Bloomberg is reporting the cost of an apartment in Shenzhen is equal to 43.5 times a resident’s average annual salary. However, they are not reporting the size of the apartment (you can bet it’s not large).
To calculate ‘affordability’ we use the following formula:
Affordable Housing = 3 years of salary (average annual salary)
By that metric, Shenzhen housing is 14.5 times over Affordability.
Welcome to communist fiscal policy—allow large moneyed interests to dominate real estate.
Some professional planners in Vancouver want us to believe this is ‘Vancouverism.’ But Time magazine beat them to it when it accurately dubbed it ‘Hongcouver’ on a cover story in May 22, 1989. Ominously, that story ran 22 days before the Tiananmen Square massacre of April 15, 1989.
‘Vancouverism’ is trying to convince us that we need to live closer together in a more enjoyable environment. Problem is that the towers, here and in Shenzhen, just provide piles of revenue to a select few, while the ‘enjoyable environment’ never gets built. It turns out that real estate money hoarders don’t give a damn about anything except pilling up towering profits.
What tower urbanism begets is land value inflation and housing—in small, cramped apartments—priced multiples over median household incomes. The North American Dream of owning a house on a lot? Of living the modern village urbanism? The classical and west coast tradition of human scale neighborhoods and towns?
Forget it. Vancouverism is a Big City game sold to high-rollers. Including off-shore money from Communist countries.
According to sources in China, Shenzhen now has the worst housing affordability ratio among 80 megacities, just one notch below Hong Kong.
Of course, if you look out of the window pictured at the top of the post, you quickly realize that the concept of a ‘megacity’ is really something to be avoided at all costs.
The ‘livability’ of the streets and public spaces that could possibly be designed at ground level amongst all those cheaply built residential towers is… zero. The places will be in shadow all day, and feel particularly unwelcoming in clouded, rainy days.
In Shenzhen that turns out to be most of the year. From April to October Shenzhen, 22° 32′ N or one degree north of the Tropic of Cancer, experiences monsoons. The rainy season begins in Spring—in April—and continues right through to Fall—in October. Summer temperatures rarely reach 35° C, however high humidity is a problem in this inland city. In winter, the weather office reports upwards of 100 days with at least some fog. Lows hover around 0°C with barely any frost precipitating on the ground.
What Communism in China (and Hong Kong) has failed to deliver is ‘good’ urbanism. That’s too bad, because ‘good’ urbanism is the best way to measure the wellbeing of any political system.
In the final analysis, social functioning, the daily ebb and flow in the lives of the people, tells the real story. And we don’t hear stories like that coming out of Communist China.
Communist economies tend to overbuild as high ranking officials make bold strokes to meet quotas and win approval up the chain of command. Shenzhen is no exception, and certainly not exceptional.
It’s just big… Too Big. But not too big to fail.
China’s mixed brand of Communism—ruled by oligarchs, provincial governors, and the politburo—is both over-building and underperforming as it manically spawns millionaires and billionaires. Just ask Jack Ma.
The Covid shock that was unleashed from Wuhan’s chemical weapons laboratories—a 12 hour drive north of Shenzhen—is about to put Beijing’s Communist formula to the test. All over the world reports are of nations and peoples turning their away from doing business with Communist China. People are looking at the labels in the products they buy to avoid buying ‘Made in China.’ Western corporations are likely to take note as hedge funds, mutual funds, and other investment vehicles follow the trend by offering ‘communist free’ investment opportunities.
A new Cold War is being fought on the ground, trying to contain Covid infections. And it is being fought in the most powerful boardrooms as corporations attempt to relocate supply chains out of the communist sphere. Australia, Canada, New Zealand, the UK and US are collecting and sharing intelligence on Communist China under the 5 Eyes policy. Discussion is underway to invite Japan to join the group. When the process of de-coupling from trade with Communist regimes completes, the trade imbalance with China will likely correct, removing from Beijing its vast accumulations of foreign capital.
Even so, China’s communist system is likely to limp along as long as the vested interests of the moneyed few keep the money presses turning. However, Xi’s Road-and-Belt initiative is reported running into problems over capital flows. As the trade taps dry up, this trend is likely to deepen. Belt-and-Road nations are in the Middle East and Africa. Oil does not hold the strategic imperative it once did, so making inroads into the Middle East comes at a discounted advantage.
And there is deep distrust for China in India. The Indian subcontinent stands poised to make the most of a western reversal with Communism and China.
Keep in mind that Russian communism imploded like a gas can as the Cold War was ramped up during the three Reagan-H.W. Bush administrations.
The mafia that is now in control of what remains of the USSR looks a lot like China.
That is the BIG problem in China.