From the Bank of Canada’s Financial Stability Review – Dec 2012.
I thought that was supposed to be heading up.
One of the interesting things we noticed on our recent trip to China were the empty shopping centres. We often ducked into one whilst waiting for trains etc. because they offered some respite from the truly terrible atmosphere outside, and marginally nicer toilets. But they were almost completely devoid of customers. Stores were always well staffed (ridiculously so by Australian standards, but that is true in Japan also), but frequently we were the only non-staff on a floor.
Was it the case that…?
a) We were always in off peak periods. Given the range of times we visited, and the busyness of non shopping centre retail outside, I guess no.
b) The margins are so huge that low rent and wages can be supported by meagre sales? Maybe, but we literally saw ONE sale the entire trip.
c) Its a bubble. That’s the easy answer, but they’re still building, and I get the impression its been this way a goooood long time. Bubbles are bubbles because they pop, and this one has lasted quite a bit too long.
d) There’s some kind of huge subsidy going on between interested developers and the Party, with possibly an element of trophy building. This seems unlikely, but so do the other explanations.
Tugan-Baronovski a revisionist Marxist argued against underconsumptionists that: ‘Absurd as it may seem to “common-sense”, it is yet possible that the volume of social consumption as a whole goes down while at the same time the aggregate social demand for commodities grows…capitalist production creates its own market – consumption being only one of the moments of capitalist production’ cited from Rosa Luxemburg’s critique of his argument https://www.marxists.org/archive/luxemburg/1913/accumulation-capital/ch23.htm Chinese trying to prove him right?
In research published in the Financial Times, Zhu Tian and Zhang Jun argue (persuasively for mine) that these kinds of consumption figures for China are likely seriously underestimated (more likely around 50-60% of GDP due in part to housing consumption being measured differently to standard imputed rents (based only on construction costs and not including land value at all!), household consumption being paid by companies and household surveying method used.
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