Xian is a city almost exactly in the middle of China. It’s the capital of the Shaanxi province and is a relatively large city having about 8 million inhabitants. The majority of the population live on the flat lands that surround the city centre rather than in the city itself and have been farmers for hundreds of years. However, Xian and it’s surrounds are experiencing a massive housing development boom. Housing is probably the wrong adjective as what’s being built are massive high rise blocks of flats and they are being built by the hundreds of thousands of units.
Outside of the city the villages are low rise, one family, brick or breeze block built houses but many of these villages are now completely uninhabited or as near as damn it. Western culture and influences have infiltrated the general populace over the last 20 years or so and with the growing prosperity of China and the Chinese as a whole the young people don’t want to work on the farms anymore and are leaving the outlying villages to move to the city.
A typical Xian region 'village' - picturesque isn't it?
The picture above is of a typical outlying village. Half, if not more of the buildings are empty, there appears to be no planning within these villages just a jumble of buildings erected in a slip-shod manner as required. When this is compared with new purpose built apartments within, or on the edge of a bustling city, which are all marketed in a manner that would never be allowed in the USA or Europe (not just mere advertising ‘puff’ but blatant lies and the overriding impression and promises that if you move to one of the new apartments your whole life will change to mirror those of the people you see in western TV, films etc.,) the temptation to move becomes irresistible. Apart from that, who wants to toil the soil when you can sit on a factory production line for more money?. The youth of central China cannot be blamed.
Here’s the problem however. The first apartment blocks sold and sold quickly. This encouraged developers to build more. The banks were making easy money lending to the developers and more and more banks and quasi-state loan companies wanted to jump on the bandwagon. Finance got easier to source and cheaper. More developers borrowed more money. More apartment blocks were built. Sound familiar? Now the outlying lands of Xian are covered with completed, but empty, apartment blocks, whilst next to these more apartment blocks continue to be built. Take a look at the pictures below. It’s hard to realise the scale from these pics but these apartment blocks are maybe 30 or 40 floors high with floor plates that allow 8 to 12 apartments (or more; a typical family unit in China will be no more than 50m2) per floor.
Just one 'small' development of apartments
And another. See the 'village' in the foreground, it's about to get bulldozed.
More of the same. Note the blocks to the left, completed by completely vacant.
And yet more.
These are just a small snapshot of what’s happening in and around Xian. Look at all the cranes, many of them were stationery. Many of the buildings now, no longer appear to be being worked on. With many of them the obvious question arises, “why are they building those 6 additional tower blocks when they already have 1000’s of empty completed apartments?”. The answer from our guide was that there is much demand. But, when asked what jobs all the people who bought these apartments were going to do, she was a little more unsure. No blame apportioned to our guide and she certainly wasn’t being monitored in what she told us or what she showed us, but I think she hadn’t really thought it through. It’s clear there are far too many apartments. Supply has far exceeded demand.
Now, if this is typical of just one city in China, imagine how big the problem is across the whole of China. The debt that is secured against these buildings, that are just never going to be sold, must run into trillions of $/£/€. In my opinion there is a major real estate bubble in China and we, across the rest of the world, are relying upon the Chinese Government to manage it and prevent it going pop. At present this is being done by the banks (which do what the State tells them) rolling over loans at maturity and/or allowing unpaid interest to accrue. Sound familiar again?
Also, another, perhaps more worrying, thought to consider. If Xian is typical of Chinese cities and the population are leaving the countryside en masse to move to a ‘better’ lifestyle in cities and the youth are not going into farming but onto the factory floor, then who will till the fields and tend the crops? Who will be there to feed China’s massive population in 10 years time?
phillipsontour 