2y ago

Even China's 1.4 billion population can't fill all its vacant homes, former official says

www.reuters.com

Even China's population of 1.4 billion would not be enough to fill all the empty apartments littered across the country, a former official said on Saturday, in a rare public critique of the country's crisis-hit property market.

China's property sector, once the pillar of the economy, has slumped since 2021 when real estate giant China Evergrande Group (3333.HK) defaulted on its debt obligations following a clampdown on new borrowing.

Big-name developers such as Country Garden Holdings (2007.HK) continue to teeter close to default even to this day, keeping home-buyer sentiment depressed.

As of the end of August, the combined floor area of unsold homes stood at 648 million square metres (7 billion square feet), the latest data from the National Bureau of Statistics (NBS) show.

That would be equal to 7.2 million homes, according to Reuters calculations, based on the average home size of 90 square metres.

117 comments

I find it interesting that everyone is calling this bad management when it's indicating one thing above all:
Productivity has well exceeded the requirements of the population.
People simply don't need to work that hard anymore, but all industrialized societies, even would-be socialists, simply can't stand the idea of letting the working class have leisure time.
- UBI and robust social safety nets should have started with the industrial revolution. Every time a machine, computer, or now robots, UBI should have increased and been given to more people.
  
  Tax the automation!! Have companies pay employee taxes for self scanners and all automation. Let the workers live, let the machines work.
- I look at my own country of Portugal with a massive realestate prices bubble were more than half the youths only leave their parent's home after they're 30, more than 50% of recent graduates emigrating when they get their degrees and schools in certain areas lacking teachers because houses there are too expensive for a teacher salary, and think that maybe what China has there is actually good thing, not a bad thing.
  Yeah, sure, "investors" are suffering, but why should the other 99% of people care?!
  
  Portugal has preserved beautiful human-scale cities and villages, while most apartments in China are in concrete jungles of tower blocks - you really want to swap one for the other? Sure, solutions are needed, but not like that. Also the chinese housing bubble conned many ordinary people to invest multi-family life-savings, it's not a 1% thing.
- I do wonder what's going to happen to all that property as China's population hits 700,000,000 or so
  
  Go take a look at Detroit
  
  A lot of developed countries are going to see a decrease in population starting in the next 20 years and that will probably go on until the end of this century.
  Our growth-minded economics needs to shift. Maybe we need to focus on how to gracefully decline. A decrease in revenue does not mean a company is not profitable. So that mindset needs to change.
  We really need to focus on geriatric care, there will be a lot more old people than young people, so we need some way to get care to all the old people without over-burdening the young. More robots? Or robot-assisted care so that is it not so taxing on a nurse? I recently had to help a neighbor who was in declining health and mind, and man, I do not want myself to be in that state burdening my children and family. So we need some legislature to allow assisted suicide for those with terminal illness so I can go and die with dignity and grace.
  Then we need a new de-construction industry that is focused on removing old buildings and old infrastructure and restoring the land back to its natural state. Otherwise we will have a plague of urban decay if that's not managed well.
- Maybe if they actually built these things up to code it would take longer to build them in the first place. These things tend to collapse.
  
  If one crumbles, they can just use the one next door. They have a surplus! /s
- That may have been true if this resulted from the operation of a non corrupt free market, but this is instead China.
  
  Housing does not have the conditions to be a Free Market because any one piece of land has a single owner who has the monoply of deciding what's done with it.
  Sure, you can make as many houses you want ... in places were nobody wants to live because there are no jobs there ... but in practice the housing market is restricted by the ownership of land in those places were people do want to live in (have to live in, even, because the jobs are there), which means the supply of the most essential "raw material" for realestate - the actual land to build the housing in, situated were people need a place to live in - is heavilly restriced.
  (In fact if you look at China's problem, with all the "ghost cities" made by the now near bankrupt building companies, they're exactly because they tried to work around that huge market barrier to entry by building cities in the middle of nowhere, were land was cheap and easilly available, on the expectation that both people and jobs would come there, and that didn't work)
  Free Markets can only happen in markets were new supply can easilly come online in response to things like price increases or lowered quality by established market players, and that's markets for things like soap or teddy bears, not things were supply growth is heavilly restricted by land ownership or other similar high market barriers to entry.
  Free Market Theory would only ever be applicable in markets with no or very low barriers to entry and only if market actors were rational, and Economists of the Behaviour Economics domain have proven that humans aren't rational economic actors, not even close: that pseudo-economics bollocks you're parroting is not only wholly unapplicable to the housing market (which has nowhere the low barriers to entry needed for there to de facto be freedom for market actors) but has even been disproven more than 2 decades ago (funilly enough by a guy who recently got a Nobel Prize in Economics, though for different work) when it was shown experimentally and in many different ways that homo economicus is not at all a good model for human economic behaviour.
  
