There are over 64 million empty apartments in China. There are numerous Ghost cities.
64 million apartments should populate 180 million people. If you take the current Chinese population of 1.3 billion people, this means that current vacant apartment accounts for 13% of the population. The current population growth in china is around 0.5% per annum, which means that this stock of empty apartments can be sufficient to support population growth for the next 20 years, even if construction comes to a complete halt.
The commodities bubble that we are all witnessing today is also a result of the Chinese housing bubble. The Chinese government and also the newly created rich people in chine are creating a huge demand for commodities, from Iron to Gold and Silver.
The inflation that show its head in China is a result of the trade surplus and the pegging of the Yuan to the US Dollar. I wonder if they can tame inflation, so far, they did not succeed.
What will happen when this bubble burst? Maybe the government will be overthrown?
In the meantime, many people are hurrying to call the US "a dead cat" and welcome the new wonder of China. I think differently. Let's see:
- They talk of debt compared to GDP just like they talked about it in the 40's. In fact, the debt as part of GDP in the 40's was much higher, and still, US dominance was maintained.
- In the 70's Soviet Union was said to gain dominance after it grew GDP "double digit" for many years. See where this ended up. One journalist even gave it a date: summer of 1971.
- In the early 80's in the wake of the great inflationary wave, they said the rule of the the anglo-saxon America is over, that power will shift towards S.E. Asia, and that gold will reach 3500$. Yeah right. They got all three wrong.
- Surely we all remember what people said about the US in the beginning of the 2000's, after the tech-bubble.
- Many more incidents dated back to the early 19 century that I could find in Google news archive.
I think that those who hurry to eulogize the US, will probably have to wait another 100 years. With all the bad things that come with the US, I don't see any replacement in the current business environment – Not the EURO-Zone countries with heavy debts and lack of will to work (PIGS countries for instance), and not the Chinese with their exploding housing bubble, lack of rule of law and communist government.
The American way will probably last another century, or at least till the next time they say it should end.