In light of the budget emphasis on getting back to surplus, it has been stated by some knowledgeable commentators that if we can reach a surplus, it will effectively be made in China. I agree. We have become highly dependent on China for our economic wellbeing.

But wait, there is a HUGE problem.

This is truly scary. From the SBS Dateline program: China’s ghost cities:

http://www.sbs.com.au/dateline/story/watch/id/601007/n/China-s-Ghost-Cities

< Things may not be as rosy as they seem >

< Ten new cities every year >

< … just another bubble waiting to burst? >

< 64 million empty apartments >

< essentially the modern equivalent of building pyramids >

China’s incredible economic growth appears to be largely built on an almighty falsehood – growth for growth’s sake, and not for the betterment of peoples’ lives.

I wonder how much longer this can continue before it all comes crashing down. And I wonder what will happen to Australia’s economy when it does.

Absolutely right Ludwig. There is no longer term planning for the end of the mining and resources boom and a growing dependency on China which is a house of cards waiting to fall.

There are alreadly rubmlings in the US about its growing dependence on China but very little foresight from Australian governments over the past 10 years.

http://arkansasnews.com/2011/01/25/lets-break-our-dependence-on-china/

why do we expect china to be any different from ireland or usa
who know about ghost estates[admittedly on a smaler scale]

china/house are mostly a way to hide
the gross ammounts of income a few are making
in a land measuring its poulation in billions..millions of houses beciomes a questyionable point

thing is are there enough people who can handle their bedt
[defaulting debts is the only real concern]

i forget the defaul;t rate on us housing
but note the prices are still falling

their investment houses being empty
could mean the got enough equity [or enough income]
to make the payments

someone..is buying them

lets wait till defaults rise
and the price falls
before we get carried away with things we dont fuully grasp

Banks Offer $5 Billion
to Resolve Foreclosures

Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM),
along with three other U.S. mortgage servicers,

proposed paying $5 billion to settle a probe of their foreclosure practices by state and federal officials,

two people familiar with the matter said.

$27 trillion in damage to the US economy,
and the banks offer $5 billion for a get-out-of-jail-free card?

follow the money?
http://www.youtube.com/watch?v=sP8PrJbJeVA
heard of red-lining?
http://www.businessweek.com/magazine/content/11_20/b4228031594062.htm
greek 'austerity biting'
http://weeklyintercept.blogspot.com/2011/05/strikes-over-austerity-measures.html

id be more worried about the rich
http://theintelhub.com/2011/05/08/billionaires-for-eugenics/

http://www.youtube.com/watch?v=qXcKIyn6LJ4&feature=channel_video_title

how about perpetual war
http://thehill.com/blogs/floor-action/house/160419-democrats-protest-gops-plans-for-permanent-war-against-taliban-al-qaeda

here is a plan...'b'
http://www.youtube.com/watch?v=mvUGr-jj5l0
[its a doomsday cult
21 st of may]..

''all a/bored''

I second that, Absolutely right, Ludwig.

The social implications resulting from China's incredible growth are also worth examining.

58 million children are now affected by the practice of adults migrating to the cities to work - often leaving their offspring in the sole care of aging grandparents. Many villages now contain only children and grandparents.

A documentary:
http://www.last-train.com/about/

http://seattletimes.nwsource.com/html/nationworld/2013173770_chinakids17.html

Australia is prospering by its trade with China,and this trade may not last forever.
And just why is China intent on this massive growth, seemingly unneeded in the case of these apartments.
Do we think they have no reason to build them ,no plan?
And what is this country to do, if our mineral exports stop, will they soon, both questions need answers.
Not a simplistic cry what shall we do.
Exporting clothing and foot wear is out, we can not compete.
Any one think we can make hole in white goods and electrical exporting.
Food? we do ok here selling sugar wheat and grains but in drought years.
Beef, ok so far, with south America out of some markets but long term room for massive growth?
Lamb/sheep NZ has us hands down in those markets but we do sell some.
Wool? increasing prices equal more use of substitutes future unknown.
Tourism, what shall we, should we base our economy's future on.
Lets not cut defense,not refuse the cash flow we now have but lets not forget the world is one big shopping mall, if yo have the right item at the right price sell it.
Out future is more about our long term population its numbers and its distribution in this big brown country.

