by Zain Jaffer
One of my staff recently returned from a quick vacation in Southern China. After some discussions with him to get updated on what is new there, it turned into a nice discussion that also made me recall my own experiences of Asia’s rising dragon.
Much has been made about China’s real estate problems. After they decided to spend a lot of capital to modernize their cities and towns, they now have (according to my staff) a lot of well built infrastructure. Modern bridges and roads everywhere. No graffiti and trash on the streets except for the occasional sighting which he said was rare.
Drive across former empty fields which used to just be forests and crops. These are now dotted with literally hundreds of thirty to fifty storey skyscraper apartments or office spaces.
One thing that took my staffer aback, which he did not really think about, was the size of the population in their cities. Guangzhou for example is smaller than Beijing and Shanghai, yet it has 80M people in the city. Let that sink in. 80M people in one city. There are hundreds of towns and cities with huge populations that dot the country.
The skyscraper designs are ultramodern and rival any of those in New York, San Francisco, Los Angeles, Tokyo, Dubai, and other global capitals. Their shopping malls are ultramodern too, particularly in the bigger cities. People are driving around in foreign cars, or local cars like Geely, BYD, Great Wall, and other brands that Americans don’t know about, but feature the latest designs and technologies such as self driving capabilities.
Southern China is not where the coal plants operate. Those are more up north in the colder regions. The air is much cleaner in Southern China as compared to Shanghai for example.
China’s young people are not from Mao’s era who just toe the official party line all the time and wear the same Mao jacket. Although their Internet is censored to block US sites such as Google, Facebook, and others, they have their own sites like Baidu (search), Alibaba (ecommerce), and the like. While ordinary citizens do not generally criticize their government like we do here in America, occasionally the government listens to their people’s mass grievances, such as when they revolted against further quarantine measures.
China has a lot of problems. Because of their one child policy that only ended a few years ago, their retiree age population is growing and there are less than adequate numbers of working age young people to replace them.
Then there are their real estate issues with too much debt fueled construction. You’ve probably seen Youtube videos of empty cities with lots of buildings that have to be blown up. Already their major real estate developers like Country Garden and Evergrande have become bankrupt.
Their debt to GDP ratio is even worse than the US. However just to prop up their stock market they have had to inject liquidity in 2023 and likely this 2024.
China’s growth is beginning to slow down as expected for a country that has grown exponentially these past few years. They have tried to find new growth by investing in friendly neighbor countries through their Belt and Road Initiative and their own development bank.
We cannot write off Asia’s dragon. It will remain a major global superpower for decades to come.
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