2014-09-15

Government Planning Failed, Individuals Will Correct

Below is an op-ed by Gu Jun, a professor of sociology at Shanghai University, talking about the empty residential buildings all over the Chinese coast as a metaphor for the failure of central planning. He closes by tying it to Premier Li Keqiang's reform efforts. This op-ed was the top headline in the real estate section of iFeng's website on Sunday.

The title can roughly be translated as "this bubble is on the even of destruction."

Here's is my incomplete summary (not a direct translation):

This bubble is not in Wenzhou, Ordos or Yulin, but on the shore. It is in Dalian , Yingkou, Qinhuangdao, Yantai, Weihai, Qingdao on the Shandong Peninsula, in Huizhou, Sanya and Beihai in the south, where the "ocean view apartment" is on the eve of destruction. Many rushed in to buy homes, but when night falls there are dark, empty buildings. In 2008, in Weihai, Shandong, homes were bought for more than ¥500,000; today they sell for ¥200,000, but there is little interest. There is a price, but no market.

When insiders describe the chaotic development of the coastline, they give three reasons. The first is that the timing wasn't right, and they "over drafted" the coastline's resources. The second is a lack of good planning; the developers moved as a herd and destructive development followed. Third, there was no core industry support, without a healthy ecosystem it could not continue growing. Valuable coastal ecosystems were destroyed, plans for scenic development fell through, now there is only a concrete and rebar forest, in the still of the night there are only a few lonely lights for comfort in this sad and lonely place.

This so called "coordinated" development, where government makes the decisions instead of independent actors, has turned into uncoordinated confusion. The BATs fly overseas (Baidu, Alibaba and Tencent), there is fake packaging scandals and shoreline destruction. Yet people still believe the government can implement the highest reason, they have a superstitious belief in planning, that government will somehow deliver long-term planning for the good of all society. Government is just another interest group though, and in the race to get promoted, officials pushed development to get ahead.

From the official's standpoint, coastal ecology has nothing to do with me; fishermen, farmers and city residents need for a supply chain has nothing to do with me; scenic development needs what type of development and continuous promotion, has nothing to do with me; if the home buyers can even see the ocean, has nothing to do with me. It is the same with the losses in high speed rail, the world's fastest M2 growth, and the investigation of the "tigers" and "houseflies."

With this background, go back and understand Li Keqiang's statement, "Whatever the market or society can do, will be left to the market or society" and the State Council's powerful push to eliminate administrative approval, it is not hard to understand the meaning. Government and planning are the same as human reason, they are imperfect and flawed, waiting for the spontaneous action of countless individuals to correct.

From iFeng: 这个地方已进入泡沫破灭前夜 住宅楼密密麻麻

Google Transltion below.


Price is up is down around the still undetermined, but there is a place already beginning to see the outcome, that place is not in Wenzhou, Ordos is not, not in Yulin, but around the coast, north of the Bohai Bay in Dalian , Yingkou, Qinhuangdao, to Shandong Peninsula, Yantai, Weihai, Qingdao , to the south of Huizhou, Sanya, Beihai, into the "sea view room bubble" burst eve. Over the years as developers have to chase the coastline, across the crowded residential buildings, has attracted people all over the country scramble to buy a set or several sets a year for a few days also live without sea view room. Today, hundreds of thousands of these large projects on mu, when night fell, no lights, only a building, shaped like a "ghost town." Then hot hot rush also grab a sea view room, now sell at a discount is "There is no market price", Weihai Silver Beach area, the 2008 purchase price of more than 50 million homes, now have little interest in the bid 200,000 yuan "rotten in the hands of" many buyers who shared despair.

When insiders summarize the development of China's coastline chaos, often pointed out three reasons: First, develop timing was not right, premature overdraft shoreline resources; second is the lack of good planning, developers herd, devastating development; third without a core industry support, without a healthy economic ecosystem, not sustainable development. There are also plans, but also for approval, but the final result is still destroyed valuable coastal ecosystems, but not yet built, the expected "tourist resort" and only a piece of reinforced concrete forest, in the quiet of the night by virtue Jizhan solitary, Xingyingxiangdiao.

How unreasonable shoreline development, Seaview much foam, not here concerned, it is worth exploring is that China in the past and pursuing a "planned economy", after the reform and opening up, the government is still firmly clutching the administrative examination and approval and hold both the NDRC, and There the Commission, not to mention the major projects to be approved, even a small business listing also requires repeated arraigned was able to release. It is said that in order to ensure coordinated economic development, in fact, nothing more than a new name of "plan" ideas.

Everything "plan" is nothing more than thinking out of the same belief that government a master, rather than by the independent market players, can guarantee a higher level of overall reasonableness of the so-called "coordinated development." But regardless of shoreline development chaos, or companies listed in the Growth super good BAT (Baidu, Alibaba, Tencent) flee overseas, and false packaging rampant in the country, have proved most stresses "plan" to bring the government last The result is that most have no plans to confusion. This is what reason?

Put a little larger, all believe that the government can achieve the highest rationality who are against human reason over superstition, and believe that a small group of elite thinking can best achieve reasonable results. Know what philosophers have long proven to finite human reason, rather than part of the decision to the people - even if they qualify as "elite" in the title, not as autonomous decision-making so that all individuals, and then compete with each other to achieve resource The most effective configuration.

Put a small bit of all persons superstition plans also believe the government can completely out of the public mind, the long way down in the implementation of public welfare programs, and not like that person only departure from the self-interest of market players do not care about public interests. But now everyone knows that the government itself is a interest groups, ranging from the size of each sector is also of interest groups, so the government decision-making based on self-interest with the common market subject to make a decision, there is no difference in the nature. In the short-term tenure system stimulation, officials either seize the performance, then promotion, or lackluster, watched subordinates become boss. "Even after I die Hongshuitaotian" Louis XIV wisdom impressed how much officials to seize the opportunity to become the highest in front of many local government policy.

Therefore, the coastal ecology of nature formed many years to my business, how many fishermen, farmers, the public need this chain has nothing to do with me, how emerging tourist resort needs to promote the overall development and continuous nothing to do with me, and even buyers include Speculators bought a sea view room can see how much worth of the sea, in order to sell to the future disk access are nothing to do with me, the only relevant within a term of coastline and sea view rooms can create a number of achievements, if not rent-seeking opportunities words: When a public interest bearers vaunted government is actually composed of hundreds of thousands of self-interested individuals or groups composed, regardless of the elite, or rational, or plans, are unreliable, than the average market body more unreliable because mandatory administrative powers to intervene, it insists is completely out of control. "Seaview bubble" coastline prove this point, in addition to individual lines, almost all net losses of high-speed rail to prove this point, the world's highest level of M2 also proved this point, is being investigated since 2013 "tiger "" The Fly "is more proof of that.

On this background, go to understand Li Keqiang premier called "Where the market or society can do, it is left to the market or society to do" and cancel the administrative approval of the State Council's strong push, it is not difficult to understand the meaning. Government and planning as human reason, is imperfect and flawed, waiting for countless individuals to make up the spontaneous action and error correction.

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