Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

China Blue Book Admits its Economic Growth Rests on Real Estate
The Epoch Times ^ | 11/01/10 | Gao Zitan

Posted on 11/09/2010 4:22:02 AM PST by TigerLikesRooster

China Blue Book Admits its Economic Growth Rests on Real Estate

By Gao Zitan

Epoch Times Staff

Created: Nov 1, 2010 Last Updated: Nov 1, 2010

Real estate, not industrial expansion, has been the key to China's rapid economic growth in recent years, claims a report published by the Chinese Academy of Social Sciences on 25 Oct. 2010.

The “Blue Book of National Competitiveness” explains that China achieved its economic growth in the past 20 years not through upgrading its industrial capacity, but through the consumption of resources and expanding investments, especially the extensive expansion of real estate development.

The report points out that China’s current industrial structure is uncompetitive, something, it says, that should be rectified immediately.

Chen Pokong, a prominent commentator on China’s economy, believes the statement is valid. “For the past 30 years, China’s ‘reform and opening up’ policy has actually been an approach with high input, low output; high cost and low efficiency.”

Economic growth has relied on the manufacturing sector, consuming vast amounts of resources and energy. Growth will have difficult to sustain with such a poorly efficient model, Chen argues.

This is compounded by pervasive corruption: local Party officials’ collusion with real-estate developers and the construction of face-saving projects that end up unusable have created a “huge bubble” in the economy, Chen said.

Real estate prices are thus driven up, making housing often unaffordable for the middle and white-collar workers. “After adjusting the real estate development output, China’s economic growth is very doubtful,” Chen said.

Dr. Cheng Xiaonong, an economist living in the U.S., says that over the last two decades, China’s economic growth came from two sectors: civil infrastructure investments (including real estate) and exports.

However, over the past six or seven years, exports didn’t grow all that much, and domestic consumption has dropped to 30 percent of GDP. To boost the figures authorities resorted to wasteful real estate development and infrastructure investment, like new office blocks for Party officials, and myriad reservoirs, dams, and highways, Chen said.

“Tens of millions of vacant houses is a waste,” Chen says, adding that the ceaseless construction has polluted the environment and wasted energy and resources on a massive scale. ”It also made China’s economic growth lose the best opportunity for economic restructuring. China’s industrial competitiveness actually did not improve,” Cheng said.

Taking the long view, both Cheng Xiaonong and Chen Pokong say that China’s current economic growth trajectory is unsustainable, the economic structure will become increasingly deformed, and problems will only worsen.

The authors of the Beijing Blue Book, however, are much more optimistic. The authors say that China is full of potential, is gradually becoming one of the strongest countries in the world, and makes the prediction that by 2050 the country’s overall national competitiveness will be second to that of only the United States.

The Chinese Academy of Social Sciences is the leading ideological institution of the Chinese Communist Party. Part of its purpose is to propagate Party viewpoints and policy from a scholarly perspective on a range of social issues.


TOPICS: Business/Economy; Foreign Affairs; News/Current Events
KEYWORDS: china; economy; realestate

1 posted on 11/09/2010 4:22:04 AM PST by TigerLikesRooster
[ Post Reply | Private Reply | View Replies]

To: TigerLikesRooster; PAR35; AndyJackson; Thane_Banquo; nicksaunt; MadLibDisease; happygrl; ...

P!


2 posted on 11/09/2010 4:23:11 AM PST by TigerLikesRooster (The way to crush the bourgeois is to grind them between the millstones of taxation and inflation)
[ Post Reply | Private Reply | To 1 | View Replies]

To: TigerLikesRooster

Well, I hope that works out for them.


3 posted on 11/09/2010 4:23:18 AM PST by ClearCase_guy
[ Post Reply | Private Reply | To 1 | View Replies]

To: TigerLikesRooster

We are 800 billion in debt to China.

I believe OUR real estate is their answer.


