Saturday, June 28, 2014

Another Ghost Town in China, This Time a Replica of Manhattan

Mike Shedlock
Malinvestment in China proceeds at a staggering pace. Technically, this growth adds to GDP, but eventually it will be written off.

Ghost cities, ghost malls, and empty train stations in China have been in the news for years. The world's largest mall is unoccupied and entire cities sit vacant.

We can now add another ghost city to the list, a big one. Bloomberg reports China Builds Its Own Manhattan -- Except It's a Ghost Town.
 China’s project to build a replica Manhattan is taking shape against a backdrop of vacant office towers and unfinished hotels, underscoring the risks to a slowing economy from the nation’s unprecedented investment boom.

The skyscraper-filled skyline of the Conch Bay district in the northern port city of Tianjin has none of a metropolis’s bustle up close, with dirt-covered glass doors and construction on some edifices halted. The area’s failure to attract tenants since the first building was finished in 2010 bodes ill across the Hai River for the separate Yujiapu development, which is modeled on New York’s Manhattan and remains in progress.

The deserted area underscores the challenge facing China’s leaders in dealing with the fallout from a record credit-fueled investment spree while sustaining growth and jobs in the world’s second-biggest economy. A Tianjin local-government financing vehicle connected to the developments said revenue fell 68 percent in 2013 to an amount that’s less than one-third of debt due this year.

“There will have to be a reckoning,” said Stephen Green, head of Greater China research at Standard Chartered Plc in Hong Kong. Sales of bonds by local-government vehicles to repay bank loans are just “buying time,” he said. “The people will pay” for it through bank bailouts, recapitalization with public money or inflation.

Conch Bay showed few signs of life during a June 19 visit by Bloomberg reporters. Work on Glorious Oriental, a two-tower residential and office complex, had stopped, and at the north end of Conch Bay, the main building of the Country Garden Phoenix Hotel, billed as Asia’s largest hotel, was a deserted shell with no signs of any work under way.

Calls to Glorious Oriental’s Beijing and Tianjin offices went unanswered.

Wang Wei, a 34-year-old Tianjin resident, was driving through the area to check out property prices, finding them six times higher than what he’d be willing to pay. “I’ve seen a lot of reports about the area, but apparently it’s not a place fit for home -- at least for now,” said Wang. “No shops, no schools, no hospitals and no neighbors.”

Buildings stand in the Conch Bay district of Tianjin, China. Photographer: Steve Engle/Bloomberg

Stories like this show why it is extremely unlikely China will pass the US any time soon.

Chinese growth is enormously exaggerated, malinvestment abounds, prices are absurd, and shadow bank operations that funds these developments will eventually implode.

Mike "Mish" Shedlock


Anonymous said...

It has been predicted that much of China and India will be below water when the continent shifts. These ghost towns to me say it all. They know........and they are not stupid.........and though they have kept this huge planetary shift secret.........they are preparing to be ready to survive even if these predictions end up being false. But this preparation makes a very bold statement on the predictions of planetary continental upheaval.

Truly think about it if you have eyes to see and ears to hear........

tina said...

China built these buildings and neighborhoods because the Earth is going to change major earthquakes up to mag 9 tsunamis and volcanoes will explode, China knows this is and is being responsible unlike America or Europe all the politicians know about this theres going to be a pole shift and the Earth will stop rotating for 5 days and the oceans are going to spill and the east coast of America is said to drop 150 feet into the ocean destroying Manhattan and all her bridges. Zeta talks safe locations said it all.

Anonymous said...

It would be a really good thing to look for products that are made in America and stop buying products from China. Their own people will eventually live in these places after they drop the prices. Remember one very bad thing... China has increased the number of children that people can have now. They have too many people now and they want to double what they already have. BE AWARE!