we..were of one mind
until this belly

""Lets not cut defense,""
rubbish and old thinking
lets cut defence off at its knees
it isnt even under authority..to govt
[but under orders of hrh/via her govenener general

in short
there to lord it over us
an army sworn to a foreign state loyalty[hrh]
but paid for by us

while serving the agenda of great briton
then usa...and very soon china

....""not refuse the cash flow we now have""

not refuse?..the cash flow...WE?...now have?

we
[the armed forces}..serving other colonisation adgendas?

how could they refuse
lord knows how they run THEIR minester
[thats the hardest job in the world..BECAUSE they KNOW
govt dont tell them NUTHING..they ONLY take orders from gg

if the cashflow is re the mining boom
remember that boom is the sound made
as the bubble goes BUST...

'\!*!/'
<BOOM>

now watch how alp..splurges it
into yet...*other bubbles

govt leeches..
love...*govt money made*...

*bubbles

In the real world to have no defense is to be defenseless.
Not to be free in fact.
How long will our position as the worlds quarrie last?
200 years,quite possible.
How long ours?
Take the advice of some,including the greens and do not bet on 20 years.
Reality has a say in the end.
Control our growth, control our population ,save for an unknown further.
But not be prepared to defend our selves, no thanks

I thought it was cultural – I thought the Chinese had this thing about new homes and they don’t like buying homes someone else has lived in and so you get ghost towns of investors waiting for buyers and they wont rent them out in the meantime as it will lower sale price.

Where does their iron etc they build with come from?

If banks lowered interest, got rid of deposits, the lower income people could get loans? They have the people numbers in China to reshuffle everything around if something bursts?

Don’t say it, I know I have no idea what I am talking about...

There's cultural element, but it's a very small part of the equation. The answer, as usual, lies where the money is.

This blog explains it in greater detail (written by a Tsinghua University economics and management professor):

http://chovanec.wordpress.com/2009/06/11/chinas-real-estate-riddle/

Basically, China doesn't tax properties in the way we do. You must pay tax on transactions, yes, but there's no property tax. Essentially, you can buy a property as an investment without needing to worry about covering the annual costs of property tax - so you don't need to find renters.

The real issue is depreciation, but given how house prices have been skyrocketing, they remain an attractive looking investment.

The problem is, that no government in China has the stomach to seriously impact the property industry. Most of China's GDP comes not from exports, but from property transactions.

Local government are required to hit certain GDP targets and property transactions is how that's done.

Bear in mind that only 300 million or so of China's people have actually seen their living standards change in the recent years. For the billion still residing in the countryside, things remain static.

There is still a massive market to be tapped which will take a while to exhaust itself. Demand is still so strong that slight property price decreases result in a rush of buyers eager to get a deal at the first sign of decreasing prices.

The Chinese government still has a range of tools at their disposal as well. Rural residents are restricted from moving to the cities via the hukou household registration. Essentially, they can move to cities but they haven't the same rights as locals. Tinkering with this is one measure the government can take to encourage more property consumption.

But, at the end of the day, you still have a massive problem and a government which of late has only shown the stomach for tinkering with policies rather than overhauling them.

This problem's going to get worse and eventually explode. But unlike most commentators, I don't think it's going to explode just yet. Give it another decade or so.

Sounds a little Orwellian to me. In 1984, Oceania, Eurasia and Eastasia were constantly at war. They were careful never to win or lose the war, and to fight it away from inhabited areas. This way, the war could go on forever without adversely affecting anyone. It was also a way of keeping people employed without raising quality of life (and, with it, excess and expectation). People who make munitions work in an industry of consumption without gain.

Likewise, by building uninhabited ghost cities, China keeps people employed without ever upsetting the status quo. They build a city, then another, then another ... nobody benefits from the product, but people benefit from the employment. Maybe in time people will move into these wonderful masterplanned communities. Maybe not. Maybe they will be able to keep going for years, decades ... maybe not. Still, unemployment breeds discontent. Pointless employment doesn't.

Like Jewely, I'm not going to claim to actually KNOW any of this. It just seemed like an interesting parallel. When they stop building apartments and start building munitions plants, that's when we should worry.

Great post, Otokonoko.

Here's a guy who liked things just the way they were. Check out the bottom pic and you'll see that he's surrounding by some of those apartments:

http://www.dailymail.co.uk/news/worldnews/article-1303730/

Thanks for the link.

