China is currently in the middle of an economic transformation with growth rates averaging 10% over the past 30 years. The main drive behind this growth is an optimistic real estate market which is producing houses, districts, and cities. But there is a major problem with China’s state- controlled economy; these cities are vacant with no one living in them. Unlike the United States market driven economy, China’s government has spent an estimated $2 trillion dollars to keep this ball rolling.
Spooked out yet?
Take a look:
In a recent CBS 60 Minutes special, Gillem Tulloch, a Hong Kong based financial analyst, said “China’s middle class is investing every penny they can into real estate simply because property values have always gone up by more than inflation”
China’s government is building under the assumption that “if you build it, they will come”
So far, supply has outweighed a non-existent demand, as many of the houses, shopping malls, and numerous empty developments remain vacant some three years later.