How bad does housing suck if you’re poor and live in Shanghai, China? This much:
“Shanghai’s landlords are quite ingenious, managing to convert even the smallest spaces into rentable rooms at high prices.”
Bathroom with a ladder to a crude loft above it? 600 yuan. (Exchange rate is currently running just above 7 yuan to the dollar.)
At least that had air-conditioning. For 300 yuan, you can get a room barely big enough for a small bed with two holes punched in the wall for ventilation.
For the same price, you can get a bathroom with a bed in the crawlspace right behind the toilet. “After using the toilet, the smell lingers in the room. Also don’t turn the shower head [over the tiny sink] on too high or it’ll soak the bed.”
One room is a twice-coffin size crawlspace off a balcony for 1,500 yuan.
But wait! For a mere 50 yuan, a guy rented a 0.3 square meter crawlspace he can’t fully lie down in. “Some local netizens from Shanghai commented that a closet could not be rented for 50 yuan, the price being at least 120 yuan.”
“This design is really thoughtful! Knowing you’d have to squat to cook noodles, they smartly place a toilet right here, complete with a door!”
“Here’s another place for 500 yuan rent combining living room, bedroom, kitchen and bathroom all in one!” Complete with cardboard box bed in the entry. “There’s a simple induction cooker for cooking, but it’s a tight squeeze for anyone a bit larger, though there is an exhaust fan. This stove is too far from the toilet. It’s inconvenient to cook while you are using a toilet, but when you shower you can easily stir fry at the same time.” No AC, but the landlord said they could add it for 200 extra yuan rent…
Of course, those exciting bed-in-toilet apartments are only available to people who can afford to pay any money for rent. Many can’t. “There are also groups known as Knights of the Bridge Underpass. In big cities, you can deliver food without renting a place. We found a bridge where several delivery guys and girls live.”
We’ve covered problems with youth despair in China before, including both the “lie flat” and “let it rot” movements.
“How do you deal with water and electricity?…First you can use water from public toilets, but this water is only for washing and laundry, not drinking.” To be fair, they show sinks in public toilets, so I imagine that’s where they’re getting their water, but it’s China, so who knows?
“Drinking water is bought from villagers nearby.”
“Electricity can be sourced from the batteries of delivery ebikes, which are rented for 300 to 400 a month. You can swap many each day, then connect an inverter to the battery you get 220 volt household electricity, and that solves that problem.” (220 volts was evidently standardized by the nationalist government in 1930.)
There’s a video blogger who lives in his solar equipped van, and he seems much better off than any other housing option covered in this video.
“It’s not just Shanghai. Nearly all major Chinese cities host these workers, often labeled as a low-end population. These include delivery workers, ride share drivers, factory or construction site laborers, or college students from out of town.” During America’s industrial boom, working in a factory allowed you to buy a house. Thanks to China’s factory boom, factory workers can enjoy living under a bridge.
“Working odd jobs, they hustle in every corner of the city, typically working over 10 hours a day without a single day off. The city’s prosperity doesn’t touch them. Their daily focus is simply on earning more money.”
The situation is slightly better in Beijing, which has 3 square meter apartments for 2000 yuan, and Shenzhen offers “urban villages” (I think we’d call them apartment complexes) with 1 bedroom apartments for 700 yuan a month.
In Guangdong, the so-called “Shango Gods” have completely given up on life and just live under bridges.
“The unemployed crowd together both men and women in an area filled with unbearable odors.”
“They work one day and rest for a week. A day’s pay can be 200 yuan, enough to sit in an Internet cafe for a week. They eat steamed buns, buy three or four to last the day.”
“In many cities, there are many of these so-called Shango Gods who have completely given up on life. ‘Already seeing no hope. This kind of life is actually pretty good. Wherever you go, just find a place to lie down and don’t think about anything, because no matter how hard you try, without connections it won’t work.'”
America is hardly free of homelessness or tiny apartments. But America’s homeless population is overwhelmingly mentally ill alcoholics and drug addicts living off handouts whose plight is catered to by a Homeless Industrial Complex that rakes off graft pretending to help them, not able-bodied young people willing to work but unable to afford even the meanest accommodations. And the smallest New York City apartments you can find on YouTube all look lightyears better than the horrors seen in Shanghai.
Communists have long bragged about working for the proletariat, but in Communist China, the actual proletarians have been reduced to living under bridges.
There more you start poking around online, the more you turn up reasons why China is screwed.
The first installment in this series was popular. Well, there’s a lot more reasons why China is screwed.
It’s screwed all the way down.
First up: Demographics:
Takeaways:
Remember all that talk of an “Asian Century?” Yeah, not so much.
“China will soon run out of people.”
China’s population pyramid is about to shift from a huge bulge of people in their prime earning years to one where that bulge is disproportionately elderly.
“Everything that made China what it is today has relied on a large, young, and productive workforce. Now, that workforce is about to succumb to biology just as every other generation has in every other country, ever.” Their demographic dividend is running out.
“China’s working-age cohort grew from 58% of the country in 1978 to 74% in 2010. But in less than twenty years, the UN predicts that number will be roughly back where it was in ‘78. By then, China will have twice as many seniors as children under 15.”
“Per capita wealth remains low, on the level of Mexico, the Maldives, and Kazakhstan. That means this mass of retirees won’t just contribute less to the economy, but will also require immense financial support — the kind China’s fractured pension and healthcare system isn’t remotely prepared for.”
“Unfortunately for China, the One-Child Policy has set the cultural expectation firmly at one.”
Replacement fertility: 2.1 children per woman. China’s official fertility rate: 1.6. “Yi Fuxian, a scientist at the University of Wisconsin-Madison [estimates] the true number at 1.18.”
