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  • Xinyuan Real Estate - Probably the Most Undervalued Stock on the NYSE [View article]
    Perhaps pictures will illustrate the reality:

    This is going on all over China.
    Oct 10, 2010. 12:27 AM | Likes Like |Link to Comment
  • Xinyuan Real Estate - Probably the Most Undervalued Stock on the NYSE [View article]
    Here are the latest comments from Andy Xie (2 days ago). He still sounds very bearish about property market:

    In China a recognition award means nothing (given out to who ever would like one). What does a code of ethics mean? Actions not words speak volumes.
    Oct 9, 2010. 08:20 AM | Likes Like |Link to Comment
  • Xinyuan Real Estate - Probably the Most Undervalued Stock on the NYSE [View article]

    Have you ever been to a property development in China?
    I happen to live in one and the quality ... well it leaves a lot to be desired. The property is built to look relatively good when first constructed (and sold) but then given no maintenance after they are built. They quickly fall into disrepair. All the corners are cut when constructing them.

    Gradually people are catching on to what is actually happening in China. The list of noteworthy names that are calling it for what it is - a massive bubble - grows. Chovanec, Xie, Pettis, Chanos, Faber, and now Roubini. A warning to those who hold property, when all is said and done, they are going to realize a serious loss when/if they have to liquidate their heavily over-priced property. Property developers will be no where to be seen - having taken your money.
    Oct 8, 2010. 07:46 AM | 1 Like Like |Link to Comment
  • Xinyuan Real Estate - Probably the Most Undervalued Stock on the NYSE [View article]
    I noticed that Xinyuan real estate have property built in Hefei. It is not just me seeing the obvious. Here are comments from Patrick Chovanec talking about real estate in Hefei:

    People need to know the truth!!

    Other commentary people should read:
    Oct 8, 2010. 12:37 AM | Likes Like |Link to Comment
  • Xinyuan Real Estate - Probably the Most Undervalued Stock on the NYSE [View article]
    The problem I have with using apartments as a store of value is that they quickly lose their worth (unlike gold or diamonds). Most of these empty apartments are in buildings that are literally falling apart (crumbling into a complete state of disrepair). Nothing is being maintained. The typical scenario is buildings two years old, that look 20 years old.

    By the way, it is news to me that China will destroy half of the urban residential property (that would create a very unwelcome Donut hole in each city). Rather how I see it, is in the city cores there are old apartments occupied (and no one is planning to leave) but on the outer edges of the city are relatively new apartments with almost no occupants. This goes for just about every city (1st, 2nd, 3rd, 4th tier). There are thousands of apartment blocks in any given city, and almost nobody there (ghost towns). Property developers were able to unload many of them to speculators (many of whom are local gov't officials, etc...) in the past but are now finding it difficult to unload the newer developments at the current high prices (very high to the incomes of the people who could actually use them).

    The reality is that China is building to keep workers employed but these building will probably never be occupied. The argument that rural to urban migration will solve the problem doesn't really hold up (not enough of them and not enough money). It is all too reminiscent to economic activities for the sake of growth that occurred in cultural revolution. This is going to end very ugly.
    Oct 8, 2010. 12:18 AM | 3 Likes Like |Link to Comment
  • Xinyuan Real Estate - Probably the Most Undervalued Stock on the NYSE [View article]

    Really no empty apartments!! What are all those empty apartments that I see in every city in China (many empty for many years). The (optimistic) estimates from gov't are 65 million apartments not using electricity and many more being built.

    Hmm ... you can't be very observant? It is rather obvious to anyone who actually opens their eyes.
    Oct 7, 2010. 09:34 PM | 1 Like Like |Link to Comment
  • A Tale of Two Chinas [View article]
    I would suggest reading the article on the SSE by Michael Pettis
    Oct 6, 2010. 11:02 PM | 1 Like Like |Link to Comment
  • Xinyuan Real Estate - Probably the Most Undervalued Stock on the NYSE [View article]
    There is no way I would ever invest in real estate in China. It is the largest bubble ever!!!

    There are literally cities of empty apartments in all 2nd and 3rd tier cities now. The bubble is even worse than in Beijing!!

    This is a ponzi scheme. Be aware!!!
    Oct 6, 2010. 09:42 PM | 1 Like Like |Link to Comment
  • Gold, Oil, China, and 'The Bubble Bubble' [View article]
    Another great article by Andy Xie:
    May 22, 2010. 08:43 PM | 1 Like Like |Link to Comment
  • Gold, Oil, China, and 'The Bubble Bubble' [View article]
    Chris I have a very different view of China on the ground.

    China has been attaining growth on two pillars: exports and fixed investment. But unless the country builds a consumer base (not just in first tier cities) the economic development model breaks down very badly. Y = C+I+G+NX (C is only 34%). Only item that I see real consumer demand occuring in China now is for the car - a very unsustainable choice (not only for the environment but also the ongoing maintenance cost of fueling them).

    In Beijing 50% of relatively new office space sits empty and 1/3 in Shanghai (similar elsewhere in China). Add that residential properties while being sold also sit empy around the outer area of all the cities in China (all over in the city of Beijing). The vacancy rates are very high - 1/10 occupied in many, if not most, of these new residential building developments. For those who don't believe - I challenge you to just venture to any 2nd or 3rd tier city in China to witness the endless construction of empty apartment buildings (and they do sit empty - many were built 5 years ago or more).

