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"China's ghost towns and phantom malls" Topic

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Tango01 Supporting Member of TMP In the TMP Dawghouse07 Sep 2017 2:07 p.m. PST

"As growth slows, China's huge investment in infrastructure is looking ever harder to sustain, leaving a string of ambitious projects – towns, shopping malls and even a theme park – empty and forlorn.

"We have spoken a lot about these ghost towns in Ireland and Spain recently [but China] is Ireland and Spain on steroids," says Kevin Doran, a senior investment fund manager at Brown Shipley in the UK.

Investment in infrastructure accounts for much of China's GDP – the country is said to have built the equivalent of Rome every two months in the past decade. And with such a large pool of labour, it is harder to put the brakes on when growth slows and supply outstrips demand.

"You have got seven to eight million people entering the workforce in China every single year, so you have to give them something to do in order to retain the legitimacy of the government," says Doran…"
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jurgenation Supporting Member of TMP07 Sep 2017 7:03 p.m. PST

They had even built a Replica of Paris.

GypsyComet07 Sep 2017 7:35 p.m. PST

It gets worse, from what I've read.

By using the Chinese equivalent of Eminent Domain, the rich acquire the land for these cities at rock bottom prices, if they pay for it at all. They then re-appraise the land as higher value urban land, get huge bank backing based on the false appreciation, and build on a budget. Both the land value increase and the construction activity enlarge the Chinese economic numbers, but only the actual construction work is real in the short term. A city sitting empty won't pay back the construction loans or realize the higher appraised value.

The juggernaut will stop at some point, and China will not be a happy place when it does.

gamershs Supporting Member of TMP07 Sep 2017 10:07 p.m. PST

If you build it they will come! OOPS!!!

Oberlindes Sol LIC Supporting Member of TMP08 Sep 2017 12:09 a.m. PST

We're going to need all of those big, empty cities when it finally becomes impossible for the 99% to afford housing in Europe and America. We should be able to buy them for not much more than the by-then bankrupt Chinese land speculating class paid for them.

We'll all be working from home anyway, so it won't matter where we actually are.

robert piepenbrink Supporting Member of TMP08 Sep 2017 8:52 a.m. PST

I'm told it's prudent to check back on those "ghost cities" in a few years. They tend to be occupied and new "ghost cities" built. Notice only one place shown in the article is a large residential area completed ten years ago. I could find you failed housing projects and abandoned malls and parks few without going quite as far as China.

Oberlindes, try to get east of the Rockies and avoid the Acela Corridor. Skyrocketing land and housing prices are actually quite localized in the United States. They're just localized where the commentariat lives, so they imagine it's universal.

jdginaz08 Sep 2017 10:41 a.m. PST

The difference between China and West is that in the West anybody can photograph the empty area while China actively discourages photography of the empty construction.

The other problem with the over building in China is that due to the limited places to invest their money the new middleclass has invested heavily in construction projects. They aren't going to take the loss of that money lightly.

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