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.