While everyone seems to be stressed over the Chinese Bank loans, have a look at this run of SocGen charts from last week regarding construction activity in China.

The first few are especially bubblelicious:

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click for larger charts

Category: Economy, Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

9 Responses to “Bubblelicious Chinese Construction Charts”

  1. crutcher says:

    Very cool charts. Curious if you think that the term “bubble” is applicable on very long time scale charts? Psychologically bubbles seem to work at much shorter intervals… cement consumption in China is apparently in a century long bubble… and so is the Chinese (for that matter human) population…?

    Also would appreciate a link to the original, esp in light of recent postings making much of the issue.

  2. KJMClark says:

    OK, but you’re comparing a Communist command-and-control economy to a bunch of democracies. These charts mostly tell the tale of a massive, infrastructure-poor country that’s finally come into some money and has a government that wants infrastructure.

    I think the most interesting chart is the “Construction as a % of GDP” – where the US is barely on the map. Sure, the US economy is large, but that looks like a country failing to invest in infrastructure. It looks like a country headed for decline. I doubt the Chinese can keep it up, but it looks like we’re not interested in trying to compete in the future.

  3. ricecake says:

    These China charts are as surreal as they are comical. LOL

  4. ricecake says:

    p.s.

    In comparison, the U.S is almost looking like a goody goody person from these charts. China is one who behaves badly.

  5. Equityval says:

    Actually it seems like we should be worried about Spain. They are a much more developed economy than China. I think these charts say the cajas are a bigger black hole than most have realized.

    The CE market share chart was also interesting. How about that CAT market share? Gulp. Doesn’t look like they’ll be dominating China like they have the rest of the world. Looks like its the every city wants its own _____ company game in China. (you can fill in steel, cars, etc – appareantly we need to add bulldozers and payloaders to the list)

  6. Johnson says:

    China’s spending on fixed asset investment is likely too rapid, and its govt directed lending burst misguided, but these charts do not clearly show that. They earlier imply, as one other observer noted, past excesses in Spain.

    re: the first two charts
    It is well known that developing countries consume more building materials per capita such as cement, steel, copper etc when they reach a certain stage. A better comparison would have been with South Korea, Taiwan, HK, Singapore and even Japan on their trajectories of the past 50 years. This would have shown China’s consumption still on the high side, but closer to past experience elsewhere.

    re: the third & fifth charts
    As a country starting with practically no infrastructure or reasonably functioning building stock just a couple of decades ago, and a population >3x that of the USA, it is no surprise that the total construction market would be larger than that of the US at some point. From this chart it is difficult to say anything about a bubble or not at this stage.
    Eventually, the construction market should be much larger than that of the USA, so the fact that it is just beyond equal size shows that in the long run it should still grow much larger.

    re: chart 4
    It is also well known that India has significantly underinvested in all types of infrastructure and housing all throughout its postwar existence. While it is working to catch up now, that China is only 2% higher relative to gdp actually argues for China’s spending to possibly be reasonable.

    [sorry for not following your instructions on comments]

    ~~~

    BR: Actually, you did exactly what you were supposed to do!

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  8. reedsch says:

    BR, I’m not sure what a bubble will look like in the developing parts of Asia, not that I doubt that it can happen, but it’s just that the metrics may not look familiar to us. For example in Saigon the value of a house is about 70% land, and rents are often far lower than cost to buy ( a buddy is renting a house the owner values at $1 mil for $1K/month). IMHO the herding tendency is also more pronounced (when the price goes up, BUY!), as is the proclivity towards hoarding. Tis possible that cultural value system places a higher value on RE holding than we semi-nomadic types do. The Chinese cities of the interior are now looking quite modern (the main shopping street in ChengDu was packed at 3pm on a typical Wednesday afternoon) but I wonder how much of that will percolate out to the countryside.

  9. [...] Check out these wonderful construction data. (link here) Construction stats for China are way off the charts and these are not in absolute terms but scaled [...]