China's innovation economy a real estate bubble in disguise?

Btw ... Ontario, Canada tried to do innovation from the top-down via the Mars building. The amount of money they spent in real-estate could have been used to give every person with a Masters/PhD in a STEM discipline from an Ontario University a bag of cash. But the buildings look prettier I guess than seed capital.

Make more of the 'common' inner areas a combination of hydroponics (above) and greenway parks (beneath). Use skylights and/or artificial sun-lamps as necessary/effective.

The city has changed - that's why I dropped an alternate career - to see what newspapers were writing about in the mid-2000s, about China's rise.

Dalian is not unique in this respect. Cities across the seaboard and a select few more inland are all doing the same thing.

But is it a bubble? Yes, it is, but in a strange kind of way. 10 years ago there was one software park with around 12 buildings and a local college. Now, that software park has 30+ buildings, and there are an additional 3 software parks located further from the city center all larger than it.

The industrial development zone was a road with a bar district and a few 24 hour restaurants (many nearby factories operate round-the-clock shifts), a couple of hotels, and several large lots filled by largely Japanese corporations. Now it is a city of 1 million+ itself, a city on the edge of the city.

10 years ago there were also a lot of empty buildings, all of which are now full. When you visited you probably noticed a lot of high-density housing near the newer office and industrial districts. The local government makes around 1/2 of its revenue (highly trusted word of mouth) from land sales to developers, who in-turn make their profit from the workers that fill these hugely subsided commercial buildings, including the cost of the subway and subsidising busses.

What's the core driver for this?

Jobs for educated people from rural areas who have no hope nor desire to work on the farm or in the rural town. Their family will invest all they have on ensuring their child 'makes it' with a stable job at a big-name company in a clean city. As long as the jobs are coming, the city is sustainable.

For Dalian, a lot of jobs have stopped coming over the past 1-2 years (4-5 years ago was boom-time, especially in BPO and ITO) and construction considerably slowed, but these are cyclical. Somewhere else a city is allowing companies to enjoy lower taxes (a lot of incentives in Xi'an, Chengdu, Chongqing for 'soft' jobs where the export is electronic in the form of email and SVN and not hindered by these cities' physical locations), and the boom is happening there, and the city is making money despite the tax breaks it's offering. It's a bubble, for sure, but it's being juggled.

Have you ever tried reading the Chinese media before? It is a step above North Korea's media, but still incredibly twisted.

A commenter below who lives in China and works next to one of these new innovation centers describes it as yet another "ghost mall".

In all fairness, the US economy has it's own version of ghost malls, which is defense spending. We spend billions of dollars on military hardware that just floats and flies around with nothing to do and no purpose except to fight a war that's almost certainly not going to happen in that equipment's lifetime.

Proactively building new cities - inflating their real estate bubble.

Technological innovations - unfair competition/theft of IP.

Government censorship - how terrible! Never mind mentioning any three letter acronyms.

MSM devolved into USSR level propoganda.

Beijing decides that innovation needs to be a key focus for the economy (for face maybe). It announces funding, sets development goals for local politicians, and writes the buzzwords in all new economic plans and development documents. Local developers and politicians read that, and their instincts kick in - they know now that any development that can show "innovation" will get a green light and throw themselves into it head first. So now, any new development that goes on is not "grass roots" or "green" or "core" - it's innovative, creative. So a bunch of pretty standard, low quality office buildings go up, but now they're called 'Creative Parks'. Rent is low for any business that is 'creative'. So local entrepreneurs fill them with creative businesses - fashion studios, wedding photographers, ad agencies, designers. The businesses do well because they are effectively getting direct government support and investment, and because there's no other genuinely creative competition around to challenge them. Innovation all round!

It's a blunt and wasteful approach. It won't necessarily encourage creativity, innovation, new approaches, risk taking. More likely at best it will create a superficial impression of innovative industries, and maybe, maybe that might result in some innovation. This is the China way, and the reason China isn't a global creative or innovative superpower. <Mic drop>

[1]: http://www.jerrypournelle.com/reports/jerryp/iron.html

Yes, they are.

Inequality is worse in China than in most Western democracies. They have more billionaires in Shanghai than New York (rougly, I may not be perfectly correct) and yet still 100's of millions in abject poverty.

Here's the Gini coefficient:

https://www.cia.gov/library/publications/the-world-factbook/...

But this only measures stated wealth, it's much easier to hide wealth as a Chinese citizens than as a US citizen. Ask someone living in Vancouver.