China Ghost Cities

May 17, 2011 by staff 

China Ghost CitiesChina Ghost Cities, Adam Johnson Bloomberg reports on the construction boom in Kangbashi, a city in Inner Mongolia of China was originally designed to accommodate about 1 million people currently has about 30,000 inhabitants. The desert city is part of the Chinese government’s plan to add 36 million units of affordable housing or social in the next five years. Critics warn that “ghost towns” as Kangbashi add to the nation’s real estate bubble.

Bloomberg TV has an article on what hedge funds, Jim Chanos, who called the Enron bubble, called “ghost towns” – the large cities, hundreds of thousands of homes and hardly anyone lives there. “People do not want to think that the Chinese growth miracle can not have both her and they thought,” Chan says Bloomberg.

Bloomberg reporter goes through some of the arguments in China – the government is building for the long term, the developer PRESOLD all units, etc, etc, but nobody lives there. No matter how you spin it, those are nonperforming assets accounting for a little investment. Sooner or later you have to have a macroeconomic history – no matter how much the Chinese government claims the role of protecting the assets are valued at par.

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