What Would a Property Bubble in China Look Like?

This FT article canvassing the possibility of a massive bubble in China seems to me to mostly demonstrate that it’s hard to know what a bubble would really look like in a very poor country that’s growing rapidly. They have this chart:


But China’s GDP has been growing at 8-10 percent this whole time, so are those crazy numbers? And there’s this:

Chenggong is a new town near Kunming, one of the main cities in the south-west of China. Construction started in 2003 and the results are now apparent in 13 immaculate local government buildings, each clad in marble tiles. A high school boasts an impressive indoor swimming pool and several of the region’s main universities have built large campuses. Pristine high-rise apartment blocks stand in rows, their new windows glinting in the subtropical sun.

The one drawback: at the moment, Chenggong is almost completely empty. Its wide streets are all but bereft of traffic, a bank branch has no customers and leaves collect in the foyers of the municipal offices.

Sounds bad. At the same time, according to James Fallows most Chinese people don’t have indoor plumbing which puts the prospect of overbuilt condos in a different kind of context. When the US builds too many houses in Riverside County or the suburbs of Las Vegas, we wind up with lots of empty houses. If China builds “too many” high-rise apartments then presumably . . . a bunch of people get to move out of crude huts and into high-rise apartments with running water. The rapid growth in China’s building stock could come to a sudden end someday soon and investors might (or then again might not) lose a bunch of money, but I think you’d be hard-pressed to say that all this building in China is a “waste” from the point of view of human welfare. Most Chinese people are horribly poor and could really use more and better housing.