Urban planners and would-be “creative cluster” designers should take heart: in China, designing a walkable faux English village will attract huge amounts of… Wedding parties.

Thames Town is a development in Shanghai’s western suburbs that is designed to look like a replica of an old English village. The fact that it’s completely fake (there’s an empty, giant Church in the middle) doesn’t seem to really bother anyone involved in the photography bit. It’s one of approximately nine such developments (there’s a modern-ancient Chinese town in Zhujiajiao, and a Weimar Republic era town somewhere in the north). Thames Town has been in the news as an example of China’s wild property market: barely anyone actually lives here, even though most of the residential properties have been sold.

There is, however, a thriving industry of wedding photography, since young couples are eager to be photographed and photoshopped in an ersatz paradise. A quick scan through the town found that the only open commercial enterprises were a small cafe, and half a dozen wedding photography studios. On a nice day, the place is crawling with couples in kitschy wedding/period garb, and their photograph entourages. Companies that specialize in this charge Rmb4,000-6,000 for a two day photo shoot, which includes transportation and photo editing.

And here, in one shot, we see three separate parties:

Taxes while living overseas are a pain, though not quite to the extent of motivating renunciation of US citizenship. Still, I sympathize with some of the arguments made in this NYT article about more American expats giving up their citizenship and going completely native. More significant than a double tax on certain levels of income (seriously who earns over USD91,000 per year anyway?) is access to financial services. While living abroad this can be quite difficult, since most US financial institutions don’t seem willing to accept wire transfers in foreign currency, requiring instead that bill (or tax) payments come from a US account. This would be a nightmare if one didn’t have an account open in the US (which can be done, especially for young expats by pretending to, for all legal purposes, be unemployed at home with your parents). Saving money in any meaningful fashion is also difficult, since expats living abroad are still subject to US capital gains taxes, and it’s often too much of a headache for foreign/multinational institutions to report offshore assets to the IRS.

The answer? Keep the blue passport, go native, and marry a local. It is fairly easy to turn a foreign spouse (here in Asia, usually a wife, for whatever reason) into a tax haven to the tune of several hundred thousand per year. You do have to trust them quite a lot but if managed correctly there is financial gain *and* you get an exotic and classically feminine partner who can boil noodles in the kitchen for you. Yes I’m suggesting that US tax law motivates some part of yellow fever. For women, I hear Latin American is a popular destination to find full of joie de vivre masculine types. They can probably launder money too.

$$$

“… what impact will banning third-home-purchases on credit have on the world’s second largest economy? If that’s what China is relying on, there are some serious structural issues.” Though I understand the situation is complex, and metrics applied elsewhere may not be applicable in a context like China, here’s some more evidence for the ‘bubble’ crowd: Zhao Xiao, a professor at Beijing University of Science and Technology, estimates that, among home buyers, at least 40-50% are doing so purely for investment purposes. He’s quoted in this article, citing a survey which examined residential energy usage statistics, and concludes that:

• There are at least 65 million empty apartments in 660 cities throughout China.

• This translates into (assuming 100 square meters per apartment) 6.5bn square meters of unused space.

• That’s enough to essentially add three more Shanghais to the country without batting an eyelash.

• The amount of space, the report notes, is equal to 7.7 times the amount of property sold in 2009, and 11.3 times the amount of new space constructed.

If this is accurate, it would seem that orgies of new construction all over the country are merely a drop in the bucket, when examining aggregate, unused space. There’s a good long term argument that this space will be soaked – 65 million units is enough for, say 190 million people, which is about equal to various estimates of China’s long-term floating population of migrants. The question of whether or not they’ve settled within the cities is extremely relevant, in determining how fast this excess space will be used up. There does appear to be considerable retail demand for decent living space, though price currently deters these people from buying into nicer properties. If incomes continue to rise, however, it’s simply a matter of time until there’s a break even point.

