China’s Property Bubble and Ghost Cities
Things have been busy for me recently, so apologies for another light week of posting. I hope to get out some more self-generated analysis later next week.
This video provides a good illustration of the Chinese property bubble. To fight the bubble China has implemented a series of price controls, enforced by the state-run capitalist nation. Laws like banning the purchase of multiple apartments, obligating proof of one to five years of tax payments in the city, requiring higher deposits, and the introduction of property taxes. The irony of all this is that an officially “communist” country is experiencing the same type of price-bubble crisis that afflicts advanced capitalist countries.
In fact there was a similar type property bubble in the U.S. at the beginning of its heavy-industrialization phase with the California gold-rush. Even prior to that, during the colonial period under Britain, the East coast experienced a similar property bubble where wealthy Merchants and petty-Nobles from European nations established mini-fiefdoms from Maine to South Carolina. Effectively forcing the working immigrants to become serfs by purchasing large swaths of land and charging ridiculous prices for land they and government had only recently just stolen from Native Americans.
This bubble of course ensured these new large landowners an abundant supply of cheap labor forced to work and pay the prices they set, kept individuals from holding land and thereby gaining autonomy, and further accelerated the development of cities where artisans and skilled professionals could live and buy housing more freely than in the countryside.
The lesson in all this is property bubbles are an intrinsic part of capitalism. Present at its earliest stages, and as shown in 2010 America, persistent even throughout the late phase.