Are New Chinese Buildings Really Falling Down? Why Is Everything In China Eroding?

Submitted by: daegog 4 months ago in Weird


From ADVChina: Before you come to China, you might have an idea that it will be ancient tea houses, tight alley ways full of culture and history, or people living the same way they did hundereds of years ago.

You'd be wrong.

China is changing, and sometimes too fast. So Winston and I delve into something that we find a little disappointing sometimes, and that is the lack of maintanence in China.
If you go to most old areas, you can almost see the history pouring out from the ancient buildings and temples, but they are almost never maintained. This problem is to the point where we are having a difficult time finding anything that is more than 50 years old, simply because it is all collapsed.

This isn't limited to old things either. Chinese people have had an issue with maintenance with most things for a long time.


What's gonna happen to the global market when THIS bubble finally breaks.

Part 2
There are 16 comments:
Male 1
nice post
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Male 1,856
three gorges damn....the Chinese wanted it built right, so they hired an American Q and A company to oversee the pouring of concrete.  Without the oversight....the Chinese contractors would have just poured it all at once, and the high heat would have weakened the entire structure.  

They KNOW what the problem is, but often do not chose the right solution
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Male 18,342
spanz I used to be a financial advisor for infrastructure projects and yes, there's no way that project would be allowed to fail. Actually my MBA classmate advised on the international project financing and lenders would have required it, not to mention the Central Government.
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Male 576
China is just a complete dump.  Even in cities everything is built to the lowest, cheapest, fastest 'standard'.  Last time I was in Shanghai going into a bank lobby to use the ATM I went to open the big glass door that you would see on any back.  The whole metal handle, floor to ceiling just came away in my hand.  I just put it down and used the other door, no-one cared.

Don't even get me started on traffic, cars, bicycles, pedestrians and the lack of consideration for other human beings.  Crossing the road, even at proper crossings, is just suicidal.  If China picks up on Russia's fascination with dash-cams we are going to see stuff that will make the Russians look like careful professional drivers.

It was fascinating to see how bad it was. watching taxis bumping along sidewalks to queue jump traffic.  Our own taxi having a ramming contest with a tram (we just got out and left him to it) seriously who tries to ram a tram off its tracks?  People's bicycles collapsing under them (cheap rubbish) and cars just driving over the bits.

One highlight was watching two cars full of people get out in a road rage incident and go full Jackie Chan on each other.  Big fight, spinning kicks, the lot.  Then one bloke got out in a white shell suit and demolished the lot of them.  Unbelievable.  They all got back in their cars and drove on.  Ridiculous.
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Male 18,342
wibble4321 yes, it's a dump. One problem is the market has an expectation of luxury at low prices.

My massage therapist tonight comes from Guangxi next to Vietnam and is planning to buy a second home to take advantage of rental income and rising prices from a planned new border crossing. She spoke of prices for an apartment currently at USD36/sqft. I couldn't believe it because Hong Kong condominium construction prices alone run around USD306/sqft, similar to NYC at around USD354/sqft and higher than the US average of USD 85 to 204/sqft.

If your budget is so low, of course corners must be cut, though she said she expects the building to be properly constructed and will last decades.
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Male 1,380
I only recently discovered serpentza's Youtube channel (and shared with IAB). It's like e-tourism, where you get to experience a foreign culture out of the comfort of your own home. 

If there's anything I've learn so far, is that I know very little about China, and I have a lot of misconceptions. 
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Male 18,342
Everyone that was supposed to make money in those projects did. Most of those buildings shown were not built to be occupied. They were built to get loans. Doesn't make sense? You shouldn't be investing in China, so I didn't. Buyer beware means knowing the prevailing winds of central, provincial and local government policy.

In Hong Kong, stuff is built to legacy British standards, so it'll last a century, but rising land value means buildings only have a 40 year life. Why? My home bought 15 years ago went from USD 1.4 million to 6 million and my parent's bought in the 70s went from USD 0.1 million to 20 million. Even my parking spaces  went up from USD30k to half a million in 15 years.

That rate of growth means they'll get rebuilt more expensively roughly every 40 years. The downside in Hong Kong is if you rent you miss out, but if you can't come up with at least a quarter million down payment, you'll never get into the property market, not even a 400sqft studio.  
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Male 579
Draculya I'm not very savvy on Chinese economics, but it would seem like their strategy of building for the sake of building could stop at any time via state policy without causing a whole lot of financial devastation (no that it appears to be a good policy as a whole for the Chinese people). Sure, GDP and its associated elements would take a hit, but would investors really panic in such a scenario given that China is a manufacturing-based economy which could still output goods as, or similar to, before? 
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Male 18,342
mrsnowmeiser I'm not very savvy on the Chinese economy either, but I spent 5 years as a financial intermediary doing what was effectively shadow financing for Chinese property developers when the government banned bank financing of many private projects over a decade ago, so yes, the government does try to control the industry.

As for trade, the government is slowly reducing its dependence on the US by building a strong domestic market by boosting consumption through wealth generation, while shifting trade routes to recenter on China through the Belt and Road program. This was partly what TPP was designed to counter, but luckily for China, the US undermined that by withdrawing.
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Male 7,147
Which bubble pops first?

The US Stock Market which is filled with Over-Valued stocks because of all the buy backs that have been happening...

OR

The Chinese Housing Market which, as you see, is absolute nonsense.

OR 

Do they both burst at the same time throwing the whole world into a massive shit show?
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Male 18,342
daegog China liquidity and lending rates aren't directly coupled to the global market.
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Male 945
daegog One pops the other.
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Male 18,342
muert there was no corresponding correction in 2008 so unless China runs out of monetary levers, it need not be so.

Indeed, the question you should be asking yourself is what if China stops buying US treasuries during the mid-terms or before next election?
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Male 7,147
Draculya I was wondering about that part, they must have a trillion dollars worth of US bonds, what happens if they want them called in?
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Male 18,342
daegog China buys US Treasuries for 2 reasons: (1) As a "risk free" store of FOREX reserves; and (2) to address the trade surplus between the two countries.

If China doesn't buy US Treasuries, American importers will push up the RMB because there won't be enough RMB available to pay for US imports from China, making Chinese products more expensive for US buyers.

Of course, that would also devalue the US Dollar and the US Government would need to offer a higher yield to issue more debt, so the National debt would cost more to service and Federal taxes would rise.

Likewise, less trade with China would: (1) make less trade surplus for China, meaning China buys less US debt and either the US government prints more money (i.e. indirect tax on savings), or federal taxes would rise; (2) the US Dollar falls and RMB rises and American consumers see prices rising on almost everything they consume; and (3) both US and China's economies falter, stock markets crash, people lose jobs and savings.
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6,849
What a coincidence I watch six other videos yesterday. I enjoyed your content but I found on the motorcycle riding a bit boring
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