That said, the break even point could be a decade from now, and if structural investment does not shift, the housing boom seen in the last decade may very well have represented a tremendous waste of resources.

赵晓表示，根据国家电网利用智能网络在全国660个城市的调查，发现大约6540万套住宅电表读数连续6个月为零。“以每套住宅平均100平方米计算，65.4亿平方米的空置商品房相当于2009年住宅竣工面积的11.3倍，这相当于2009年住宅销售面积的7.7倍，说明中国当前住房空置率远比想象的严重，也说明一些有钱人正用大量资金在房地产市场上兴风作浪，不断激化社会矛盾，炒房大军明显已经成为加剧我国房地产市场疯狂的毒药。”

The State Council just issued new regulations, in an attempt to curb real estate speculation and rising property prices. As of today, major property developer stocks are down about ~9%, with the broader index down approximately 5%. Conservative estimates coming from brokerages indicate that, if none of the regulations are altered, property prices will fall about 30% by the end of the year. Details on the regulations: down payments on first homes was raised from 20% to 30%, on second homes from 40% to 50%. Loans for second homes must be at least 110% of the benchmark interest rate (first homes can still be purchased with a 20-30% discount, so long as the down payment is 40% of the purchase value, making the new rules even more punitive than they seem at first glance for anything but a first home purchase). Loans for third home purchases have been completed suspended.

These rules were obviously meant to address concerns that many were using real estate purely as an investment tool, buying apartments and having them sit, empty, without even putting them on the rental market. Having written previously about concerns of a housing bubble, the really interesting thing will be to see how much of a recession this move precipitates (caveat: the term “recession” will be tossed around here if year over year growth approaches 8%). The high GDP numbers, and recent real estate price climb certainly motivated this move – it’s not often one sees regulators poking at bubbles, especially when the consequences could be so problematic. In the long run, constantly rising house prices would have been very damaging for social stability, so it’s a positive signal that authorities are trying to be proactive. This may end up illustrating, however, how very difficult it is to pop asset bubbles, assuming they can even be accurately identified. From the outside looking in, it’s fascinating, and how things play out over the next twelve months will shed light on several open questions: the composition of a lot of recent infrastructure investment and actual levels of urbanization/retail demand for housing.

Meanwhile, well-off poor local friends are losing money hand over fist, when all they wanted to do was settle down and marry a nice lady. Boo.

There was a story at FT China, 中国私募业的“红色贵族,” (“Chinese Private Equity’s ‘Red Aristocracy’”) which not only was blocked but also seems to have been removed from the site completely. The English version is still up and accessible here, “China: To the Money Born.” A copy of the Chinese can be found at GFWBlog. It covers how party officials’ sons are beginning to set up private equity funds, seeking to cash in on the spate of deals that are becoming available as formerly state owned firms undergo restructuring. That de facto Communist royalty is getting involved in mainland PE is unsurprising, everyone is. In fact, the group structure of many large firms here mean that even clothing retailers are getting involved with mutual funds and securities companies, approximately equivalent to the Gap Capital Management (ah China). Still, these individuals are high profile, though someone apparently doesn’t want to much attention being focused on them at this juncture. From the article:

“Private equity is a very good area for princelings because with these sorts of connections you can get into companies ahead of their IPOs and make a lot of money in a short space of time,” says Professor Victor Shih of Northwestern University. “It is an easy way to make money because everyone will be willing to back them because of their connections. Everyone will do it willingly in order to potentially get favours from senior leaders in return.”

… But the constant jockeying for position within the party behind closed doors in Beijing is set to intensify as the next big leadership transition approaches in 2012. Some analysts say the private equity activities of the more aggressive younger princelings could be used by political enemies as a weapon against their parents.

One could argue in defense of this sort of nepotism, since private equity is as relationship driven as anything is here, and these guys, quite reasonably from their perspective, see the most opportunity there. The articles are more interesting as an example of exactly what is blocked. Since the Chinese version isn’t available, even behind a VPN, it means that the FT removed it, potentially after a suggestion from the Ministry of Truth.

