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TW's avatar

I like this podcast, but you've got to stop operating your PC while you're recording. You can quite often clearly hear button presses. Loads of examples but while Hammond is talking at 1:17:15 and beyond, you can just hear these soft button presses constantly. It may be for a good reason but it's super annoying and seems rude.

But keep up the good work! Great guests and interesting conversations.

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Brian Chau's avatar

This one was recorded while I was on vacation so setup is a bit worse. Sorry!

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Brandon Adams's avatar

Samuel seems to trust Western media narratives on China in a way that I think he wouldn't if the reporting was on something closer to home.

On incentives to overbuild housing, this is a real thing, but as far as I can tell there's no epidemic of empty cities. It may be easy to get photos of "ghost towns" because of the way that redevelopment works. Areas don't organically have lower density housing replaced with higher density as demand and zoning rules change. Instead the government condemns an entire district, razes it, and replaces it.

So, until it's done and people have moved back in, it will look empty. My wife's family moved into a new building as redevelopment was nearing completion. The shells of the buildings were all complete, landscaping was about half done, but there were maybe ten other families in the 20+ story building we were in, and most units in the building were completely bare, without even a door. Luckily they neighbored an existing mid-rise district and so still had plenty of shops and restaurants nearby.

Existing residents have incentives to like this model because they stand to materially benefit, at least on paper. They endure a year or two in some form of temporary housing and then are rewarded with some multiple of their existing unit. For example, if you had one apartment in a five story compound, and the government replaces it with many twenty story buildings, the government may grant you four units in the new buildings.

Construction companies probably enjoy the economy of scale in this model of development, on top of whatever direct payments they're getting from the government.

This also moves those important KPIs. So, people that local leaders report to are happy, and the locals are mostly happy, too. People in the West might think that latter part doesn't matter in China, but it does. Complaining about bad local leaders and calling for authorities to intervene is an acceptable form of protest. There intra-party dynamics to consider as well, and the party has a lot of members.

There are certainly downsides: the temporary housing can be pretty rough, consisting of densely packed prefabs with unpaved roads. And of course, not everyone wants to give up their existing home. On one trip I saw police talking down a guy who was refusing to leave a building that was due to be flipped. Going from a one story village residence with an open courtyard to a high-rise condo can be a shock, especially for older generations.

All this could be just a Shandong thing, I don't have much exposure to other parts of China.

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Brian Chau's avatar

I'm told by my friends in family that building housing in T1 cities is still profitable, T2 is around net neutral and T3 or lower is actively losing money at this point, with fortunes also declining for T2 cities. I'll have to relisten to hear exactly how far Sam's case goes, but I would generally agree with the statement "Chinese housing is overextended".

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Brandon Adams's avatar

I think both can be true, that there's a lot of slack in the housing market and that "ghost cities" aren't really a thing.

To be fair to Samuel he didn't really elaborate on what he meant by "ghost cities." I had assumed his comment was informed by a news cycle a few years back that was driven by pictures of an empty Chinese city supposedly constructed from nothing, Brasilia-style. I didn't remember the name, but after having searched it looks like this was Kangbashi, which it turns out is actually a district of Ordos, Inner Mongolia.

Finding out it's a district has me thinking it's likely this was more of a business-as-usual whole district flipping that a Western journalist, knowingly or not, represented as unusual.

Looking at a map, it is tiny for a Chinese city. The urban center is maybe a mile wide. Baidu maps has street view, and it has light traffic consistent with what I experienced in a recently flipped district. The pictures are stamped as from 2015.

The earliest reporting I could find on the project was from 2008, many years before it was referred to as a ghost city. I laughed at learning that Ai Weiwei was involved, representing his company, Fake Design: https://www.nytimes.com/2008/05/01/garden/01mongolia.html

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Anti-Zionist Kahanist's avatar

About 2 hours and 44 minutes in you reference Jon Askonas's piece in Compact about how conservatism cannot exist because of technology. I just wanted to call out that he blatantly plagiarized Industrial Society and It's future and refused to cite Theodore Kacynski as the originator of that idea. In the future you should give credit to Kacynski instead of the intellectual thief Jon Askonas.

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Brian Chau's avatar

I think the two should settle it with a fox ditto on final destination

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