A reader just returned to a trip from China and Singapore and sent me some thoughts. He is American and I believe this was his first trip there so I asked him for a bit of background to understand the prism of what his thoughts on what he saw in China were:
I recently completed a BS in Biology and Education at UNC and am teaching Biology in Charlotte, NC. I went to China with friends and a professor for pleasure, spent time in Beijing and Chengdu, then went to Tibet for two weeks, and then spent time with my professor in his hometown of Penang Malaysia, then traveled to Singapore where I flew to Beijing, then recently returned home.
Reader is originally from struggling metro Detroit area so his comparison of the real estate market was interesting. Here were Josh from North Carolina's observations...
Thoughts on what I saw in China's most livable city and in other parts of China. I can better relate what I felt by comparing to my hometown in suburban Detroit, Michigan. Real estate's downturn and unemployment have I believe led the US since around 2005; the economy was bad long before it was nationwide. I remember counting the number of vacant versus occupied storefronts when my family began to notice changes in 2007. There were more than 50 percent vacancies based on my rather unscientific technique; when I shared this with friends they were disbelieving, until we counted together! Not knowing nor studying much of economics or business, this just struck my common sense as problematic in the extreme.
The confusing thing was what the vacancies indicated to the observer. One had difficulty deciding whether something was vacant, never occupied in the first place, not finished building, or opened but closed for business. It felt like a perennial state of limbo. And I think that is what the bursting stage of a bubble ought to feel like. You look around and see shreds and pieces here and there, and even bubbles which haven't yet popped, and far away someone is blowing a brand new bubble. Confusing. That is what commercial real estate in Michigan felt and still feels like. I don't think that Michigan nor the US have entered a stage of recognition where we can say what happened and why. Thus I am bearish.
Really, Chengdu seemed worse. I couldn't tell what or why I found myself gawking at massive developments at 3 pm in the middle of the week without signs of construction, occupancy, or any activity. These were not mere strip malls but giant commercial, industrial, residential cities within a city. Skyscrapers, street front shops, apartments, malls, many I observed were vacant. The explanation is, these are for future demand. I hypothesize that future demand is exaggerated, if demand has not already peaked. A taxi driver in Chengdu said after we began to discuss Chengdu and China and how they have changed, Life is terrible here but it is all beneath the surface. If you become ill, you might as well kill yourself.. He said there was no health care available. Te term below the surface was something I heard multiple times, including in Chinese blogs I read. On the surface things are great; underneath lie problems.
Also I saw many encouraging signs from China. Primarily I saw a structural vision for the country. While my own country is mired in fixing past transgressions, China is forward thinking and will get what is best for China. I just believe that there is not enough aggregate demand in china's cities to support the massive, breathtaking development I saw there.
A newspaper article in the state published China Daily addressed the recent violent killings in China. The Chinese economist wrote that economically China is in the second of the three stages of development, with the US, Europe, Japan and other developed nations in the third stage. He wrote that the problem is that socially, much of China is in the first of those three stages; that Chinas social structure cannot support yet its economic development. Thus the social problems experienced by China.