    So if China has to finally stop construction of empty buildings and white-elephant projects (and there are many, many of these), and exports no longer provide growth to the economy how is this not going to end badly? This will be a painful adjustment forced rather than one that could have been largely averted if the government had actually just let the markets dictate resource allocation.

    The problem is that the market signals are all very distorted (from central control) and the economy has not in the past several years made the adjusts to a sustainable model. There are endless subsidies in place diverting income from the consumer to inefficient SOEs (i.e., interest rates, input costs, etc..). The distribution of wealth in the nation is highly skewed and rich consumers can only buy so many apartments that sit empty while the vast majority have yet to get the chance to move into the consumer society. The banking sector lends to inefficient SOEs while private companies lack the means of getting funding and have no incentive to really innovate (with a lack of IP protection).

    Time is also running out. Working age population will begin to decline in 5 years followed by the overall population in 10 years. And while the younger generation might be going on to further eduction in larger numbers than ever, many are ill-trained for employment. Quality of education remains very low at most universities in China and students attain few of the skills needed for any meaningful employment. The challenge is going to be immense on this younger generation (a single child supporting their parents and their inlaws/other aging relatives while trying to have their own child).

    As a last note, money supply is growing rapidly, lending is going out to any SOE that wants money, and therefore it might appear now that things are doing ok (and all is fine in China), but this is a very false comfort (before the storm). Inflation is actually out of control on assets (hence the bubble!) and it is even beginning to show up on consumer prices. Talk to the people on the street. They have limited budgets (the vast majority in China) and they are feeling it on their household purchases.
    May 21, 2010. 08:28 PM | 1 Like Like |Link to Comment
  • Bubble in the Boonies, China Edition [View article]

    It isn't just the 1st tier cities and Hefei is not just an exception to the rule. Rather this is occuring all over China. Hefei is the norm. It can only end in one way. It is all too obvious!!! But when will it come all crashing down is the million (multi-trillion) dollar question??

    I just keep shaking my head the more I observe of this craziness first hand and then to listen to some people claim that it all makes sense. They'll claim that people are migrating from the rural regions to the cities etc... But they don't like to have it pointed out that the working population will decline this decade and the population will fall at the end of the decade. Furthermore that this is occuring not only in the major cities but everywhere. It is a train moving full speed ahead off a very high cliff. I can only imagine the debt load being hidden now. I would estimate on a piece of paper several trillion. That is just by taking all the non-performing assets (i.e., real estate) and extrapolating that as either a non-performing liability (loan) or equity. It is staggering.
    May 1, 2010. 09:56 AM | Likes Like |Link to Comment
  • Who Will Pay for China‚Äôs Bad Loans? [View article]

    I concur with your conclusions about the 'Economist'. They have a particular bias of brushing off any negative observations on China. It might be noted that Shaun Rein is supposedly one of those writing for them. Anybody who has followed him will perhaps have noticed that he comes up with all kinds of data (from his own research) to put a positive light on anything about China. 'Economist' was a publication that I had a deep respect for a few years ago but they have used up most of that now.

    P.S. Another excellent article.
    Apr 7, 2010. 09:20 AM | 4 Likes Like |Link to Comment
  • China: What the PBoC Cannot Do With Its Reserves [View article]
    Well done. Great explanation about realized/unrealized valuation. Excellent article!!
    Feb 23, 2010. 10:24 PM | Likes Like |Link to Comment
  • No, China Will Absolutely Not Collapse [View article]
    Thanks for responding Shaun.

    In China it is sometimes best to keep a little discreet. So I am not about to tell you who I am. In other words, I can be more forthright with my opinion here than I ever could be when in my business relationships - that would be suicidal.

    I am sure you are also aware that taking a stance against the government economic agenda quickly blacklists you. For those in China try to get to Michael Pettis's blog: The only reason you can get to his blog on seeking alpha is because they would have to block the whole website. Try also to get to the following link:

    There are many other economic commentaries that are also blocked because they don't follow the party line. It seems that only ones you get to in China are those that either kowtow to the government or require a complete website block.

    Although it is really refreshing to see that Caijing magazine resurrected (after harshment) and became caing at This is the most honest business publication in China. They are doing a great service to China long-term development.

    It is very troubling to see so much misplaced investment and a watch a train rolling down the tracks at full speed knowing that it is going to have a terrible crash. The implications of which will not only harm China but the precarious balance in the global markets (i.e., commodities).

    China desperately needs to create a middle class because the window of opportunity is closing quickly. As it is now you have the ultra-rich buying BMWs and multiple luxury apartments while those who are just reaching middle class must struggle to make ends meet. It is a doomed scenario because the middle class is the driver of consumerism. Without a middle class it all comes to an end. The rich can only buy so many things!

    By the way Shaun I noticed that you didn't respond to the question I had pertaining to your quoted GDP growth rates. I assume that you realize your error now!
    Feb 6, 2010. 12:31 AM | Likes Like |Link to Comment
  • No, China Will Absolutely Not Collapse [View article]
    Here is some pictures worth a thousand words about retail sales growth in China:

    By the way there are literally hundreds of retail malls in China no different than the pictures given here. Shaun you really need to take a trip outside the Pudong/Nanjing road region of Shanghai. The reality is much different than from your Starbucks restaurant and 60 floor apartment you live in.

    By the way, the local term for the ghost malls is "gui gouwu zhongxin."
    Feb 5, 2010. 10:00 AM | Likes Like |Link to Comment