China’s Economic Growth Looks Strong, Maybe Too Strong

And that largely stems from the fact that Han culture has been mostly stable and very successful for most of those thousands of years. They only got a blip of doubt in their total confidence of racial superiority when American-European culture suddenly lurched ahead economically within the last 200 years. White people earned temporary, grudging status as near-equals by making a colossal pile of money while building massive new empires around the world, while China was busy still being the best China that ever China'd.

The thought in the back of the Han-Chinese mind is that the success of the West is but a temporary condition, and that once the technological gap closes, China will once again be the undisputed center of the world, populated by the best, smartest, and most sophisticated people. There is almost zero self-awareness of their own racism, and barely an inkling of consideration that racism might even be bad.

China is 92% Han. The remaining 8% are largely sequestered in poor regions of the interior, like the Indian reservations in the US, so any city you are likely to visit for business or tourism will be 99.9% Han. And if you are not already Chinese, it is nigh-impossible to gain citizenship without being a full-blooded Han (tragically born into the wrong country) or by marrying a native.

So don't pin your hopes on being able to follow the money if China becomes the dominant global economy.

I’ve taken the HSR many times and the car I’ve been in has almost been empty for much of the way between Beijing and Guangzhou.

Some years ago, I got an investment club to put some of our money in Harley-Davidson, based on numbers that hit our criteria perfectly. Too perfectly. A few months later, the CEO resigned, revised numbers came out, it became clear they'd been more or less cooking the books, and the stock tanked. This happens a lot. Worse, it happens with stock market darlings. Remember Enron?

The numbers are insane. In the US, we move 11x in our lifetimes of ~80y aka 13% of our population moves each year. Apply that average to China and you're looking at 170m migrants annually. And unlike US (a lot of urban to urban), in China there's a gigantic one-way rural->urban traffic, i.e., two people aren't switching urban houses and calling it 'moving', two people are leaving behind a rural home and needing an entirely newly built urban home.

How do you accommodate that many people in new homes. Do you start building homes only after they're needed? Or do you build some capacity at a surplus, to cover expected growth?

Probably the latter. It isn't much different from any company stocking surplus inventory. That's not an immediate indication of a failure of economics and a bubble.

And do you only build in existing popular cities and just try to add to the periphery, or do you build-up new cities? Probably the latter, too.

Plenty of other countries do it as well. Incheon developed very much due to overdevelopment in Seoul. Or here in the Netherlands, we now have close 0.8m people living in so called Vinexwijken. They're a development centered on a new ordinance concerning housing development between 1995 and 2005. Since 1995 our population grew by 1.6m or so, apparently half our growth went to these new locations created out of nothing. And we always have discussions about structural emptiness, big malls being built and remaining 75% empty for years. But the scale is smaller, the country is 75x smaller than China. We had issues with structural vacancy rates at a new 100k 'village', scale that up to 75x and you have a similar story. Yet the biggest ghosttown in China ia Ordos, planned for 1 million people, scaled back and built for 'only' 300k, and currently houses more than 100k and climbing. That's what is consistently called the biggest ghost town in China. For Chinese, both the size of the project as well as the timeframe (10 years of vacancy) is a rounding error.

Don't get me wrong, there's definitely an asset bubble. But we've also been saying that for who knows how many years and I feel we tend to focus too much on symbolism of the ghost town narrative.

This comic describes it very well: https://goo.gl/GAn5fi

BTW, i believe the city in question is Chongqing. But sadly i didn't keep a bookmark of the story itself.

https://en.wikipedia.org/wiki/Chongqing

They actually have more say than you think. And also, the government also has a lot of its own introspection about nuclear, especially after Fukushima. Couple with the huge capital costs, and it isn't a sure thing for China.

> it's worth noting that along with data and talent, there is money - China's dedicated 150 billion USD to AI as part of it's 5 year plan.

Much of the current advances in AI are not coming from federal funding (rather, private companies who are using it). Nor can you expect Chinese academia to soak up that much money and use it efficiently. Again, China has a chance at it, but it is far from inevitable. It is annoying to me when they talk about how their success is a sure thing, the Chinese government used to talk about how they would clean up their pollution problem by 2015 in 2010 because they were going to spend a lot of money on it....