China's empty city

[bascule]

0h7V3Twb-Qk

Sometimes it's really hard to gauge how China's economy is actually doing, especially when you see things like this.

The discussion of how building an empty city affects their GDP is a very strange one as well.

It was also weird to read that while this city is unoccupied, most of the property has been sold to people who are holding it as investments.

[ydoaPs]

0h7V3Twb-Qk

 

Sometimes it's really hard to gauge how China's economy is actually doing, especially when you see things like this.

 

The discussion of how building an empty city affects their GDP is a very strange one as well.

 

It was also weird to read that while this city is unoccupied, most of the property has been sold to people who are holding it as investments.

 

That might end up being a great idea. I see how it might be more efficient in terms of roadways(including traffic due to loading of residential areas) and utilities than an ad hoc settlement.

[iNow]

I had a very similar thought to ydoaps. It's not exactly like China is hurting for population growth. People will move in, and it will be nice to have the city ready when they do.

 

Their GDP is growing. Their middle class is quickly surging. The China economy is focused more consumption from internal residents than exports... at least in terms of where it's heading.

 

I think this is a good idea. Imagine how smart you can build a city when nobody lives there yet. It can be well designed, have smart infrastructure, and be less a result of organic need. It's based on planning instead of after-thoughts.

 

I'd wager money that it's a booming area within 5 years. It reminds me a bit of Dubai.

[bascule]

Their GDP is growing.

 

Did you watch the video? I think this city is a rather interesting statement on the "GDP is growing" idea. This is an entire city built with government money, which goes towards their GDP. The growth this city has added to China's GDP is equivalent to saying the New Deal created jobs... which it did, but those jobs were all based on government money.

 

I'm not saying it's a bad thing, but this city is a microcosm of China itself, which was the underlying tone Al Jazeera seemed to convey in this entire report. Sure, China looks great on paper. But this city has no domestic economy. The government built a city and the creation of this city added to China's GDP. People are buying into it, but it has not resulted in this city having its own economy... all the money is coming from outside. The internal economy of this city is completely dead.

 

I think, in the future, yes, this city could have a huge economy, but what catalyst will kick it off? You can't have a healthy economy sustained by external forces alone.

 

Compare this to the US: we have a negative trade balance with every other country in the entire world, and yet it's sustainable, because America has such a strong domestic economy. China is the polar opposite of America... if Americans stopped buying Chinese goods, China's economy would wither and die. Right now, China has a parasite economy which only sustains itself by feeding off other countries demands for their goods.

[iNow]

Hence my mention of their growing middle class and internal consumption. You raise good points, but I think you're somewhat disconnected from the trend they've been on for years now. It's just my opinion. I'm biased as I have many colleagues in China giving me first hand accounts. It doesn't mean they are right. It's just what informs my opinions.

[padren]

The real question is if this "paper only" economic boost can translate into a self sustaining one as the city becomes active. It's supposed to be a resource driven center (they mentioned coal extraction) so it does have the potential to boost the domestic economy from within.

 

When government money is spent on jobs that consist of digging holes and filling them up, then it's very correct call it for what it is. This seems more like a gamble though - they are betting it will pay off, and it is a lot of infrastructure that can lead to genuine growth. I am skeptical as to whether such a project will work out well because frankly, you now have this giant infrastructure that is starting to weather and decay even before it's put to use and it may take some time before the organic nature of population growth really fills and takes advantage of it.

In most cities, new growth occurs as existing infrastructure becomes strained and while that is far less organized it is at least in response to direct demand. They are banking on demand patterns reflecting the plan they already built in - which may work out. It may also lead to some areas being strained and others in decline before they are ever utilized.

 

It will be interesting to see how it develops.

[bascule]

Hence my mention of their growing middle class and internal consumption.

 

Well, you're looking at national-level statistics, like their GDP. What percentage of the Chinese population is considered middle-class versus the percentage of first-world countries which are considered middle class?

 

China is a third world country. The overwhelming majority of their population is impoverished. Their GDP is still less than Japan, and Japan's middle class is still larger than China's, and that's as a whole, not as a percentage of their population. As a percentage of their population, China's middle class is a drop in the bucket compared to any first-world country.

 

China still remains the diametrical opposite of America as far as its domestic economy versus its exports go. America consumes far more than it produces, because its exports are weak and its domestic economy is extremely strong. China produces far more than it consumes, because its exports are strong and its domestic economy is extremely weak.

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The real question is if this "paper only" economic boost can translate into a self sustaining one as the city becomes active. It's supposed to be a resource driven center (they mentioned coal extraction) so it does have the potential to boost the domestic economy from within.

 

That's the real question. Much like UAE/Dubai, China recognizes their dependence on exports. This city is obviously a recognition of that and an attempt to produce a legitimate domestic economy from money acquired through exports. That said, thus far the attempt is a failure. The only money the city has is based on speculation. This city obviously has NO economy!

 

Dubai is certainly a much better attempt than this Ordos city in China, but now that the bottom has dropped out of the oil market, Dubai is suffering.

 

You could never say the same thing about the bottom dropping out of any American metropolis because of fluctuations in the value of some commodity. New York City has a robust economy despite the value of oil. New York City has a true domestic economy.

Edited November 14, 2009 by bascule
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[Mr Skeptic]

This city obviously has NO economy!

 

Duh, it's empty! Let people go there and then see if it still has no economy. As China built the city from scratch, it could also build its economy from scratch if they needed to. For example, providing temporary subsidies for working there. Though if they did it right they would not have to do that.

 

Planned cities can be very nice, but there is the danger of not properly anticipating what infrastructure will be necessary, of making mistakes. A citywide "oops" can be very costly and annoying.

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Oh, and I can't watch the video, which now says it is zero second long.