![]() The papers from this year’s update have been published in a free e-book by the ANU, China’s Domestic Transformation in a Global Context, and their tone is quite different from those of past updates. Given that the International Monetary Fund tells us China is now the largest economy in the world, that matters to the rest of us.Ĭhina’s current woes were the key topic of a recent forum, China Update 2015, organised by economist Ross Garnaut, a former Australian ambassador to China, at the Australian National University. Prominent Peking University economist Yiping Huang estimates it has fallen to about 5 per cent, and a few think it is even lower. Some think growth has shrunk to around 6 per cent. Many analysts believe the latest estimate of 7 per cent growth over the year to June has been padded to match the official target of “around 7 per cent.” Other figures show exports are flat, manufacturing is shrinking, electricity use is declining, the forests of cranes overheard are thinning out, and millions of displaced workers are moving back to their home villages. That’s well down from the 14.1 per cent growth reported a year ago, but taken literally it implies that the peak of construction activity is still ahead.īut there is increasing scepticism, in China and more widely, about whether China’s national accounts can be taken at face value. Its amazingly prompt June quarter national accounts claim investment in new real estate grew 4.6 per cent year-on-year in the first half of 2015. Officially, China doesn’t have a housing bust it says its housing sector is still growing, just more slowly. They exist because supply vastly exceeded demand, because many working families cannot afford the kind of apartments China is building – and because, while China’s leaders have made the case for reforms that will solve problems like these, they have not matched their words with deeds. In four weeks there, I saw hundreds of them, which suggests there must be tens of thousands across this vast country. It seems China keeps no statistics on how many abandoned concrete towers stand in its cities. And it was using them, in part, to build those empty buildings. And most important, they are vivid evidence of why some fear that China is not, as so many assume, immune to the laws of economics and to the risk that a boom will end with a bust.Īt the height of the boom, it was estimated that China was using half the world’s cement and producing more than half of the world’s steel. The empty towers help explain the growing interest among Chinese investors in real estate in Australia. ![]() It is inevitable that at some point that proportion will fall sharply, to work off the excess supply. In the past six years, investment comprised almost half its output. China has built so much excess capacity in steel making and aluminium smelting that it has caused a global glut of supply in each. We travelled on a virtually empty four-lane motorway through the hills of southern China in eight minutes, I counted six other vehicles on the road. Coal consumption is dropping more rapidly, thanks to a serious government campaign to reduce pollution, and so far in 2015 coal imports have plunged 37.5 per cent.Īnd the over-investment isn’t only in real estate. But its steel consumption has begun falling and its iron ore imports fell 1 per cent in the first half of 2015. Australian leaders – ministers, economic officials and mining executives – gambled heavily on a mistaken faith that China’s demand for coal and iron ore was almost insatiable. ![]() They also have implications nearer to home. They are evidence that supply has run well ahead of demand for Chinese real estate. These are empty, half-finished buildings, and they’re everywhere. These are not the “ghost cities” SBS’s Dateline has memorably documented (and which Chinese authorities have since rushed to fill). ![]() And they are a warning of what might lie ahead as China’s housing bust gathers more momentum. They are a testament to the rash judgements made during the world’s biggest ever speculative housing boom. They are the ghosts of apartment blocks, begun but abandoned because of a lack of demand. In every Chinese city, in every town of any size, as you speed through in your train or bus, you see a cluster of concrete ghosts: bare, grey blocks of concrete, usually half a dozen standing together, twenty storeys or so, bereft of glazing, fittings, furniture, cranes or scaffolding.
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