I can understand where the 'nail householders' are coming from. Giving up a family home - one that has been in the family for generations - to make way for soulless apartment blocks that will stand vacant ... well, I can see why they wouldn't want to.

That said, a family friend once had a nice canal front home on the Gold Coast. He liked his house very much, so he refused to sell when offered a huge sum by developers on one side. Multi-storey apartments went in, destroying his privacy, but he was content. Then he refused to sell to developers on the other side, so he ended up with apartment blocks on both sides, apartments across the canal and his little house in the middle. It was impossible to sell, it received no sunlight except at about noon, and it had no privacy. He stood his ground, but lost what he had fought for as well. I know it's futile, standing in the way of progress, but it seems that we can't keep things the way we like it no matter how hard we try.

It is my understanding that China gets a contract, then builds a factory to fulfill that order, then builds a city around that factory to house the workers.

The problem is that once the GFC hit hard, the contracts dried up, the factories closed and the people left.

The future problem looming for China, and us, is that the new generation of chinese no longer want to be chinese.

They want to live like we do, and who can blame them.

The want cars, TV's and holidays, along with workers rights and entitlements.

The simple fact is that the world can't afford all these luxuries, because once we can't afford to buy from China, and we can't afford to manufacture here, then what.

The reality is that Australia has set a very dangerous bench mark for wages and conditions and the rest of the world is watching.

A 10% growth rate means the Chinese economy will double in seven years.
There is not the energy supplies and all the other needs of an economy
growing at that rate.
Therefore, the economy must either stall, contract or collapse.
No alternative, it will happen. No way around it, it is just simple
arithmetic.

Rechtub, are you prepared to back up your statement.
I doubt you understand but market forces drive wages not in any way unions.
If you had your wish, turned your staff in to serfs they would go to other butchers or find other work.
The fallacy that union thuggery drives wages can not be supported.
Under fair work Australia, and Work choices, a union can only strike at award or wage negotiation time, no other time.
And only if true honest two sided talks are not possible.
Right now, big miners are activly head hunting skilled workers and even laborers offering high wages.
Until fair work came about in WA the big wages came from totally nonunion firms.
China is intent on growing, it will continue to,its rate has nothing to do with our wage structure.
And finally but a waste of my time, if we cut wages to please such bas you, by 40% say, surely our whole economy, your shops too would shrink by that amount.
Is it not clear the mining boom is not running a chain of QLD butcher shops but wage earners.
Finally do you think meat should only be for high income earners.

Belly there are two major problems with wages here.

1. They are becoming to high for small businesses to afford to continue and the owners will sooner or later stop taking the risks as the gains are quickly fading.

2. They are becoming to low to live on.

Now if the likes of China introduces anything like the wages and conditions we have, then they will not be able to produce the cheap goods that allow us to enjoy the lifestyles we do.

Like it or not, we have the highest wages for the average worker.

We have already lost our manufactring and aguculture, tourism and perhaps our car industries are on their way out.

No amount of unuion intervention can protect jobs when there are no small employers left.

Sorry butch the subject you are trying to debate requires far more understanding than you possess.
First cost of living prices of goods and services in every country must be compared to true average income, wages.
Measuring our wages against Chinas, or for that matter any other country is plain useless.
Now conservatives, and yes my mob too think markets should as much as possible be allowed to set its own levels.
Surely if I put it in simple terms you too will be forced to agree no other way works.
You need to buy your meat at about the same rate as your competitors,sell it at about the same Mark up or sell more, ok so far.
If it costs you more to sell you will suffer but if less you will do ok.
Who buys your meat if living standards drop by that 40% at what rate of profit, dare you say wages should not be measured by the same market rates that rule your profits?
In my last job two mates both butchers both chain store ones asked me to help them get jobs, not enough pay.
Both hold lolly pops controlling traffic, not joking casual and happy with extra income.
For you mate, after Broncos dropped the bundle I can do the same.
However may have to take a lessor rate, lot of ex butchers in the game now so how about 10% under award ok with you?
Profit is in my view a result of turn over price consumers can pay cut wages cut profit.
Unless I know nothing your prices and profits are a result of the money consumers have in their pockets ,wages

Belly, I am not suggesting that we drop wages, however, what I am suggesting is that if the likes of China increases wages, to anything like we pay, it will be 'game over' for all as our entire economy now relies on cheap imports.

