RE: [Futurework] China and growth

[Harry Pollard]

Arthur,   Thank you – I’ve archived it.   Last year, when I first heard about Chinese wall-to-wall skyscrapers, I didn’t believe it.   When I checked I was astounded.   Now, if only they would follow Sun-Yat-Sen’s philosophy and institute land-value taxation.   Taiwan did until they became prosperous.   Harry   ******************************** Henry George School of Social Science of Los Angeles Box 655  Tujunga  CA 91042 818 352-4141 ********************************     From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On Behalf Of Cordell, Arthur: ECOM Sent: Wednesday, October 19, 2005 10:22 AM To: FUTUREWORK (E-mail) Subject: [Futurework] China and growth   For Harry P.     NEWS Hunger for homes drives a building frenzy in China 19 October 2005 International Herald Tribune Move over, New York. 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 will happen 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. China's real estate market is so hot that miniature cities are being created with artificial lakes, and the nation's nouveaux riches suddenly seem eager to put down as much as $5.3 million for a luxury apartment in skyscrapers with names like the Skyline Mansion. For decades after the Communists took over in 1949, there was relatively little housing construction or office building. But since the early 1990s, Shanghai and other Chinese cities have been making up for lost time. And this year the building boom is at a frenzy, with the country expected to lay down the finishing blocks on a record total of 440 million square meters 4.7 billion square feet or more of construction. "There's no doubt what is happening in parts of China is on a scale we've never seen before," said Richard Burdett, professor of architecture and urbanism at the London School of Economics. "But more importantly, it's the fastest pace of development in the past 50 or 100 years, for sure." In Beijing, the remains of an old Taoist temple now stand in the middle of the parking lot of a new mall more than twice the size of the Mall of America in Minnesota, once the world's largest. Big developers are acquiring huge swaths of prime land in the largest cities to build huge residential campuses with kitschy names like Cloudland Water Manor, Eastern Venice, Palais de Fortune and Skyway Oasis Garden. Such developments dwarf anything being built today in the West. "I'm working on a master plan for a 46-kilometer riverfront area," said Robert Egan, who runs a landscape architecture firm in Beijing called PlaceMakers. "Scale like that doesn't happen in the U.S." It is not uncommon to see a residential development with 10, 20 or even 30 identical high-rise apartment buildings clustered around sculpted green spaces and artificial waterways. For increasingly wealthy Chinese, the American dream of a home and a yard has grown into visions of a French-style villa with a community lake, a town square, a post office, a hospital, a cinema, a church, a hotel, a shopping mall and, of course, a power plant. A top-of-the-line unit at one development project has a 10-hectare, or 25-acre, palm-shaped artificial lake that brochures say will feature docks with berths for private yachts. Prices are soaring. Luxury apartments in Shanghai and Beijing with names like Rich Gate and Home of the Tycoons now sell for prices comparable to those of some high-end properties in New York. Rising prices have created a circus-like atmosphere in parts of China. Real estate fairs are mobbed, land speculation is rampant and some poor farmers dream about converting their wheat fields into the next Beverly Hills. Prices have risen so fast over the last few years, and the pace of building has been so furious here and in other large cities, that the government and some leading economists have been warning that there could be a huge property bubble in China. The building boom is a principal reason that China is searching around the world for energy and natural resources. It needs the raw materials to build new cities and the energy to power them. That is helping to drive up world commodity prices and threatening global environmental damage. China's heavy reliance on coal to power its overcharged economy has already made it the world's second-largest producer of greenhouse gases, after the United States. And the World Health Organization says China now has 7 of the world's 10 most polluted cities. The construction boom is also beginning to wipe out what little is left of the old China, alarming historic preservationists. As the world's most populous country, with its 1.3 billion people, rapidly modernizes and urbanizes, producing millions of new homeowners, its social and economic fabric is being fundamentally altered. China's housing rush is being fueled by low interest rates, huge inflows of foreign capital and generous bank lending practices. But the boom is also