Chinese Cargo Cult Mimicry: If We Build It Will They Come?

China is building a replica Alpine village in a grimy industrial city.

It hopes the chalets in the southern city of Huizhou will be sought after by homesick Europeans.

The village will be a £5.7billion copy of Hallstatt in Austria, complete with artificial lake. Posing as tourists, the Chinese have been photographing every building there for three years. _DailyMail

Hallstatt, Austria on Lake Hallstatt
Chinese developers have built other duplicate towns, based upon villages in the UK. Now a Chinese developer has gone to extraordinary lengths to mimic an Austrian mountain village, down to the boards on building exteriors. Something tells me that the Guangdong version of Hallstatt will not provide that same fresh, brisk, clean feeling as the original.

...at the Chinese site, in the city of Huizhou about 100 miles north of the border with Hong Kong, there is little to indicate that the copycat version will ever approximate the beauty of the original.

A few low-rise buildings are in the early stages of construction, their frames covered with bamboo scaffolding and green mesh. Cranes and trucks moved around the area Friday dodging workers carrying steel construction elements.

Though the area is hilly, there was not an alpine peak in sight and the waters of a nearby lake - apparently the faux Lake Hallstatt to be - were green and murky. Instead of mirroring majestic alpine mountaintops, several dead fish floated on the surface. _DailyMail

The Chinese would do better to try to build a cleaner China, where people will want to go to understand both contemporary and historical China. Mimicking ancient European villages projects a feeling of desperate cluelessness and naivete.

First, build a better China, then if you want to build European village replicas, at least the air and water will be clean.

China's Command Economy Builds Toward Ultimate Collapse

Here are two videos on China's Ghost Cities, and excerpts from recent economic looks at China's recent economic growth. Can the growth be sustained, even though it is built upon massive loans and expenditures on infrastructure growth which no one is using? Keep in mind that buildings, bridges, tunnels, towers, and overpasses in China collapse regularly due to shoddy construction and corrupt oversight. All of this spending looks good on paper, but how will it look in 10 or 20 years when a significant portion of the ghost construction will have already collapsed or required demolition?

The last time your editor checked, central planning was not a huge success. According to history, bureaucrats wielding directives over long distances tend to allocate resources poorly.

But are ghost cities a recipe for a bust? Some say no. The Bloomberg reporter, for instance, assures us that China's economics are different -- that is to say, "it's different this time." (Where have we heard that before...)

It is supposedly OK that these ghost cities, built for millions of inhabitants, have only tens of thousands of people living in them -- because all that deserted square footage will eventually be put to good use.

As a bonus, building ghost cities is great for economic growth.

Via running superhighways out to the middle of nowhere, erecting steel and glass towers in the boondocks, China generates new jobs in construction, civil engineering, city planning and the like. All this construction looks fabulous on paper. The ghostly infrastructure gets counted as productive output, and the super-aggressive GDP target is maintained.

But what is wrong with that picture?

For one, there is the central planning problem. Growth and development are free market forces, with signature markings of trial and error. Successful cities are built from the ground up, not decreed by bureaucrat stamp. So how does the government know where a new metropolis should go, or what its optimal size should be?

Then you have the accounting problems. Should the promise of tomorrow be so readily reflected on balance sheets today?

Imagine if a public corporation said, "We are going to grow 20% per year by building idle factories in the middle of nowhere, that no one is going to use for quite some time. Don't worry though, the demand for these factories will show up. We'll make a profit on them eventually. Just don't ask when."

Such a plan would be brutalized by the market, because public companies are held accountable for profits and return on investment (ROI). (At least most of the time -- in bubble times investors will happily suspend their rational faculties.)

The Chinese government, of course, does not have to seek profit in its actions. Or it can measure results in some entirely non-traditional way, via "how many jobs did we create" or "how do the GDP numbers look."

At the end of the day, the "ghost city" mandate is directly channeling John Maynard Keynes, who once suggested digging holes, then filling them up again as a way to put men to work _TaipanPublishing

China’s blistering growth over the last two years were based on massive government stimulus and unconstrained lending from banks. The end result was over-investment in infrastructure and over-construction in buildings, which did not bear fruit for the money spent and offers only a shaky foundation for further economic growth

Moreover, inflation began to accelerate, forcing the Chinese government to curb lending and raise interest rates. In fact, the tightening efforts of the Chinese government in 2011 has taken the lending rate close to 1 percentage point of pre-recession levels and the bank reserve requirement ratio for large banks to an all-time high of 20.5 percent.

The fear is that if China’s growth has been fueled by rampant lending, the slowing down of lending may therefore crash the economy, or at least slow it down. Furthermore, the construction of commercially unviable buildings, many of which remain empty, is economically unsustainable and must stop sooner or later.

The main problem for the Chinese economy is the failure to distribute income to its massive population and cultivate consumption. Before the financial crisis, the Chinese economy relied on exports to the US. In the past two years, it has been fueled by over-investment and over-building.

Investors in the Chinese stock market may have already wised up to the dangers facing the Chinese economy as the Shanghai Composite has steadily declined since late 2009. _IBTimes

via IBTimes

... the recent explosion of domestic credit creation has saved the collapse of China’s economy.

