加拿大外贸
Summary------------
Urbanization is not a free gift for economic growth. A city without competitive industries is an empty shell and doomed to failure. Borrowing money to build a city may create a temporary boom. After construction, if it doesn’t have competitive industries to pay off
the debts, it merely leaves behind a debt crisis and a ghost city.
China’s existing system encourages the formation and growth of unviable cities. They depend on debt–funded construction per se to survive. As the credit bubble begins to deflate, they are suffering. They demand more funding to continue the same path. More loans merely delay the adjustment and lead a bigger debt crisis later. Instead of focusing on continuing the construction boom they should shift to developing competitive industries.
China should focus resources on developing cities that are increasing competitiveness. This path will lead to the rise of 20-30 mega cities where most people live and work. This is the efficient path. Megacities are resilient due to diversity in competitive industries and
reap economies of scale in employment creation. The often citied disadvantages associated with megacities like congestion and pollution are design and management issues, not inevitable.
Urbanization isn’t a free lunch
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The economic slowdown has led to a search for growth opportunities. Urbanization is being raised as a possibility for China’s economy. It could be, but not in the context being discussed. China’s growth in the future depends on raising productivity. Urbanization, if structured efficiently, could help in that regard.
Urbanization as an untapped resource is not available. When one travels through the countryside, it is apparent that old folks and children dominate. There isn’t a big and untapped source of workers in their prime available for migration. The maximum source of labor available for migration is the children growing up to join their parents who already work in cities. It may add 1.5% to the existing urban population, similar to the natural growth rate in many countries and hardly a torrent requiring massive resources for building new cities and expanding existing ones.
The National Bureau of Statistics reports that China has 9.8 billion square meters of property under construction in October, of which 4.8 is residential. China is building oughly 50 Hong Kong’s. Comparing it to the requirement for urbanization, overbuilding is apparent. So it is high risk to pursue urbanization per se for juicing up GDP growth.
It would lead to bigger debt crises down the road.
Tier 3 cities are yet to succeed
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The 2008 stimulus catapulted a massive construction boom in tier 3 cities. Property developers poured funds into them, believing that the lower land prices was an arbitrage opportunity relative to tier 1 cities. The land sales revenues pumped up their fiscal revenues and increased local purchasing power for properties. For a period the
arbitrage seemed working. Unfortunately, it was a self-fulfilling bubble. As the funds inflow slows, the purchasing power declines too. This is why the property sales in tier cities have dropped so dramatically.
Some local governments blame property-tightening policies for their troubles. But, such policies are not in force in tier 3 cities. If one looks closer, lack of competitive industries are to blame. Why would people pay lots of money for a property in a city without good
job opportunities? Chinese villages are like small cities anyway. The housing has no cost there. So, if one is left without much to do, staying in a village is a better choice.
Small cities must survive on some industries that are competitive in the global economy. That is how such cities in Europe or the US survive. Some cities are merely company towns, depending on a single company. When the company loses competitiveness, the whole town loses viability. This is why there are ghost towns everywhere.
Living on building city itself is building ghost cities to begin with. It is happening in China because the financial system is government owned and credit allocation is heavily influenced by political considerations. Still, if there is enough money to build a city, how
would it survive afterwards?
The future of urbanization is megacities
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In the productivity-led growth, megacities could play a key role. Economies of scale, i.e., one plus one is more than two, is like a free lunch. It is well understood in manufacturing. The development of a car may cost one billion dollars. Its profitability depends on how big the sales are relative to the development cost. This is why auto manufacturers have to be very big to thrive. Hypermart is an example in service industry. Warehousing all the goods for household demand in the same store creates economies of scale in shopping. Infrastructure is the ultimate example in economies of scale. A highway system, for example, can accommodate more cars than if the roads are not connected.
Big city has a bad reputation. Experts often criticize its shortcomings like congestion, pollution, and socially alienating. These criticisms don't explain why big cities keep becoming bigger, while small cities struggle. People choose to live in big cities because they are better off there. The only barrier to entry is high property price. Of course, high price partly reflects insufficient supply. From social justice perspective, the government should accommodate people's desire and increase supply to lower price and to accommodate more people. It is unfair to keep people out through limiting supply.
Megacity with over 20 million in population each is the future of urbanization. As I argued before, a small city must rely on a few competitive companies to survive. If they lose competitiveness, the whole city goes down. It is a high risk model for urbanization. A megacity has a diverse economy. When one part loses competitiveness, the city can absorb the loss. Over time, new competitive businesses rise up. This is why big cities tend to come back again and again. The size is its insurance.
Job creation cost, i.e, capital expenditure per job, is inversely correlated with the size of a city. The economies of scale in infrastructure formation and the market size for division of labor are the key factors in lowering cost for employment creation. China must boost household income to balance the economy. It means less money for investment. To make more out of less, focusing on developing megacities is a way out.
The big city diseases like congestion and pollution are really design or management problems. Big cities per se don't bring such problems. When 20 million live in a city designed for five million people, the problems become serious. This is why policy intensions are so critical. If a government is against megacities, it won't support designing a city for 20 million people. When so many people show up, the city exhibits the big city diseases. The critics of big cities then point at the problems and justify their criticisms. This is a vicious cycle. The Great Tokyo has 30 million population. It doesn't exhibit big city diseases. If China chooses rationally to encourage and invest in big cities, the country could have 20-30 megacities in the next two decades. They will power the Chinese economy to the pinnacle of the global economy.
Social critics consider big cities cold and lack of compassion. Small cities actually are less friendly. Their closely knit relationship networks keep opportunities to a small group of people. This is a major reason that people gravitate towards big cities. While connections are always important to opportunities, size can leave enough opportunities for those who have no connections but try hard. Magacities, not small cities, offer better social justice.
Towards efficient urbanization
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The property boom has provided finance for virtually every town to build up massively. Urbanization has occurred on money availability rather than efficiency, future viability, or quality of life. As the property bubble winds down, the financing is drying up. Debt crises and unfinished buildings will plague the economy for years to come. In addition to the financial cost, urbanization everywhere has damaged environment severely. It will haunt the country for decades to come.
China has achieved high growth rate in the past decade. It's happened despite obvious waste and inefficiencies in so many areas. Joining the WTO and demographic dividends have paid for the waste and inefficiencies. As China's share in global trade stabilizes and the wage of blue-collar labor rises faster than productivity, neither dividend is available anymore. If the waste and inefficiencies continue, China will face slow growth and inflation. Efficient resource allocation has become necessary even for sustaining 7% growth rate.
As most investment is related to urbanization, improving its efficiency is a necessary condition for the country to revive growth. Creating another bubble would certainly bring calamities to the country, even if it is widely supported by vested interests. The world has changed. If China's policy doesn't change, the economy will remain stuck.
加拿大电商刚从事这行半年，对电子行业不了解，自己整理了些，算是学习，供大家分享，也请大家补充。我毕竟是个文科生，对这方面知识严重欠缺。 DVD:英文全名是Digital Video Disk, 即数字视频光 加拿大电商昨天我把提单复件发给了客户，今天收到了他回信，如下： Dear Nicholas, please send all shipping documents. We will check B/L copy and we will reply ASAP. Thank you Best Regards .........................................
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