China fact of the day

…construction accounts for about 13 per cent of the country’s GDP.

Here is more.


What's Chinese for "bubble"?

Those ghost cities won't build themselves.

I've read some are estimating within a decade or so, the depreciation and maintenance on China's ever-increasing capital investments will be something crazy like >30% of GDP. They are getting to the point of paying each other to dig holes and fill them in again.

They don't DO maintenance. . .

Yes, I've heard that's a huge problem -- used housing in China is supposedly comparable to used cars here in the U.S., rapid depreciation is apparently the norm and buildings can be unlivable after a couple decades.

Once I went to the former Finnish towns in Russia (Karelian towns taken after WWII). The post-1945 Soviet architecture was crumbling. The pre-1945 buildings were standing. Just saying.

Government spending should not count towards GDP. Stupid China, stupid US.


'Government spending should not count towards GDP.'
Of course - building a network of weather monitoring satellites, weather stations, and providing the information through a highly developed communications network involving multiple paths is just a waste of money, thrown down an endless rathole involving federal revenues and federal employees, and has no effect on either GDP nor in promoting the general welfare (a reason for the government to exist, at least according to the document all Americans consider the basis for that government).

Don't like satellites? Well, there are massive government projects and programs involving irrigating much of roughly 25% of a continent to create cities and farm land. And providing them, as in the case of Hoover Dam.

The list is really quite long - don't Americans learn it anymore, filled with pride at what they are capable of doing as a nation?

Damn - 'providing them electricity'

I will offer a provoking counterstatement...

There is a long list of murder victims who actually deserved what they got, be it a bullet or a knife. Many crooks, blackmailers etc. met their demise at the hands of an outraged victim.

Yet it does not mean that murder is generally OK.

Analogically, there is a long list of successful governmental projects, but it is probably outweighed by various Bridges to Nowhere, all around the country.

You must count the entire balance.

Let's count. How many bridges to nowhere can you name?

And as a bonus, how many successful economies with 0% of GDP as government spending can you count?

Department of Education, Stimulus Act, ...

This is like North Koreans saying "The government grows the food that feeds us." It's true, but it's not an argument for how great gov't is.

When you throw out the ~90% of expenditures that were not worthwhle or didn't require state intervention, yes, gov't has done some wonderful things. Now, can we please have it stop doing everything else?

Does anyone know what percent construction was of GDP for, say, America, or any of the European nations in the post-war period?

Or for any other developing country such as South Korea or Japan after WWII.

Ask your mom. She should know - I heard she likes getting gangbanged by construction workers.

I suppose the question to ask is do you want the Chinese to overinvest in infrastructure or overinvest in tradeable goods industries. If there is a recession, excess capacity in tradeable goods manufacturing would be highly deflationary to the world, whereas a real estate property bubble just takes Chinese consumers out the equation, which they are in only marginally anyway.

Roubini has been writing on this for some time. He now projects a 50% chance of a global recession. Optomistic for him.

13%? So what?

What is a global recession? World GDP going down? Seems unlikely.

Roubini is a permabear. So he doesn't make predictions as such. He just repeatedly states that all will be getting worse. Sometimes it does and he gets some more press. When something gets better he simply states that it will someday be worse again.

Totally useless pundit, just like a permabull. Perma-anythings are stopped clocks.

To a Spanish reader, this sounds familiar. Wasn't that exactly the same amount in Spain pre-bust era?

Houses sitting empty and prices falling? Hmmm, maybe China can borrow an idea...

Out of curiousity, what was the figure for the U.S. throughout the 2000s?

Max around 7% I think.

From 1987 to 2007 total construction put in place -- both public and private -- was some 7% to 9.5% of nominal US GDP.

I think China real estate market have bubble. First, urbanization make real estate maket to develop overfast. Second, China savers have limited option to put their money so that they investing in apartments.
Third, the intrest rate is low, so the savers think invest real estate is wise option. when the reserve rate is low, the investment is active. I think China government have reposbility to elimate the bubble, they should formulate policy to prevent the overfast. First of all, they levy the property tax about increasing value, if they do that, those want to invest deline their revenue. Chinese only purchase the aprtment for live, not for investment.

When Paul Krugman and Tyler agree on the future of a country, is it time to worry for this country?

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