One asset missing for China: it doesn’t have any of the cultural influence and attractiveness that Japan had in the 1980s and still has today. In Eastern Europe where I was born, we had just one TV channel, and the number of Japan-imported content on that TV channel was equal to that of the US-imported: I grew up watching anime and Taiga dramas. I then lived in France, and the Japanese cultural prestige there is even more insane. Anyone who has visited France’s yearly «Japan Expo» can attest. I know that culture doesn’t necessarily transfer into economics, but it’s still a factor. I mean, you’re much more receptive to the economical deals of a country you grew up admiring.
Very good article. Although I lived through Japan's bubble and burst, I'd forgotten just how insane property values had gotten. Japan's combined real estate values were 4X the US! How did investors in Japan not realize a tsunami correction was coming?
A really good insight you made is how China's bubble is nowhere near where Japan peaked. That's a helpful perspective.
What you and everyone forgets about is that technically the government owns the land in China and everyone leases it from them to build on. Nobody knows what happens when the leases are up + they don't have an effective mechanism like property taxes to raise steady revenue for local govts. IF we look at Singapore (and basic finance textbooks) where they have this issue, lease values start to decay once they hit a certain point in their life and the value goes to zero when they end...
Also, anything built MUST BE MAINTAINED and they are bad at maintaining stuff in Asia...
One asset missing for China: it doesn’t have any of the cultural influence and attractiveness that Japan had in the 1980s and still has today. In Eastern Europe where I was born, we had just one TV channel, and the number of Japan-imported content on that TV channel was equal to that of the US-imported: I grew up watching anime and Taiga dramas. I then lived in France, and the Japanese cultural prestige there is even more insane. Anyone who has visited France’s yearly «Japan Expo» can attest. I know that culture doesn’t necessarily transfer into economics, but it’s still a factor. I mean, you’re much more receptive to the economical deals of a country you grew up admiring.
Very good article. Although I lived through Japan's bubble and burst, I'd forgotten just how insane property values had gotten. Japan's combined real estate values were 4X the US! How did investors in Japan not realize a tsunami correction was coming?
A really good insight you made is how China's bubble is nowhere near where Japan peaked. That's a helpful perspective.
I mentioned some of you previous Tokyo real estate articles in my "China's Problems That Few People Talk About (And Investor Implications):" https://emergingmarketskeptic.substack.com/p/chinas-problems-that-few-people-talk-about
What you and everyone forgets about is that technically the government owns the land in China and everyone leases it from them to build on. Nobody knows what happens when the leases are up + they don't have an effective mechanism like property taxes to raise steady revenue for local govts. IF we look at Singapore (and basic finance textbooks) where they have this issue, lease values start to decay once they hit a certain point in their life and the value goes to zero when they end...
Also, anything built MUST BE MAINTAINED and they are bad at maintaining stuff in Asia...