I can remember a time when it cost $100 to get your drill fixed. Now it cost $40 for a brand new drill.

Small business profits have been errodded, just the way that disposable income for workers has been. Trouble is, SB, being the back bone of the nation will simply fail once the worker gets almost as much as the employer and believe me when I tell you that the gap is closing and fast.

It used to be that the owner would make about twice to three times the amount paid out in wages.

3 staff @ $1,000, $3,000 net to the owner. A good return on investment, considering they take all the risk.

Nowdays, you are lucky to make dollar for dollar returns and that's where the problem lies.

You see the worker gets paid to be there, but the owner only gets paid if a profit is made.

It cost the owner the same amount in wages to make 5 coffes and hour as it does to make 25.

The way of the future for SB may well be in 'partnership arrangements', whereby workers 'buy their jobs'.

These are known as 'non voting shares'.

The jobs will then go to the 'shareholders' before any outsider gets a go.

They will share the risks and the profits. It will also weed out those who don't care about the job, just the money.

Watch this space.

Somewhat related to this thread was an item on BBC World Service last night.
It was about the colonisation of Africa by China.
In Zimbabwe Africans that were allocated the farms taken from white
farmers are being removed and the farms "sold" to Chinese companies.
The farms will not be supplying the local economy but exporting to China.

Perhaps if the Chinese economy contracts enough farmers in China may
return to the land and leave even more empty home units behind them.

Bazz this is happening every place in the world that will sell.
NZ has seen dairy's sold and we too sell to China and other country's parts of ours.
It is a long standing joke,decades old, that America wanted to buy QLD But Japan did not wish to sell
Rechtub Chinas economy has zero reason to adopt our wages/prices, for exactly the reasons I gave about your shops.
If tomorrow they did,increase wages to our levels [why they would baffles me] Japan Korea many country's would be happy.
If, [and too silly to think about] they all did.
Our country within a year would create a manufacturing industry here bigger than ever.
We do not manufacture ONLY BECAUSE MARKET FORCES control prices and costs.
Thinking about going back to work bored here need a business manager?

Gee belly, now would'nt that be nice. Jobs all round for everyone.

Belly & Rehctub, actually Chinese wages have been rising and is one
of the reasons for the closed factories.
Inflation is the number one worry of the Chinese government.

They would love to unload more US dollars but to do so would crash the
US$ and make their situation worse.
The crunch date for US borrowing has moved back to 2nd August.
It is the date when the US either increases its borrowing or defaults
on its payments.
Its congress is in dispute over increasing the amount that may be borrowed.

Default is a real possibility and if it does come to that will have
world wide repercussions.

Bazz no default back on it,but I see only hardship for America for some years.
GFC born in America and the single biggest act of treason against that country in history.
Rechtub, mate, what happened to the Broncos?
Bet you do not sell too many sausages to vegetarians.
If you try,give it up bloke it will not make you rich.
Now I have cut my meat in take, while working was the type who said give me a full scotch fillet two kgs of t bone and some snags, leave the road kill out.
Living on 25% of my once income, and doing ok.
Meat will never be cheap again, but just maybe that is reason some sales are down.
We, face it, are not a chance of being a manufacturing country for White goods and such.
It is those you bless as risk takers who will not invest in such.
Would you buy your shirts made here at three times the price of imports?
Get the grumpy bloke inside you under control bung on a free Bar BBQ for street kids.
But watch what you put in the snags, your dad would have loved you for it.

If we think times are tough here have a look at this;

http://www.youtube.com/watch?v=QwrO6jhtC5E

This one reason the US will either default or be never able to repay
its debts. Some say they are now at the point where it is impossible
to recover without restructuring their debt. Thats code for going bankrupt like Greece may well do.

I promise you they will not default or go bankrupt in the next ten years.
However we could benefit by understanding a few things high income tax cuts under Bush, those who crafted the GFC actually not paying tax on it.
Those who will suffer most are average Americans.
And that no miracle is coming, America while not crashing is going to suffer.
I get no joy out of this,but in time even capitalism may die as a result of the very rich wanting to be richer.
No Socialist heaven if it happens just a world without a plan.