CHINESE FORTUNE COOKIES CAN CRACK OPEN WITHOUT A FORTUNE INSIDE
Have you ever opened a Chinese fortune cookie and you were the only one at the Chinese round table banquet with no fortune inside? I have had that experience in China when there were gasps around the table as the Chinese can be very superstitious. Fortunately, I am not superstitious and I shrugged it off. China, at that time, had nothing I wanted. Their exotic banquet ersatz food like bear claws, pickled snakes and strange innards was not up to par with my favorite Peking duck in Bangkok. Moreover, their oil and gas opportunities were singularly unappealing. Years later I did utilize their drilling rigs in Mongolia to explore and produce oil which I sold to China. On the other hand, I had to figuratively take a gun to a meeting in Daqing, China to get paid by the Chinese. By the way, it is not my favorite place and I have not been back since the rather ugly confrontation there. Nonetheless, the $52,700,531 PetroChina owed us was paid in full to the last dollar. When invited to a big Chinese dinner that evening, I decided it was best to leave “Dodge” as that meal could have been hazardous to my health.
My first trip to mainland China was in the early nineties which was my earliest opportunity to get a visa. Everything was quiet and rather primitive in the more remote villages like Nanchang which would have resembled that shown below. Clearly, Mao hats and clothing had been scuttled for more western clothing that could have found its way there from Hong Kong or other purveyors of used clothing.
Nonetheless, even at that time there was a clear direction to destroy conventional neighborhoods throughout China in favor of more modern condominium developments. The image below shows the forced destruction of homes in small villages to be leveled and replaced with high-rise condominiums. In fact, we bought antique furnishings that were placed outside family dwellings before the residents were to be shuttled off to some unknown place with whatever they could carry with them.
Nanchang was recently featured in The New York Times article entitled Once a Symbol of China’s Growth, Now a Sign of a Housing Crisis. Simply stated, the skyscrapers in a former village of thirty years ago represented urban transformation. However, the apartment construction engine got vastly ahead of population growth. Moreover, at some point the former “one child policy” of Chairman Mao flipped the direction of population growth into the other direction. The apartment image below illustrates a scary housing scenario and a lifestyle that would not measure up to that of periods long past. Qilai Shen captured the modern images for the The New York Times.
In the past two decades, the China expansion model was growth at all costs: “Advance eastward, extend southward, expand westward, integrate northward and prosper in the middle.” A prolonged real estate slump throughout China was exacerbated in Nanchang with some 20 percent of homes remaining vacant which is the highest rate of the 28 large and midsize China cities. Although housing prices in the largest Chinese cities rebounded earlier this year, the rate of growth slowed in April. Many of the Nanchang apartments remain empty as the developers do not have the funding to complete them.
Clearly, China’s housing problems are greater outside of the largest cities as overbuilding was more pervasive. In Nanchang there was more construction than population growth could sustain. In the decade prior to the Pandemic, the amount of housing construction doubled while the population increased only 25 percent. Moreover, in more remote parts of the city, prices have declined 25%. The result has been declining values on purchased apartments in uncompleted buildings leaving the developers with inadequate funding to complete the projects. However, some people have taken advantage of the ghost buildings to develop food gardens in the islands outside of the abandoned condominium projects.
Perhaps, Xi Jinping should focus on his domestic real estate problems before he proceeds to acquire more real estate in Taiwan. Clearly, the real estate fortunes in China are no longer contained in the famous cookies.
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