4 posted on 11/09/2010 4:24:05 AM PST by Loud Mime ("A question? What is it?" an interrogative statement used to gather knowledge.. Airplane!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: ClearCase_guy

Yeah, I’m not liking the sound of that....


5 posted on 11/09/2010 4:24:50 AM PST by onona (dbada)
[ Post Reply | Private Reply | To 3 | View Replies]

To: TigerLikesRooster

So they went from manufacturing to a real-estate bubble in five years?

Maybe they can find a leader like Barrack Obama, and then get rid of him, and finish the whole thing in a couple of weeks.


6 posted on 11/09/2010 4:32:18 AM PST by proxy_user
[ Post Reply | Private Reply | To 1 | View Replies]

To: TigerLikesRooster

That isn’t good. Then they will have similar, if not worse, problems.


7 posted on 11/09/2010 4:32:49 AM PST by redgolum ("God is dead" -- Nietzsche. "Nietzsche is dead" -- God.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Loud Mime
We are 800 billion in debt to China.

I believe OUR real estate is their answer.

Ben Bernanke has a better plan, he'll just print up $800 Billion.

8 posted on 11/09/2010 4:33:22 AM PST by ninonitti
[ Post Reply | Private Reply | To 4 | View Replies]

To: TigerLikesRooster

Signs of an internal power struggle, IMO.


9 posted on 11/09/2010 4:36:30 AM PST by 1010RD (First Do No Harm)
[ Post Reply | Private Reply | To 1 | View Replies]

To: 1010RD

The last line says it all:

“The Chinese Academy of Social Sciences is the leading ideological institution of the Chinese Communist Party”

This just screams of a planned economy. Sounds like the free market experiment was to successful to the and now they want to exert control again.


10 posted on 11/09/2010 4:53:18 AM PST by jimpick
[ Post Reply | Private Reply | To 9 | View Replies]

To: jimpick

Their economy has been planned all along. That’s part of the problem.

They don’t have a credit bubble in RE like we do, but a cash bubble in RE. Too much cash.

I think this is a shot over the bow to try and burst that bubble. It comes from one party organ, although many party hacks are in RE.

Even those who are seen as “free-market” over there would be classed at best as moderate Dems over here.


11 posted on 11/09/2010 5:00:26 AM PST by 1010RD (First Do No Harm)
[ Post Reply | Private Reply | To 10 | View Replies]

To: TigerLikesRooster

It sounds a lot like Houston Texas circa 1980 or thereabouts


12 posted on 11/09/2010 5:04:19 AM PST by bert (K.E. N.P. N.C. +12 ..... History is a process, not an event)
[ Post Reply | Private Reply | To 1 | View Replies]

To: 1010RD

Yes it has been a planned economy for the most part. Still some are more free than others, I think this is nothing more than a way to exert control over some of the freer class. But I am not there and only get my info from our flawed media.


13 posted on 11/09/2010 5:05:06 AM PST by jimpick
[ Post Reply | Private Reply | To 11 | View Replies]

To: jimpick

Just BIG GOVERNMENT doing whaqt it does best—waste taxpayer money.


14 posted on 11/09/2010 5:52:57 AM PST by SC_Pete
[ Post Reply | Private Reply | To 10 | View Replies]

To: Loud Mime; TigerLikesRooster; Candor7; proxy_user; ninonitti; jimpick; 1010RD; SC_Pete; bert; ...

We are 800 billion in debt to China.

I believe OUR real estate is their answer.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
China shows Idaho how it could run the state

http://www.mcclatchydc.com/2010/09/03/100123/china-shows-idaho-how-it-could.html


15 posted on 11/09/2010 7:17:41 AM PST by Whenifhow
[ Post Reply | Private Reply | To 4 | View Replies]

To: Whenifhow

American companies like Bechtel used to rule the world. This is very depressing.


16 posted on 11/09/2010 8:08:48 AM PST by SC_Pete
[ Post Reply | Private Reply | To 15 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson