When Crony Capitalism Meets Dysfunctional Human Settlement Patterns

The world’s largest shopping mall/entertainment complex, in Guongzhou, China, is China’s version of “too big to fail.” The developer poured $365 million into this showcase project. It’s beautiful in an extravagant, Las Vegas kind of way. But the developers, inexperienced in running malls, gave little thought to who would shop there, and how they would get there. The place is almost a ghost town. With 7.1 million square feet, it has only 12 tenants. But the Chinese authorities keep the mall open at extraordinary expense. POV has the video story here.

It would be a mistake to underestimate the Chinese as an economic competitor to the United States. But it would be a mistake to assume, as we did with the Japanese 20 years ago, that they can continuing growing their economy at a world-beating without ever stumbling. China is one big Enron. The only thing saving hundreds of large, speculative investments across the country is the opacity of the financial system and the willingness of the government to keep the whole thing going. When confidence in the system collapses, it will be a nuclear meltdown spewing its financial fallout all over the world.

So, add one more unsustainable prop to the American economy. U.S. human settlement patterns are unsustainable due to peak oil. U.S. fiscal policies are unsustainable due to ever-expanding spending and entitlements. And continued bankrolling of U.S. deficits by China is unsustainable due to that own country’s misallocation of capital on a scale that rivals our residential real estate boom and bust.

At least people are living in most of the houses U.S. home builders erected. Many of those glitzy towers on big-city Chinese skylines are empty. How do you say “Potemkin Village” in Chinese?
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14 responses to “When Crony Capitalism Meets Dysfunctional Human Settlement Patterns

  1. In the sailing business they say the very best bilge pump is a scared man with a bucket.

    In China you have 600 million people who are scared to death of being that guy with the bucket. That's what keeps China going.

    RH

  2. Jim,
    I sort of agree with your post, but I think you are linking China's econolmic future too much with that of the U.S. China is a huge trader and has a huge footprint throughout the rest of Asia and much of Europe. Not all of the dynamics affecting its future or those coming from advanced economies such as the U.S. or the Euro Union.
    That dimension makes it harder to say with certainty that CHina will go bust. And (having only been to Hong Kong and the Russian and Kazakh border areas), my guess is that CHina does fit the humongous, cnbetrally-planned mega-apartment-style living options that are anything but sprawl, rely on bicycles or public transit and probably fit the Rissean paradigms although to a degree that mnost AMericans would find awful.

    Peter Galuszka

  3. Peter, I don't know what the predominant Chinese settlement pattern is. I have seen photos of lots of highrise apartment buildings, so, as you observe, there's not a lot of U.S.-style sprawl… yet. (I have read of American-style cul de sac subdivisions, but I would think they are very few in number.) But China is fast developing an auto-centric society.

    The reason I referred to "dysfunctional human settlement patterns" is that, according to the video, the developer did not build the supermall with any way for people to easily access it. You've got to give Disney credit for one thing — they paid very close attention to getting people in and out of their amusement parks.

    It will be interesting to see how well the Chinese adapt their urban planning to the rise of the automobile. Subsidizing the retail price of gasoline is not a positive sign that they'll get it right.

  4. This could never happen in Virgina. The developer would find some way to have his competitors and other taxpayers bail him out — at least to some degree.

    Look at Bechtel and the Tysons landowners. They have Dulles Toll Road drivers paying the largest share of costs for the Silver Line. Also, no one has witnesses a single landowner propose any contributions whatsoever for the hundreds and hundreds of millions of dollars for public facilities needed to support an urban Tysons Corner.

    EMR – You'll enjoy this one. We've seen a shift in the balance between office and residential uses at Tysons. The former is coming up, and the latter is trending down. So much much for "functional" settlement patters. Changes to the intensities listed in the Tysons Strawman 2 (page 27), as compared to the Planning Staff's 7/22/09 recommendations, removed a limit on non-residential FAR resulting in higher intensities for commercial space. This will encourage more office uses instead of residences.

    It would appear that even the landowners and developers don't believe their own rhetoric.

    TMT

  5. I have been to China many times. My company does a significant amount of business in China. for what it's worth, I studied Chinese at UVA 30 years ago under Prof. Gilbert Roy.

    China is as different from the US as Mars is different from Guam.

    China is not a "developing Canada". China is an economically successful totalitarian communist country. The simple freedoms we enjoy in the west so not exist in China.

    In addition, China is a study in contrasts. The "urban cresent" is wealthy by historical Chinese standards. Unfortunately, the countryside is as poor as the worst town on the worst day of the US depression.

    There is no freedom of either speech or press. What you see and hear is what the government provides as "news".