“China’s preference for male babies means that between 2020 and 2060, there will be roughly 3 single men for every 2 single women.”
“China’s 2020 Census, [tallied] 14.65 million births the previous year — the lowest level since 1961.”
Japan, which is also aging, provides a best case scenario. “With a median age of 48.6, Japan is the 2nd oldest place on earth. Today, its share of the world’s manufacturing exports has fallen from 12.5% to just 5.2. Japan did not fade into global irrelevance. It’s still a great power. But it never fulfilled what once seemed certain: its rise to rival the U.S. as a superpower. And it never will.”
That’s part 1. Part 2 focuses on China’s out of control property market:
It starts off talking about the ghost cities, especially Ordos.
“Ordos does have an interesting story to tell. Just, not the one you might expect. The missing context, at the time, was far stranger than what the unimaginative pessimists concocted: Nearly all of these half-finished homes have owners — the vast majority of which have no intention of ever moving in.”
“All over China are millions of empty, some unfinished, but almost universally sold homes — not just in far-flung corners but also in Beijing, Shanghai, and Shenzhen. Over one-fifth of all urban homes — 65 million in all — sit vacant.”
China relied on “a surplus of cheap labor, which means, by definition, wages are low. You can only compete with the entire rest of the world for so long — and neither do you want to. Low-value manufacturing has long since moved South, to places like Vietnam, Laos, and Bangladesh.”
All the long-hanging fruits of infrastructure spending have already been built.
“Individually, Chinese consumers really don’t spend very much — just 32% of GDP — less than half that of the US, and far below countries like Japan and Germany. Worse, this number has actually been decreasing over time.”
“Chinese consumers are spending, but only on one thing, something not considered ‘consumption’: houses!”
China’s home ownership rate “is among the highest in the world — 90% — to much of the developed world’s mid-60s. It gets much weirder, still. If you can believe it, the majority of recent purchases have been 2nd and 3rd homes. In 2018, for instance, 87% of new home buyers already owned at least one.”
“Because the government tightly controls how much cash is allowed to leave the country, Chinese people simply don’t have a lot of options, and of them, housing is seen as the only sure thing.”
Also, given the sex imbalance mentioned above, for men, home ownership = marriage.
“For all of these reasons, prices have risen to extreme levels. In Shenzhen, Beijing, and Shanghai, it takes 40 years of the average income to afford a home.”
Most are bought before construction even begins.
And here’s where the demographics above provide a double whammy. “The majority of homebuyers, meanwhile, are aged between 20-50 — precisely the segment China will soon lose.”
One huge reason for the bubble: Local governments using their control of land to balance their budgets:
They created what are basically state-owned shell companies called “Local Government Financing Vehicles”. They gave these LGFVs free valuable land, which they then used to take out loans that local governments themselves couldn’t. The trick is that because their debt is hidden, local governments appear far healthier than they really are, while at the same time, meeting the quotas set by Beijing. Following the 2008 crisis, LGFVs transformed from a little quirk of its financial system to the backbone of local economies. If these ‘financing vehicles’ default on their loans, or if housing prices fall too steeply, local governments now have just as much to lose as homeowners. If a local government stops taking out loans, it instantly loses over a third of its revenue, causing a different kind of doomsday. So while the central government may direct local officials to control their debt, the best they can really do is feign cooperation.
Flu Manchu only temporarily halted home price rises, and they’re still soaring.
“Solutions are far too costly to assume their implementation.”
There are a lot more videos of China suckage, but I’ll have to split this up and get to those another time.
Only recently did I learn the word Chinesium, a much needed neologism describing the crappy, subpar metal that cut-rate Chinese manufacturers build their products out of.
So what happens when you build skyscrapers out of Chinesium? This happens:
Engineers were inspecting a skyscraper in southern China on Wednesday, a day after it triggered widespread panic when it suddenly began shaking, as people took to social media to ask if shoddy construction may have been to blame.
Shoddy construction? In China?
The 1,000-foot SEG Plaza in the southern city of Shenzhen near Hong Kong began swaying in the early afternoon on Tuesday, prompting people inside and those on the streets below to flee.
Emergency management officials quickly ruled out an earthquake as the cause of the wobble in the tech hub’s Futian district.
Officials said no further movement had been detected and experts found “no safety abnormalities in the main structure and surrounding environment of the building.”
The building had stopped shaking by the time people were evacuated, state media reported, and the plaza remained sealed off.
Building collapses are not rare in China, where lax construction standards and breakneck urbanization over recent decades has led to buildings being thrown up in haste.
You don’t say. It’s cut corners all the way down.
Poor construction standards are often linked to corruption among local officials, most recently after the collapse of a quarantine hotel in southern China last year.
As opposed to that corruption among national officials reporters aren’t supposed to mention.
Completed in 2000, the tower is home to a major electronics market as well as various offices in the central business district of Shenzhen, a sprawling metropolis of more than 13 million people.
The building is named after the semiconductor and electronics manufacturer Shenzhen Electronics Group, whose offices are based in the complex.
It is the 18th tallest tower in Shenzhen, according to the Council on Tall Buildings and Urban Habitat skyscraper database.
I’d never heard of Shenzhen Electronics Group, AKA Shenzhen Fine Made Electronics Group Company Ltd., which doesn’t necessarily mean anything. There are lots of fabless semiconductor manufacturers in various vertical markets I’ve never heard of. Bloomberg says they have 899 employees. So why do they have a website that would have looked ancient even in 2005?
Hopefully their semiconductors are better constructed than the building they work in.
Chinese authorities last year banned the construction of skyscrapers taller than 500 meters (1,640 feet), adding to height restrictions already enforced in some other cities such as Beijing.
Sounds like Chinesium may be a widespread problem in China…