  Is China having a homelessness crisis, economic collapse, or famine?
The world is really lucky that China's not doing that great at the moment. Not so long ago, China was winning the propaganda war internationally.
You don't want authoritarianism to win the argument by out-performing democracies.
- I agree. I don't think we had or have anything to fear. The Chinese educational system is built around obedience, cultural homogeneity, and rote learning. Sure, there are fewer protests, and there is less crime, but also a SEVERE lack of innovation. I can count on one hand the number of innovations China has exported to the world in the last decade. Everything they build of note is based on stolen IP and figurative and literal slave labour. The world is finally clamping down on the former, and China's social progression to a service-based economy is putting an end to the latter. Their comparative competitive advantages are eroding by the day.
  
  and there is less crime
  I wouldn't necessarily bet on this, authoritarian states are breeding grounds for corruption and that in turn fuels crime. I wouldn't be surprised if China has a problem with criminality that the government, at least on a local level, not only turns a blind eye to but is complicit in.
- They've hit the middle income trap while simultaneously upsetting all their trading partners. It's not going to be a pretty fall from grace. Fake numbers saying how awesome things are only work for so long.
- I suspect a major reason for Putin's most recent crimes was to prevent his people learning how much their neighbours are prospering.
- Why doesn't China count as a democracy? People vote and the votes get counted and decide who runs things.
  
  Why doesn't North Korea count as a democracy? People vote and the votes get counted and decide who runs things. /s
  https://en.wikipedia.org/wiki/ElectionsinChina
  
  Hmm, why isn't the one-party state is considered a democracy? Truly baffling.
- why dont we want that if its outperforming democracies
  
  Ah the old “ends justify the means” argument. I’ve seen this one before somewhere
- Show me a single democracy anywhere in the world.
  
  Alright I'll bite, what makes the world's declared democracies actually undemocratic in your mind?
  
  Its a democracy when you're in the global north, it's autocracy when you're in the global south.
  
  I love how you're getting downvoted, likely by people who feel a sense of enlightenment in that they can identify Chinese propaganda that has been pointed out to them as such but have no clue about propaganda originating from their own country or from a country theirs is allied with.
good to know Earth resources are used in rational and sustainable manner.
- The half finished apartment complexes and ones that are collapsing already because they build them with bamboo instead of cement would indicate otherwise. Look up tofu-dreg projects/buildings for a good laugh. So much of the rapid construction done in the last 20-30 years in China is going to be in landfills far before it should be....
- It looks like you mixed up the fields for your password and username. TL;DR: you’ve got a password-looking username
  Also, I agree with your comment.
  
  This is a feature, not a bug :)
Considering China's population shrank by nearly 1 million last year and it predicted to drop by 700 million by 2100.
This is not going to get better.
When you make the only safe place for money real estate, then your corrupt Politicians make that only safe for the wealthy and connected, you end up with a lot of empty useless real estate.
- Are you talking about China or Toronto?
  
  Yes
  
  Toronto is arguably an exclave of China. One could argue that Canada is now a colony of the PRC.
Damn... Can't they disassemble them and ship them in the West?
- No thanks, China's infrastructure is of notoriously bad quality.
- You're thinking of Ikea
  
  We can exchange them for a wobbly CD rack and some of those rancid meatballs.
- If you're American, the problem here actually isn't the number of residences, there are plenty of those. The problem is that developers only want to invest in single family units or high value apartments. We need policy makers who will actually tax absentee landlords and developers of high value properties to the point that local developers begin seeing more profit in creating affordable housing. In fact, affordable housing can be some of the most profitable even without increased tax burden but try convincing a group of investors that.
- The West is not interested in more houses.
For many mainland Chinese people, real estate is the only place they can invest their money. Traditionally and culturally it's also seen as the only possible way to rise up and do better.
The money export controls make it difficult for the average guy to move his money abroad as well.
So there are many Chinese people putting retirement or family savings into these places because they don't have other options.
They have also just had a very long run of easy government backed mortgage support, making it a bit too easy to borrow money for these properties.
It's crazy and doesn't make long term sense when the number of domiciles exceeds the number of people.
- Wait so China might be having an economic crisis in coming years?
  
  A lot of signs point to it already beginning.
  This is a quick reminder that (looking at you fellow Americans) authoritarian governments are incredibly inefficient economically at best, are always ran by idiots, and are completely detrimental to everything at worst.
Can... can they move those apartments here?
- I'm 99% sure they wouldn't pass a safety inspection.
- If you'd like to die from building collapse, or at the best least have your shit apartment literally falling apart in less than a few years
- No need, just need to force them to sell their property here along with all the other rich people who are holding on to vacant property as an investment. There are plenty of homes in most places if they'd do something like double the property tax on any property that's vacant more than a few months per year.
It's almost as if the idea of endless growth is a bad one...
- but GrOwTh
  What will we ever do without gRoWtH
This is important, not least because making the cement and steel for these surplus apartments and associated road infrastructure makes an enormous contribution to global CO₂ emissions. Look at how the emissions took off after 2005. So the sooner the bubble bursts, the better for the climate.
- Then they'll expend CO2 removing the abandoned structures, and building other things on top of some of that, and another bubble will be coming down the pipe sooner or later.
  We need to fix the systems that let these bubbles occur in the first place
  