    The liberal love affair with China is an anti-American philosophy in drag. The pro-Chinese, anti-American self-loathers in the US are an embarassment to America and a curiosity to China.

    China is a fine place – so far as totalitarian, communist, anti-American, socialist places go.

    China is far, far away from effectively competing with the US in either economic or military affairs. The American left's love affair with "all thing Chinese" is, at once, naive, misguided and incompetent. The next time a lefty tells you of the wonders of China ask him/her if he/she has ever been to the Poeple's Republic.

  6. Jim,
    I have to agree with Groveton here and unfortunately, his informed remarks throw your analysis out the window.
    You simply can't compare Communist, centrally planned countries with the U.S. "Human settlement patterns" are determined by a local party committee and almost always involve stacking people on top of each other with a train stop nearby. Sure, they may have some "mall" project that goes kerflooey but the comparisons are somewhat ludicrous.
    I know about this since I lived and worked int he Soveit Union and then Russia for a total of six years.
    As for the Chinese economy collapsing remember that they dance to a different tune and can push inputs wherever they want, market or no. The USSR collapsed, but the Chinese model is muich more likely to endure.
    You might be a little more discriminating in the examples you pick.

    Peter Galuszka

  7. two points about China:

    1. – I was under the impression that private-sector Capitalism was superior to centrally planned totalitarianism which according to our conventional wisdom – will fail because govt is at it's root incapable of operating a business.

    2. – if China is so bad then why do they own much of our debt?

    I'm not left lover of China.

    Ya'll know me .. I'm all about asking about contradictions..

    so how do we explain these?

  8. Peter:

    Are you just looking for things to disagree with Jim about or are looking for flies specs in the pepper.

    You are right about differences but those differences are not the critical ones.

    There are many flavors of dysfunctional human settlement patterns. China has one flavor, India has a different one. Japan has a different one as well and so does Russia. But the worst is the US of A.

    Jim Bacon’s observations on the Chinese shopping center is a very good one because it is a clear indication that the Chinese formula is not evolving in a sustainable direction.

    That is true regardless of how the pattern or the forces that drive it differs from others.

    So is his reference to Japans economic trajectory of two decades ago.

    Beyond the settlement pattern dysfunction, the fact that China and India have been promoting unsustainable expectations in their populations is perhaps the most critical point.

    Some suggest that if there was a right to bare arms in China there would have been regime change long ago.

    Others point to the speed of the fall of the Soviet Union when they could not afford the price of military spending.

    It will be interesting to see how China evolves. Perhaps it becomes four or five nation-states?

    The only certainty is that it is on an unsustainable trajectory at this time and the TIGER the current governance practitioners are riding is MUCH lager than the one in the US of A.

    That is true, even if the the settlement pattern is not as dysfunctional to support the population that they have.

    EMR

  9. EMR,
    You are right to point out that I am constantly on the lookout for things to critcize Bacon for. It is sort of a game and he plays it too and can be merciless.
    As I said, I am no expert on China but I can see how a totalitarian government would build a project like a mall for no particular reason (perhaps because someone's nephew was on the local planning unit of the Communist Party). And I think Americans do not fully understand that China isn't exactly a capitalist country. So the dynamics are different to some degreee.
    This can be true as countries go through a post-Communist phase. Yuri Lyzhkov, Moscow's scrappy and powerful mayor, insisted that a gigantic shopping mall be built under the Manezh which is a big square just off Red Square. He just thought it was a cool idea and it turned out to be a success.
    PG

  10. Peter:

    Good example.

    There are a number of people (not thumb sucking liberal types that Groveton dislikes) who point out that in China there are a number of attempts to build innovative Planned New Communities that are not just a bunch of highrise gulougs (sp?) but have Balance, etc.

    The reason I liked Bacons item was that it shows the powers that be — for now — are not all doing smart things concerning major invenstments in that impact settlement pattern.

    From our perspective the settlement pattern issue is what can be seen from 50,000 feet and that is why there is not one iota of difference between Home Rule and Dillion Rule states.

    EMR

  11. China? Look at the Stalinist planning in downtown Richmond. Talk about unsustainable? Look at how much the 'Greater' Richmond Convention Center is costing the City and its taxpayers. Watch as the City taxpayers are forced to support the latest downtown white elephant, Center Stage, while their neighborhood school buildings continue to crumble.

  12. Scott,
    Touche.
    Peter Galuszka

  13. There are many flavors of dysfunctional and apparently only one flavor of functional.

    The odds are against us.

    Rather than trying to build the next utopia, maybe we are better off making th ebest of what we have.

    RH

  14. Speaking of the next utopia…have you read Nader's latest?

    http://www.vagreenparty.org/richblog/?p=456

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