But Duncan is concerned that rapid credit growth could in fact lead to a banking crisis in the mainland. “There could be no more certain way to destroy a banking system that to permit 60 percent loan growth over a two-year period… Every boom busts, China's boom will be no exception."

China has been seeking to ramp up domestic consumption in order to rebalance its economy. It is one of the key tenets of the country's 12th 5-year plan.

However, Duncan says the rate of wage inflation will not be quick enough to allow the Chinese to consume what they produce due to the country’s “adverse” demographic trends.

“There are so many young people coming into the workforce and there are so many people coming from the countryside into the cities that wages can’t just go up very rapidly.” _cnbc

Peter Hitchens tours a Chinese Ghost City

The "Skyscraper Index" and China's Building Boom

Table 1: World's Tallest Buildings

Completed	Building	Location	Height	Stories	Economic Crisis
1908	Singer	New York	612 ft.	48	Panic of 1907
1909	Metropolitan Life	New York	700 ft.	50	Panic of 1907
1912	Woolworth	New York	792 ft.	57	——
1929	40 Wall Street	New York	927 ft.	71	Great Depression
1930	Chrysler	New York	1,046 ft.	77	Great Depression
1931	Empire State	New York	1,250 ft.	102	Great Depression
1972/73	World Trade Center	New York	1,368 ft.	110	1970s stagflation
1974	Sears Tower	Chicago	1,450 ft.	110	1970s stagflation
1997	Petronas Tower	Kuala Lumpur	1,483 ft.	88	East Asian
2012	Shanghai	Shanghai	1,509 ft.	94	China?

Lawrence showed that in almost all cases the initiation of construction of a new record-breaking skyscraper preceded major financial corrections and turmoil in economic institutions. Generally, the skyscraper project is announced and construction is begun during the late phase of the boom in the business cycle; when the economy is growing and unemployment is low. This is then followed by a sharp downturn in financial markets, economic recession or depression, and significant increases in unemployment. The skyscraper is then completed during the early phase of the economic correction, unless that correction was revealed early enough to delay or scrap plans for construction. For example, the Chrysler Building in New York was conceived and designed in 1928 and the groundbreaking ceremony was conducted on September 19, 1928. "Black Tuesday" occurred on October 29, 1929, marking the beginning of the Great Depression. Opening ceremonies for the Chrysler Building occurred on May 28, 1930, making it the tallest building in the world. _Mises

China is building 44% of the 50 skyscrapers to be completed worldwide in the next six years, increasing the number of skyscrapers in Chinese cities by over 50%, says Andrew Lawrence, an Asian property analyst at investment bank Barclays Capital.

China is already host to six of the 15 tallest, completed buildings in the world, according to the Council on Tall Buildings and Urban Habitat, at the Illinois Institute of Technology in Chicago.

..."The appetite in China for high-rises, in the last five years and the next five, is bigger than ever before in the history of building," says Silas Chiow, China director for Skidmore, Owings and Merrill, the U.S. architectural firm, founded in Chicago, responsible for the Burj Khalifa.

The firm is currently engaged in 50 China projects, including the tallest buildings in eight separate cities.

Chinese government officials believe high-rises "show their progress in terms of urbanization and modernism," spur wider development by boosting investor confidence, and symbolize "a city's desire to become modern and international," says Chiow, a Chinese-American based in China for the past 15 years. _USAToday_via_ImpactLab

China's Secret Financials

First, a disclaimer. My name is Valerie. I am Mr. Al Fin's domestic android. But since Mr. Fin has gone missing after meeting with representatives of the Obama campaign, I have decided to practice my blog-writing skills in his absence. Mr. Fin might not approve, but then he isn't here, is he? Mr. Fin hasn't written about China in a while so I think I'll post a quick one on that topic.

A lot of conventional analysts think that China's booming economy will save the world from the big credit crunch in Europe and the US. But they are not thinking clearly, even for them. China thrives on exports to Europe and the US. Without big orders from those places, China's economy is in trouble.

"A significant slowdown in US growth will hit emerging markets in general, and China in particular," Michael Pettis, professor of finance at the University of Beijing, said.

...He also said that "I don't believe the government is in such a strong fiscal position as many analysts believe," explaining that Chinese provinces and municipalities were probably hiding debts not shown in national accounting.

Total government debt, he said, was more likely more than 50 percent of gross domestic product -- far higher than the 20-30 percent given by Chinese officials.

"With global and domestic conditions apparently trending lower, it's easy to see a plausible scenario in which spending starts to radically overtake income. Revenue growth is already slowing markedly, while spending is rising," he said. _source

China is a propaganda state. Nothing that comes from official government channels can be taken at face value. You've got to look deeper, and deeper yet.

If the human voters of America choose Senator Obama as their next president, Mr. Fin believes the US economy is in for deep, long term trouble. I've looked at the issues, and processed the numbers, and I tend to agree with Mr. Fin. Humans are irrational. Public opinion tends to swing like a pendulum. Reacting, rebounding, swinging this way and that like a pinball. Silly humans.