Normally, journalism that focuses on economic/financial topics can get away with more in terms of potentially sensitive topics. Magazines like Caijing built their reputations on pushing these boundaries. At times, though, someone hits a soft spot.

China’s 1Q GDP is coming in at 11.9%, [insert normal caveats about data reliability and statistical methodology here]. One important basic note is that Chinese GDP measures YOY, rather than quarterly changes – given a ‘worse than an average 1Q09,’ this isn’t quite as eye watering as it may seem at first glance. Still, impressive overall. It is questionable whether this represents a paradigm shift, as I suspect mainstream accounts will take this number and the recent trade surplus and conclude that China is already moving away from fixed investment as the primary source of growth. Digging deeper: this article breaks down the components; a few notes: consumption is up approximately 2.9% YOY, which will no doubt provide support to China enthusiasts who argue that the mainland is capable of quickly moving from a fixed investment driven economy to one based upon consumption. This increase, however, includes industrial purchases (much like industrial saving is lumped in with household saving, which skews total saving statistics). Fixed income investment is also up 3.2% YOY: more luxury concrete apartments.

A lot of reporting has focused on how the central government is backing out of further stimulus, after last year’s orgiastic fit of new construction. What’s often ignored is that a lot of the money earmarked in 2009 will actually be distributed in 2010, since a lot of the new projects were long-term fixed infrastructure investments. Banks aren’t in the clear yet, and for the next several quarters stimulus driven fixed income investment will continue to be a major component of explicit growth statistics.

It seems like everywhere one turns evolutionary psychology arguments are running rampant (at least in the land of pseudo-intelligentsia literati). People eat this stuff up – they are great conversation starters at parties (“did you hear that monkeys like watching other monkeys bang on drums while…”) – and an extremely effective means to bring up otherwise taboo topics with would-be friend-with-benefits (“say, you know, it feels real good if someone tugs on your hair like this. That’s a conditioned response from thousands of years of…”)

Rather than shed light on human behavior, popular press reports on these topics seem to draw a lot of their appeal from the fact that mainstream evo psych arguments allow perfectly respectable publications/people, like the NYT Magazine, to publish articles about vanilla rape fantasies, which they might not otherwise be so inclined to do. The fact that there needs to be intellectual cover to discuss otherwise taboo practices is itself a more interesting comment on human behavior.

That’s not to say that some of these arguments aren’t valid: I don’t know, I’m neither an evolutionary biologist nor an anthropologist. Neither are 90% of the other peddlers of this material, however. These arguments are instead used to provide cover for, say, vain metrosexual dieting fads that allow modern interpretations of vestigial lifestyles to take on very modern conceptions of machismo. Sure our distant ancestors might have hunted mastadons and ate lots of berries. They also had very short life expectancies.

Many of the objections seem blindingly simple: why are some gay men be enamored with rape fantasies, if the appeal stems from female survivability in an era of common violence? It seems more likely that people find agency-free boning very appealing. Or, if us v. them tribal mentalities really are to blame for an inherent fear of foreigners, why does the modern definition of national and ethnic identification often expand to millions (or, a billion over here) of people. Deeply ingrained tribal loyalty would extend to, at maximum, 100-200 people, suggesting that modern political systems could only function among competing groups of angry-Michigander militia. Obviously the interaction of cultural and biological factors are at work in any type of social organization, though the popular sci evo psych arguments are much more absolute, and their authors rarely attempt to navigate any tension between the two.

So, dear readers, here’s the challenge: use absolute evo psych arguments to answer as many questions asked of you as possible. For example, respond to “what are you having for dinner” with “given thousands of years of my ancestors living in a tribal context my ancestors needed to rely on the women of the group to provide daily sustenance in the form of fruits and figs. So get in the kitchen, woman, and forage me some fruits and figs.”

Your logic will be irrefutable. The NYT might even come and quote you.