being driven by a set of landmark government housing reforms from the 1990s that for the first time since the Communist revolution in 1949 allowed Chinese to acquire their own homes rather than live in government housing. As a result of this privatization, thousands of new residential projects are rising in the bustling coastal provinces. Sprawling satellite towns and luxury villa developments are sprouting in what was once farmland. And this may be just a suggestion of what is ahead. China expects 75 million more farmers to migrate to cities over the next five years, amounting to one of the biggest mass migrations in history, according to CLSA, a brokerage house specializing in the Asia-Pacific region. "China's demand for housing is just getting going," said Andy Rothman, an analyst at CLSA in Shanghai. The boom is most evident in the largest cities. Beijing, which will be the host city for the 2008 Olympics, is now draped in construction projects that are straining water and power supplies. Every big city now seems to have plans for a central business district. And every big housing or villa project seems to have a Phase 1, 2 and 3. "Everyone wants to build a Manhattan," said Jun Xia, a principal in the Shanghai office of Gensler, a leading global architecture and design firm. "In China, I say 'smaller, smaller' and the clients say 'wider, wider.'" Some of the greatest financial rewards have been going to the country's new real estate tycoons, people like Pan Shiyi and Zhang Xin in Beijing, and Wang Shi in Shenzhen. A property tycoon in Tianjin, Sun Hongbin, once served a two-year prison term for embezzlement but now graces the cover of magazines like China Entrepreneur. It is not surprising that in a country where 170 metropolitan areas have more than a million people each, according to government figures, everyone seems to want to be a developer. State-owned oil and steel giants, automobile companies, shipbuilders and even Communist Party newspapers are creating real estate subsidiaries. The developer of the Fortune Residence in Shanghai, a high-end property, is a subsidiary of People's Daily, the propaganda arm of the Communist Party. And China Central Place in Beijing is being developed by Guohua Electric, a local power company that for 50 years has occupied land in an area the city recently designated as its new central business district. Guohua's new real estate arm is now building a $1.2 billion complex that consists of three high- rise office buildings, a 170,000-square-meter shopping mall, 1,300 luxury apartments, two five-star hotels and a manmade lake and river walk. Foreigners are also scrambling to enter the Chinese real estate market. Goldman Sachs and Merrill Lynch have invested in Chinese real estate, and Morgan Stanley has acquired about $400 million of commercial property this year in Shanghai. The city says it now has more than 4,000 skyscrapers buildings 18 stories or higher and that is far more than New York, according to Emporis, a global real estate research group based in Germany. Also looking into investing here are Simon Property, one of the world's biggest retail developers; Triple Five Group, the developer of the Mall of America; and the Japanese real estate executive Minoru Mori, who is spending nearly $1 billion to build one of the world's tallest buildings, the 492-meter, or 1,614-foot, Shanghai World Financial Center in the city's Pudong business district. In the scramble to reallocate land and create boomtowns, China has spent much of the past decade demolishing millions of old homes and buildings and relocating tens of millions of people, many of them against their will. But more serious dangers loom. The Chinese government is concerned that soaring prices might overheat the economy and even threaten social stability. It moved this year to impose new taxes and other measures aimed at cooling off the property sector. Housing sales have slowed since June. But in recent months, real estate construction has picked up steam again, according to UBS. And that growth is again bolstering demand for energy and raw materials. China is already the world's largest producer and consumer of steel, cement and coal. In his report, "China Eats the World," Rothman, the CLSA analyst, predicts that in the coming years "the Chinese dragon will stay very, very hungry." Few if any analysts expect China's housing boom to fizzle soon. The economy is soaring, incomes are rising, Ikeas and Wal-Marts are popping up in second-tier cities, and tens of millions of people are giddy about the prospect of owning their own home, driving their own car and adopting a more modern lifestyle. "You know, for a half-century, nothing was built in China," said Jun Xia at Gensler. "Now there's a lot of excitement and demand for new houses, and excitement about a new way to live." ------------------------------

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