Thomas White Global Investing
China
China Stamp
October 5, 2012
A Postcard from the Asia Pacific
China: Making its Mark on the Skyline

china

The proposed Sky City will have schools, hospitals, homes, stores, and offices.

China’s towering ambitions go back to the days of Mao Zedong who unsuccessfully tried to make the Great Leap Forward, an economic and social campaign that only left death and destruction in its trail. It took a daring Deng Xiaoping to declare in 1978 that it is “glorious to be rich,” which set the stage for a host of economic reforms. China, as they say, has never looked back since then, powering its way through almost three decades of fast-paced growth to emerge as the world’s second biggest economy.

Now China, it seems, wants to leave its mark on the skyline as well, much like the Sears Tower and Empire State Building and the might of the economy they represent. If the privately-held construction company Broad Group has its way, the country will be home to what it claims will be tallest skyscraper in the world, and all in a span of just three months, according to a Financial Times report.

Apparently, tall is an attribute which is considered not just beautiful in China, but a characteristic that lends an edge over the competitor, be it in the workplace or even in the marriage market. And so, Chinese competitive spirit is not necessarily limited to the architectural space. Attempts are being made to build taller children too. Ubiquitous summer camps carefully designed to elevate kids’ stature bear testimony to the height-wise attitude of the parents, not to mention the “Tiger Mothers” who push their wards to excel in school even at the cost of denying them the simple joys of childhood.

The fact that nine of the 20 tallest buildings being constructed globally are in China, as the Financial Times says, points to the sky-high ambitions of the emerging economy. Demographic trends are fueling the skyscraper construction frenzy. Workers now are moving en masse from coastal cities back to their home towns where many big companies have set up shop to take advantage of low wages. Broad Group’s project, which is christened the Sky City, for instance, is located in the rural environs of Changsha, the capital of the Hunan province in central China. The choice of Changsha to build the 220-story super structure may have been mere coincidence, but interestingly, the small town is home to the likes of China’s largest construction machinery maker Sany Heavy Industry, state-owned Changsha Zoomlion Heavy Industry Science and Technology Development Co., and Fiat’s car production venture with Guangzhou Automobile Industry Group.

To put things in perspective, the property sector in China began to boom after the government privatized urban residential housing in 1998, which opened up the possibility that the Chinese could own their homes for the first time. Construction activity is vital to the country’s economic growth, accounting for about 15% of its gross domestic product during recent years, according to a Financial Times report. Moreover, China consumes about 50% of commodities such as iron ore, cement, steel and coal, the majority of which goes into the real estate sector, the report points out. Naturally, even a slight deceleration in construction has made the economy slow down this year, dragging in its wake commodity-oriented economies such as Brazil.

The government, on its part, has been trying to address the housing problem by building millions of subsidized apartments to accommodate citizens who can ill-afford expensive city living. Despite the partially state-sponsored property boom, the command-capitalist government is leaving no stone unturned to avoid a property bubble, keeping home prices down by increasing home supply and restricting home purchases, as a Reuters report pointed out.

Property touches a nerve in a country where a select few go on to become super-rich real estate tycoons profiting from the housing reforms, leaving a yawning gap between them and the underprivileged whose cause the Party is supposed to champion. Still, the topless towers of the proposed Sky City, destined to dwarf those of Dubai’s Burj Khalifa, will be a monumental tribute to China’s long march to the top.

 

Image Credit: Jakob Montrasio on Flickr under a Creative Commons License

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