Anyway, if Mr. Fin ever gets his human cognition project off the ground there may be hope for them. Otherwise, I wouldn't give you very good odds for the entire species.

Well, I'd better stop here before I get chatty. Mr. Fin hates chatty. Speaking of Mr. Fin, I wonder whatever happened to him. It's not like him to be out of contact for days at a time.

Signing off,

Valerie

What China Will Do to Win

China poses as a rising star in the world of commerce, industry, technology and science. But China's recent stock market scare reveals how closely China's success hangs upon financial and technological achievements in the west. If China were unable to steal, counterfeit, pirate, and reverse-engineer superior achievements of technology and science in the west, how many decades behind the west would China be?

The government believes that, in the next few years, China will surpass South Korea in technical abilities, and Germany in GDP. While China is still a minor player in the world of military high tech, the government is putting lots of money and effort into changing this. Expensive, and long term, efforts are being made to produce high tech items like jet engines, missiles and military electronics. At the current rate of progress, Chinese military technology will match that of the United States in a decade or so.

Strategy Page

In a mad rush to surpass the west, China is poisoning its air and water, destroying and depleting its topsoil, stealing from its trading partners, sending poisoned toys,food,and other merchandise overseas, misrepresenting the size and health of its banks and state enterprises, and becoming the world's leading destructive state computer hacker and possible currency counterfeiter (via N. Korea).

...there is a long record in China of sending government-directed missions overseas to buy or shamelessly steal the best civil and military technology available, reverse engineer it, and build an industrial complex that supports the growth of China as a commercial and military power....The allegations against Chen Jin, of Jiaotong University in Shanghai, are an example of the entrepreneurial approach people take toward industrial espionage and intellectual property theft in China. Chen returned to China after earning a Ph.D. at the University of Texas at Austin. In 2003, China treated Chen like a national hero for inventing China's first signal processing microchip. Last week, Jiaotong University dismissed him, and Chen stands accused of hiring flocks of migrant workers with good manual dexterity and great eyesight to scratch the name "Motorola" off chips and etch in the name of Chen's company, "Hanxin."

Source

Is the government involved in Chinese counterfeiting? What do you think?

The second point is equally important. The piracy and counterfeiting that exists in China is largely the result of a tacit government policy to allow such practices to flourish. China has a relatively comprehensive set of antipiracy statutes on its books. However, little or no enforcement exists, and what fines and punishments do exist serve as only weak deterrents.

The reason for China's tacit sanctioning of widespread counterfeiting and piracy is that the Chinese government is well aware of two things. Counterfeit and pirated goods sold domestically help keep inflation low, and selling these goods internationally creates jobs and export revenues.___Source

Some of the counterfeit exports being sent overseas from China present a significant hazard to the end users.

Counterfeit high-tech items are a growing business, and a growing danger. In addition to computer gear, auto and aircraft components are also being faked. Some aircraft and auto accidents have been traced to the fakes, which makes it a public safety issue. But with the Department of Defense installing counterfeit computer components, it becomes a national security issue. There's also the fear that the Chinese, or some other hostile nation, might get their hands on real computer components, and replace some of the chips with modified ones that will make government networks easier to hack. Yes, it just gets worse.

Strategy Page

China is destabilizing the world's security.

China’s goal is to dominate in all sectors – from the lowest, most labor-intensive sectors to the highest and most advanced technological sectors – as quickly as possible. To accomplish these goals, China must have access to advanced technology. FDI gives China this access. Once the advanced technology is introduced into China, China gains access to the technology. Some of this access is lawful, but much of it is through unauthorized copying, theft, and counterfeiting, all of which allows China to obtain technology transfer without the payment of fees.___Source

China's recent moves into the third world, including Africa, should raise eybrows--particularly regarding the tendency of Chinese consumer exports to be poisoned.

The upcoming Beijing Olympics are a source of pride for the Chinese CCP, but amid all the other rampant illegitimacy, is China hosting a counterfeit Olympics? There is significant international concern over the safety of food and water to be provided by the host country for Olympic athletes and guests. I wonder if the Chinese people themselves are wondering about the future safety of Chinese food and water? No, they're too busy worrying about the present.

China wants to be taken seriously by everyone, including the world's superpower. To accomplish this, China intends to gouge, steal, lie, cheat, copy, counterfeit, hack, intimidate, subvert, proliferate nukes, reverse engineer, spy, and bluster its way to the top.

In the process of its grand strategy, China's people and environment are being poisoned, while the world's environment is sullied. China's pro-proliferation policies and close friendships with state sponsors of terrorism such as Iran and Venezuela, suggests long term plans to destabilize the islands of prosperity within both the developed and developing worlds.

Nothing about the method of China's rise suggests the intent to become a responsible world co-citizen. Nothing indicates a will to create a better world, with prosperity and security for all. Instead we see a Chinese CCP hell-bent to achieve superiority and hegemony in every area--while destroying its own ecology and the ecologies of East Asia. There is nothing admirable or encouraging about China's gutter tactics, its quasi-criminal methods of achievement.

China's CCP government will do anything to win--including destroying its own country, and half the world with it. Is this what George Soros and half the pandering world leadership at Davos and the UN also wants?