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Chinese economic DOOM!! Signs show they could be worse off than the US.
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Here is a link to an interesting link about certain aspects of Real Estate in China.
[link to behindthewall.msnbc.msn.com]
I'm also going to post a few snippets for those that don't like to click.
All that's missing are the people.
Thames Town was completed in 2006, cost a billion dollars to build, and was designed as home for 10,000 people. But shops and restaurants are boarded up, their doors chained.
Thames Town is one of the more bizarre examples of the madness of a construction frenzy and real estate bubble that has left the country with an estimated sixty four million empty homes. It was fuelled by easy money and rapidly rising prices.
OK, I guess it's pretty common knowledge at GLP that these ghost towns do indeed exist in China.
By China's own estimate, there are twenty new cities being built each year. One recent housing development was designed to look like a village in Austria.
The building is ongoing.
Now this next thing I hadn't heard about.
The problem for the Chinese government is that construction is a major component of GDP. Wasteful and mad though it may seem to outsiders, it has helped pump up growth figures, particularly after the 2008 financial crises, when the Chinese government injected into the economy a stimulus worth nearly US$700 billion. Much of that money went straight to those ghost towns.
I did not know the Chinese did a stimulus at a number similar to what was done in the US.
Keep in mind China's GDP is roughly half that of the US.
And here's the kicker.
Local government has come to rely on rising land prices for its funding, and local authorities have run up huge property-related debts. Nobody quite knows how exposed China's banks might be.
They are certainly not in a good position.
Especially if things keep going downhill in the US as I think we are still their largest customer.
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