A New Shanghai Apartment: 68% More Expensive Now Than a Year Ago

I heard a rather disturbing story on NPR's Morning Edition while in the shower this morning.

Here is an excerpt of the transcript from National Public Radio (note, the radio version can be heard here):

New figures show that property sales in China jumped 75 percent last year as record levels of bank loans boosted purchases. Property prices rose by the fastest pace in 18 months in December, adding to fears of a real estate bubble. China has been trying to rein in speculation.

One of the places with the fastest rise in prices is Shanghai. A new Shanghai apartment now costs 68 percent more than it did a year ago, according to Knight Frank, a commercial and residential property agency.

In many other Chinese cities, prices rose by 40 percent, the agency says. Now, ordinary people fear they are being priced out of the market, while the luxury sector is soaring.

"Last year, one of my customers arrived in a BMW, lugging two suitcases. Each suitcase contained the equivalent of about $70,000. He said, 'I've brought this money to buy a villa,' " recalls James Zhuo, a property agent for Century 21 who works in Lujiazui, one of Shanghai's most expensive areas.

The coal-mine millionaire from the inland province of Shaanxi was the type of customer who was buying in 2009, Zhuo says.

Read On

68% in one year?! Even (the relatively modest) 40% thoughout the rest of China is insanity. This kind of rapid growth even puts the early 2000's US bubble to shame.

This article does a good job in highlighting how Chinese cities are already absorbing a massive amount of people flowing in from the Chinese countryside. That migration will surely raise demand for apartments in Chinese cities. That is an unprecedentedly large amount of people who'll be coming into the Chinese real estate market in the coming decades.

While saying that, so much of the growth highlighted in the article appears to be fueled by luxury apartment growth. Obviously, rural migrants aren't going to be adding to demand for those kinds of apartments.

To me, any investment or commodity or anything that grows 68% or 40% (or even an amount significantly less than these numbers) is shaky. It screams ponzi scheme or some other kind of predatory sucker operation.

And usually, those kinds of schemes end up doing something like this:

Photo from shanghaiexpat.com

The above photo is of a collapsed apartment building under construction in Shanghai this past summer.

I really want China to avoid anything remotely close to what is going on in the US. Sure, Chinese people alive today have seen things much, much worse than anything going on in America right now. But things here in the US are bad. While things are going well for Qian and me on a personal level, the US as a whole is very sick. I hope China can learn from our mistakes.

Chinese Wedding Ceremony Photos

Qian and I have regretted for the past several months that we had, literally, zero pictures from our Chinese wedding ceremony this past year.

The wedding (not legal wedding, just a celebration... Qian had to enter the US as my fiancee) was video taped, but not photographed. That video of the day is cool (and I realize I still haven't edited that and posted a few clips here... someday), but it'd have been nice to have at least some photos from the event.

The other day, Qian looked at her uncle's QQ page and saw that he had up a gallery of snapshots that he took from the ceremony last August. We were happy to see that he had a number of really good shots.

Here are some of our favorite ones:

Edited out photos here

Qian's dad and me toasting baijiu. Thankfully, I didn't have too much baijiu on this day (I was still hung over from the bachelor party a few days prior). I did have a few shots though. Qian's dad's friends had painted his face. That is a tradition for the parents of the bride.

Memphis and MLK, Jr. Day

Image from blacklooks.com

I'm heading to Memphis, Tennessee for work tomorrow. I'm not going to have to travel much with my job. But the company want me to get to Memphis to see where a majority of our work happens now, right when I'm learning exactly what the company does.

Tomorrow is the national/federal holiday - Martin Luther King Day - in America. Schools will be closed and I believe banks will be closed too. But I, and millions of other Americans, will still be working.

The interesting thing about going to Memphis on MLK, Jr. Day is that Memphis is where Dr. King was assassinated on April 4, 1968. Today, the motel where Dr. King was gunned down is now The National Civil Rights Museum.

I can't imagine that I'll be able to get to the museum tomorrow (we're driving from Kansas City), but I hope I'll be able to make it at some point later in the week. If I do, I'll be sure to write my impressions.

Until then, do yourself a favor and watch this.

Current Affairs

First, this whole Google/China tiff is unbelievable. I'm really intrigued by it and can't wait to see how it plays out.

Getting away from China news though, things have been busy for me recently.

The biggest news in my life is that I FINALLY found gainful employment. I started work at a logistics company in Olathe, Kansas on Monday. It's such a relief to find a good full-time position in this brutal economy.

My re-integration into the American economy has been tough. But I feel like my patience finally paid off. I didn't want to take a job that I wouldn't be happy with. The job that I just started, four and a half months after coming back from China, is a good one that I'm really excited about.

So between the new job, moving into a new apartment with Qian, and the holidays last month, life has been hectic. But a good kind of hectic.

When I have down time, I've begun reading a new book - The Search for Modern China by Jonathan D. Spence. I'm reading this book per the recommendation of Kaiser Kuo in his excellent lecture that can be seen here. If you have an hour at work where you can put on headphones, check this lecture out. I'm already learning a lot from this book just a few pages into it.

I'm missing China and will surely lament being gone during the Spring Festival coming up next month. Saying that, life in America is good. I finally have a job and feel as though Qian and I have taken a big step towards establishing our new life together.

