Re:‘China’s Manhattan’ Borrowed Heavily, but the People Have...
by baybal2 on Thursday April 11, 2019 @02:40PM
(#19637798)
I visited the city last year, out of curiosity.
Binhai is far from being exceptional from other abandoned "new areas." Even in 20m people Shenzhen, a lot of new skyscrapers are empty.
A girl I tried to date last year was running a chemical company in Ningbo's "new area." I went there too. It blew my mind that her company was occupying a whole floor in a 30 storey building, and was one of only two tenants. And that was only after the local government gave them a $3m endorsement.
The girl latter tearfully admitted to misspelling her age in Tinder by a whopping 3 years, and I moved on :)
What the article underlines well, and say what other don't is that there is a positive feedback loop:
1. Banks are given political directives to dish out loans to all those "new areas"
2. Developers than rent extremely overpriced land from municipalities, and build similarly overpriced highrises/elite hotels/luxury malls
3. A great lot of that real estate is then unloaded, and leased away to no-name municipality's own asset management companies at laughably low rate.
4. Whatever money that was not banged away immediately, ends up in same banks after a few years.
5. On the paper, the value of those skyscrapers goes up!
6. Read Marx and profit...
In essence, the state cashed out a substantial portion of the People Bank of China without anybody noticing as sum on their balance sheet was seemingly not influenced.
The problem of China 20 years ago - a lot of underused rural land
The problem of China now - a lot of underused prime rib real estate
Binhai is far from being exceptional from other abandoned "new areas." Even in 20m people Shenzhen, a lot of new skyscrapers are empty.
A girl I tried to date last year was running a chemical company in Ningbo's "new area." I went there too. It blew my mind that her company was occupying a whole floor in a 30 storey building, and was one of only two tenants. And that was only after the local government gave them a $3m endorsement.
The girl latter tearfully admitted to misspelling her age in Tinder by a whopping 3 years, and I moved on :)
What the article underlines well, and say what other don't is that there is a positive feedback loop:
1. Banks are given political directives to dish out loans to all those "new areas"
2. Developers than rent extremely overpriced land from municipalities, and build similarly overpriced highrises/elite hotels/luxury malls
3. A great lot of that real estate is then unloaded, and leased away to no-name municipality's own asset management companies at laughably low rate.
4. Whatever money that was not banged away immediately, ends up in same banks after a few years.
5. On the paper, the value of those skyscrapers goes up!
6. Read Marx and profit...
In essence, the state cashed out a substantial portion of the People Bank of China without anybody noticing as sum on their balance sheet was seemingly not influenced.
The problem of China 20 years ago - a lot of underused rural land
The problem of China now - a lot of underused prime rib real estate