  I recall a presentation by a key guy in China's planning system (NDRC-ERI) - it was clear that their plan all along was for the peak construction to coincide with the peak working-age population - which is why they would never concede to reduce emissions earlier. They had a long-term view including demographics (more than most governments consider), but the process got its own momentum and became the bubble - also related to city-government financing incentives as well as risky tycoons. Now the problem with such over-planning is that the next generation may not thank them for the legacy of this type of construction (and CO₂), and prefer to live in smaller houses or away from the coast (as Shanghai, Tianjin, etc. will be flooded due to same CO₂), hence as you say even more reconstruction (and more CO₂). But the peak has passed, what really matters next is whether India will repeat similar mistakes.
This is the best summary I could come up with:
BEIJING, Sept 23 (Reuters) - Even China's population of 1.4 billion would not be enough to fill all the empty apartments littered across the country, a former official said on Saturday, in a rare public critique of the country's crisis-hit property market.
Big-name developers such as Country Garden Holdings (2007.HK) continue to teeter close to default even to this day, keeping home-buyer sentiment depressed.
As of the end of August, the combined floor area of unsold homes stood at 648 million square metres (7 billion square feet), the latest data from the National Bureau of Statistics (NBS) show.
That does not count the numerous residential projects that have already been sold but not yet completed due to cash-flow problems, or the multiple homes purchased by speculators in the last market upturn in 2016 that remain vacant, which together make up the bulk of unused space, experts estimate.
"That estimate might be a bit much, but 1.4 billion people probably can't fill them," He said at a forum in the southern Chinese city Dongguan, according to a video released by the official media China News Service.
His negative view of the economically significant sector at a public forum stands in sharp contrast to the official narrative that the Chinese economy is "resilient".
The original article contains 346 words, the summary contains 211 words. Saved 39%. I'm a bot and I'm open source!
Nah. China's urbanization rate is currently 65%. South Korea for comparison has 82% urbanization rate. So the Chinese have plenty more (say, a hundred million or so more) homes to build. The current difficulties are more to do with (i) loss of consumer confidence caused by the leadership's bad economic management, and (ii) the deliberate restriction of credit to developers because of the government's concerns about debt.
This analysis reminds me of the hoo-hah about China's "ghost cities" circa 2010. Those ghost cities ended up being filled up.
- There are still vast ghost cities in that country, so no they don't actually all fill up
  
  Sooo many empty or partially used shopping malls
  
  Enough of them filled up that even the press outlets that pushed the ghost cities narrative most aggressively, like Bloomberg, have run follow-up stories acknowledging it.
  Yes, some developments worked out and others didn't, but building out housing in advance of increasing urbanization is a good thing, not a bad thing. It's how you avoid housing unaffordability in urban centers, or worse, the rise of slums.
  
  Ghost cities are largely American propaganda and most have filled out to well urbanized areas. You can read quite a bit about it on the wiki
And China's population is projected to fall under 1 billion again over the next decades, making this a shit show circus. So many apartments bought as an investment will never see any occupancy and will likely just be abandoned. They got entire empty ghost towns already
It's not for them. It's so they can buy them and charge exorbitant rents to the next generation looking for a place to call their own, but can't afford one of their own.
- There is no next generation to rent them to...China's population is shrinking.
- Doubt they have that multi-generational 4D chess in mind
if only their regime weren't so repressive, homeless americans would be flocking there for a place to live.
- I'm guessing most of those dwellings are in places that don't have any employment options.
  
  presumably someone is doing upkeep on these buildings, and presumably those someones have needs for other folks to fill
  presumably once more folks move there, they will have even more needs for folks to fill
  not to mention remote work and all that
  
  perhaps not, but hey, if a job around here won't make it possible for you to afford four walls and a roof, then the difference it purely academic.
  People like to create things, to do something productive. it's why NEETs are notoriously miserable people who hate themselves. humans crave to DO something or it torments us to the brink of suicide - and sometimes past it. If only these folks had a place to live and weren't brutalized by the authorities for daring to attempt to do so, they'll create productive activities.
  Part of the problem of poverty here, also, is that it's sometimes literally fucking illegal to carry out productive labor activities unless you're on land that you own or land that is owned by a designated employer. Try growing produce in a vacant lot and you'll get arrested for trespassing and "vandalism", and possibly sued by whatever ghoulish real estate holdings firm is hoarding the land.
  With an apartment and nothing else, you'll have a place to go back to while seeking employment OR a place to stage activities with other people. just because I personally don't have 100% of the answers or the clairvoyant foreknowledge of what someone might be able to do with the resource of just having a space to call their own doesn't mean that someone else won't come up with something i'd have never dreamed of. I think it's not unreasonable to have a little faith in human creativity.

117 comments