A real estate broker reflects on his trip to China
If the country were to cut public and private construction back 50%, it would throw 20 million out of work
Shanghai at night
Having just returned from a trip to China with the Greater Concord Chamber of Commerce (and 39 of my new best friends) I am still trying to digest it all.
People ask what was the most impressive/interesting thing? Where to start? The Great Wall is unbelievable! How they built it is nearly impossible to imagine. We drove out about an hour north of Beijing (a city of 20 million population, which measures 80 miles wide and 120 miles long!). We “walked” about a mile to a mile and a half on the wall. I say “walked,” but it was really climbing, because this particular section was all steps! It is reputed to be the only man-made object to be seen from `
One night we came out of a show in Shanghai, and I saw a convoy of 24 cement trucks rolling down the street. It dawned on me that I had not seen any during the day. Nor had we seen garbage trucks. So many Chinese are getting cars, and despite massive road-building projects, much of the commercial traffic is mandated to travel at night.
We saw so much construction – not only housing, but roads and all kinds of infrastructures. Some Australian businessmen told us that construction is between 20 and 22 percent of the economy, and it is in a serious bubble, but if China cut public and private construction back 50 percent, it would throw 20 million out of work and put the country in recession. (The Chinese hold $1.3 to $1.4 trillion of our treasuries, so if they were forced to liquidate those to raise cash, it would not be pretty.)
Beyond construction, which was going around the clock, the general pace of business activity was impressive. The Maglev train cost $10 billion and goes 18 miles from downtown Shanghai to the airport. It can't reach maximum speed because there is not enough track to slow down. It is German engineering, but not even Germany can afford it. We were told it requires $6,000 in electricity per hour to run it.
We brought paper masks, but we did not use them. We encountered yellow “fog” almost every day. I do not suffer allergies typically, but my eyes watered and my throat was scratchy. Others experienced more distress.
On our last night in Shanghai, it rained, and the winds blew. The next morning, my son and I got up, opened the draperies in our eighth-floor room and about 10 to 12 miles out we could see hundreds of factories and smokestacks. They were the first ones we really saw. They burn a lot of soft “brown” coal, and thus the U.S. Chamber of Commerce only does its trips in April and October because it is too hot in the summer and too cold in the winter. This past winter was reported to be one of the coldest in 100 years.
Bill Norton, president of Norton Asset Management, is a Counselor of Real Estate (CRE) and a Fellow of the Royal Institution of Chartered Surveyors (FRICS). He can be reached at firstname.lastname@example.org.