THE FRANTIC PACE OF URBANIZATION has been the transformative engine driving this country's economy, as some 300 million to 400 million people from dirt-poor farming regions made their way to relative prosperity in cities. Within the contours of that great migration, however, there is another one now about to take place less visible, but arguably no less powerful. As China's major cities -- there are now 49 with populations of one million or more, compared with nine in the U.S. in 2000 -- become more crowded and expensive, a phenomenon similar to the one that reshaped the U.S. in the aftermath of World War II has begun to take hold: A rapidly expanding middle class seeks a little bit more room to live at a reasonable price, maybe a little patch of grass for children to play on or a whiff of cleaner air as the country's cities become ever more polluted.
The Levittowns now springing up across China (ten so-called satellite cities are going up around Shanghai alone) promise to have enormous consequences not just for China but for the global economy. It's easy to understand the persistent strength in commodity prices steel, copper, lumber, oil when you realize that Emerald Riverside [the ~140-house development Powell's townhouse is part of] alone requires more than three tons of steel in the houses and nearly a quarter of a ton of copper wiring. And as Lu Hongjiang, a vice president of the New Songjiang Development & Construction company, puts it, "We're only at the very beginning of this in China."
The box story notes that Emerald Riverside is one of only 50 developments in New Songjiang:
New Songjiang alone will consist of more than 50 housing developments, which require 7,500 tons of steel for buildings, 1,100 tons of copper, and 100,000 tons of cement. Is it any wonder commodity prices are so high?
Regarding the mortgage situation there, Powell writes,
No subprime, "no money down" loans here. We got an off-the-shelf mortgage from the Standard Chartered Bank branch in town, plunked down 25% of the purchase price, and bought ourselves a piece of the Great Chinese Dream.