, it’s not particularly dire- 10K in 1989 is the equivalent of 30K today. The massive economic growth over the same time period, coupled with the extremely lopsided property values of a few first-tier cities, merely make it look much worse than it really is.

    “Cheap Chinese products not only confuse and strike the world market, but deeply hurt China itself and its people by producing horrible pollution, over-exploitation and poverty.”

    I might agree with the second one (though really, which produces more pollution- the heavy industries building China’s infrastructure, or the light export manufacturing? Yiwu and Xiamen, light manufacturing/export industry cities, have the best air quality I’ve witnessed in this country), but produces poverty? The poverty has been there from the beginning. The export-driven model has been the only thing dragging this country out of it.

  5. justrecently says:

    Tend to agree with Joe here. At least the money is used for building, and when the rents go down (which they will have to), more living space will be available for more people. It is really a certain quantity of goods vis-a-vis money.
    That said, the average Chinese citizen subsidizes his or her country’s business in many ways – this includes ridiculously low interests on their savings (that’s why the banks hardly seem to care how their loans to enterprises actually perform), and by getting lower wages than efficient companies would be able to pay.
    Not the model of the future anyway – China won’t be able to export its way out of its problems for much longer. This would take many more creditworthy buyers abroad.

  6. Joe Unlie says:

    Right; the current patterns are completely unsustainable, but they’re being done to build the infrastructure that will undergird the coming internal consumption/”quality of life” boom that will follow when the export model collapses. To me it all looks like it’s being done in line with a neo-Marxist development plan.

  7. conscienceinchina says:


  8. Dave Rudolf says:

    Hi all.

    I was wondering… how is it possible that the official CPI publishes a deflationary scenario?
    e.g. according to the National Bureau of Statistics of China, urban residence prices have dropped 4.3% over the past year (http://www.stats.gov.cn/english/statisticaldata/monthlydata/t20091126_402603551.htm).

    How is this possible when I seem to read everywhere that home values in many Chinese cities have actually doubled over the past 9 months or so? Have home prices dropped in other urban places that significantly?

    I’m not here to judge on the correctness or incorrectness of official data, just like to clarify obvious incompatibilities.

  9. justrecently says:

    Statistics with Chinese characteristics seldom rhyme. Better use as much real-world evidence as you can get, and avoid getting arrested for stealing state secrets.

  10. Dave Rudolf says:

    lol. Thank you for the advice. I will keep that in mind! 🙂

    And about the numbers… that’s what I suspected. I’ve seen video footage of entire cities in which no-one lives in (makes the Trump Tower appear like an over-populated habitat!), and high-tech railways with little to no chance for profitability because most simply cannot afford to use it. Faking “some” statistics then seems like a natural continuation of the trend.

    Btw, where does all the money come from for those government projects? Just taxation? Or do some Chinese citizens also buy government debt?

    Or is it just the good old printing press?

  11. justrecently says:

    China saw more inflation some two years ago, than now, and building houses is still better than building another high-speed train to Tibet, or simply reducing taxes to leave more in the pockets of the people – local officials would quickly think up some new local taxation, without Beijing’s approval.
    Not sure how much government debt is bought by the citizens, but the citizens certainly subsidize cheap credits for the industry (they get only very low interest rates on their proverbial high savings), and they subsidize many industries directly for getting wages far below what should be feasible.

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