Tuesday, October 18, 2005

OK, so maybe China is growing...

We will be better able to discuss this topic when we cover economic growth next semester, but this NY Times article talks about the booming housing market in China. The key interesting fact is the following:

This year alone, Shanghai will complete towers with more space for living and working than there is in all the office buildings in New York City.

That is in a city that already has 4,000 skyscrapers, almost double the number in New York. And there are designs to build 1,000 more by the end of this decade.

Below is a picture of the skyline in Shanghai. Source: Marginal Revolution

6 comments:

Gregory Bylos said...

All I'll say is that we should all start learning Chinese now, it'll make it easier when they take over the world...

Daniel Hanison said...

It would appear that its great to be in the Chinese real estate business - its obviously the future. I would expect that the labor and material costs are lower in Shanghai and therefore they are able to build more buildings than in NYC at a faster pace.

Gregory Bylos said...

Daniel: I don't think that it's just the fact that labor and materials are cheaper, in fact, because of high demand, materials would prob be more expensive. I think it's just that there is so much money there (for instance because of foreign investment like Brian said) that they can afford to build all these skycrapers. NYC doesn't have a slower expansion rate because of high material and labor prices, it has a slower expansion rate because less big businesses want to build their buildings there...although on second thought what you said could be a contributing factor because maybe less people want to build in NYC because of the high prices, such as property in NYC.

Brian Zabell said...

Well I mean you take a huge country like China and change its agricultural activity from 80% to 50% due to the 1978 reforms and that's gonna be the result.

The Chinese market is a pretty "modern" market now. It is more free to set production goals and have private company ownership.

The smartest thing the Chinese did, in my opinion, was to have an open-door policy for foreign investments, considering its location. I mean, within 20 years, China made nearly $100 billion from foreign investment. That foreign money is what has made China so prosperous now.

There's a lot of in-depth analysis for Chinese economy, but when you pour money into a country with a vast population and large size which has decided to reduce agriculture and increase industrial growth, you result in one very rich country.

Politically this makes some people uneasy but I really doubt China will turn against America considering how much money China makes off of us.

(Changed the profanity :P)

Anonymous said...

China also has the hugest labor market in their back yard. It makes sense that they would be able to construct so many skyscrapers in shanghai, especially since those communists can control that sort of thing. The only question that i would have is how
much they're really spending on all of that steel being used in those skyscrapers. I mean that steel could go toward so many other added value products in other industries. Is shanghai really that attractive of
a city in terms of the jobs it offers in order for such skyscrapers to be built? But then again, i figure quite a few internationals that do frequent business in china might want one of those lofts in a skyscraper. If they really have that much of an immigration into the city, the chinese are being smart as to pile people into these large skyscrapers, because spreading those people out over the land diminishes the land's agricultural use, which is critical to their country's economy. If they don't have such a demand for those skyscrapers, i'm sure there are plenty of realtors that would invest quite a bit of money into those living spaces given the current growth in china.

Anonymous said...

that last comment was by David Wyant, my mistake.