China's Economy is Scarier Than We Thought
posted Saturday Jul 16, 2011 by Scott Ertz
In general, we tend to avoid political topics as they often alienate people, but seeing as this year China overtook the US as the leading manufacturer in the world and we talk about Apple's use of Chinese manufacturer Foxconn, I decided to buck the trend and bring you this information.
We hear often about how China's economy is booming, and it is pretty difficult to dispute. They own so much of the US's $14 trillion debt, they have had an almost constant 10% GDP growth and, as I said before, they are now the largest manufacturer on the planet. As it turns out, the lack of ability to dispute the boom is exactly what China has been trying to produce.
How have they managed to create an indisputable economic boom? Hit the break to find out.
One of the best ways to create GDP growth is in construction. It doesn't matter necessarily what you are building, just that you are. That is exactly the path China has taken to produce their constant growth. They have built entire cities, capable of housing millions. They even built a university, Yunan University, capable of handling 2.3 million students. In a country with 15% of the world's population, building places for those people to live, learn and work can only be a positive.
The problem with this construction is that almost all of it is abandoned. Ordos, a city in Inner Mongolia, is one of the best-known Chinese ghost towns. It is a sprawling metropolis built to accommodate over a million residents with a whopping $5 billion price tag is virtually empty. Zhengzhou in Henan was built with 2 financial districts, 13 hotels and 15 universities, and from an aerial view, not a car on the road. Even the massive Yunan University only houses 11,000 students instead of the 2.3 million it was built for.
As it turns out, there are somewhere around 64 million empty apartments in these new Chinese cities. To put that number into some sort of perspective for you, the entire US has only around 30 million multi-unit housing units total. In addition to the looming civil unrest coming from wasteful spending of taxpayer dollars, there is the even more harmful fact that with all of these empty housing units, there are many Chinese people who live in miserable conditions. Sometimes 10 people living in a 2 bedroom apartment, just to be able to pay the bills. If ever there was a people on the verge of revolution, I would think it is China.
The Australian news magazine Dateline (not NBC but SBS) investigated the problem with a lengthy but very interesting report. It's about 14.5 minutes but worth the watch.