Rising Waters

There is a nice piece on the aftermath of the Three Gorges Dam in The New York Times' "Lens Showcase" blog today (h/t The Don).

Here are a few pics and some of the writing on the pieces:

In all the coverage of the enormous Three Gorges hydroelectric project on the Yangtze River, and the creation of a vast reservoir that has displaced hundreds of thousands of people around his birthplace in Chongqing, the photographer Muge Huang Rong felt the lack of something very important. And personal.

“I saw many images about Three Gorges, but could not find a familiar emotion — one that belonged to me,” said Muge, as he is known professionally. Now 30 years old and living in Chengdu, Muge has just spent four years on “Go Home,” a look at the lives that have been disrupted by the construction of the Three Gorges Dam.

“Home, for me, has too many meanings,” Muge said. “On one side is demolition, explosion, collapse; mixed with noises and flying dust. On the other side is my childhood memories.” This tension is apparent in his portraits, in which people inhabit desolate landscapes. The intimacy of the subjects’ relationships with one another — depicted in embraces, gestures and gazes — contrasts starkly with the rubble and refuse piled in the background.

Go to the Showcase

Really great stuff here.

Cars and Oil

GM announced that its sales are booming in China.

From The Wall Street Journal:

BEIJING -- General Motors Co.'s sales in China soared 67% last year, underscoring the country's importance to the U.S. auto maker as sales sputtered in its home market.

GM has been expanding its share of the fast-growing Chinese auto market and its 2009 sales growth in China was likely stronger than the country's overall auto market.

GM sold a record 1.83 million autos in China last year, the company said in a statement Monday. The auto maker expects to top that this year, though it sees slowing growth. Kevin Wale, president and managing director of GM China Group, "The industry outlook is strong and we expect more growth, albeit on a somewhat slower pace."

China's government gave the domestic auto industry a boost last year by introducing several policies aimed at increasing demand, such as halving the purchase tax for vehicles with small engines. The government partially rolled back the tax cut starting this year, but auto makers say passenger vehicle sales in China could grow as much as 15% this year.

Read On

As I read this news of GM's sales, I also came across this article on an oil spill near my old province - Shaanxi.

From The BBC:

Pollution from a broken oil pipeline in northern China has now reached one of the country's major water sources - the Yellow River, state media say.

Hundreds of workers had battled to contain the oil upstream, but officials discovered traces in the river itself.

The traces were found about 200km (124 miles) upstream from Zhengzhou.

Three counties in neighbouring Shaanxi province have warned people not to take supplies from the river or drink river water.

Correspondents say local towns and cities get some of their water from the river, the rest from underground water sources.

Read On

Nothing too groundbreaking here - economic development mixed with environmental contamination. Looking at China always involves stark contrasts though.

I've been missing China a lot the past several days. Things here in America are cool. But I can't wait to go back to visit China. My first chance will probably be in early 2011.

High-Speed Train Development

China's transportation infrastructure is getting a significant upgrade.

From National Pulic Radio:

Workers are putting the finishing touches on a French-designed, glass-and-steel train station on the fringes of Wuhan, a major metropolis on the middle reaches of the Yangtze River in China.

Inside, the mostly middle-class passengers line up to board the high-speed train. It takes just three hours to cover the more than 600 miles to Guangzhou, China's third-largest city, in the heart of the industrialized Pearl River Delta. That's 10 hours less than the conventional train takes.

While the United States has allocated $13 billion for the construction of high-speed rail over the next five years, China plans to spend $300 billion in the next decade to build the world's most extensive and advanced high-speed rail network.

In the first-class section of the train to Guangzhou, where tickets cost upwards of $100 — almost double the price of second-class seats — real estate company manager Yang Tao and his wife have swiveled the seats in front of them around and put their feet up. He says he's willing to pay extra for a comfortable ride.

"My wife is afraid of flying," he says with a chuckle. "Taking this train is more convenient than going to the airport, with all the security checks. The flights are often delayed and the airlines' attitude is arrogant."

Onboard video screens show off the train's advanced features. In the dining car, passengers eat roast duck gizzards and spicy noodles and watch the terraced fields and factory towns of South China slip past their windows at speeds averaging around 220 mph.

By 2012, China plans to have almost three dozen high-speed rail lines crisscrossing the country. Nearly 130,000 workers are now building the Beijing-to-Shanghai line, which at $32 billion will be China's most expensive construction project ever. The frenzy of construction is at the heart of China's massive fiscal stimulus to revive the economy.

Read On

Wuhan and Guangzhou are not close to each other. At all.


Image from worldtravels.com

There is a high speed train in development between Xi'an and Beijing. The thirteen hour trip will be three or four after the train is built.

This high-speed train development is great. Chinese trains are so crowded now. Adding high-speed trains onto the already running trains is going to make train travel much easier throughout the country. Such development will also decrease dependency on air travel.

Reading about this project reminds me of what the film producer Bob Compton said to me a few months ago, "China's stimulus is building while America's is bailing." America, right now, can only dream of such projects (and honestly, most Americans don't even understand the value of getting away from our car culture). China is actually making their ambitious dreams a reality.