Wednesday, May 19, 2010

China - The Biggest Domino - Foreign Correspondent - ABC:

China correspondent Stephen McDonell set out on a journey through China to try to find out just how sustainable the country’s incredible growth – more than 10 percent every year – really is.

“They consume the lowest share of GDP ever recorded. It’s not at all practical - it’s not logical and it’s not sustainable.” Professor Michael Petttis.

Along the way McDonell visits shipyards, prestige real estate developments and an incredible“ghost city” – a whole town in Inner Mongolia built from scratch, complete with theatre, museum and library, and row after row of apartment blocks – almost all of them empty.

It’s a concrete example of the way the Chinese economy works – from the top down. State owned banks provide loans to more state owned companies who build and develop, paying taxes to local authorities – possibly where no demand actually exists.

“This place is either a bold piece of planning for the future which is yet to reach fruition… or a very large white elephant.”
China correspondent, Stephen McDonell, talking about the ghost city of Kang Ba Shi.