Chinese Real Estate Bubble About To Burst

As bad as the real estate bubble and subsequent meltdown was here in the US, the bubble in China is worse and the meltdown will be far more spectacular. Unlike the one in the US, the Chinese meltdown includes entire cities built in anticipation of demands for housing, manufacturing, and consumer spending. It is this last that shows just how badly the Chinese government has overestimated the demand, particularly in light of the highly inflated prices for housing.

One other difference – while shopping malls in the US have been struggling remain open as retailers either fail or decide to move to another location (sometimes to the web), many new malls in China never had the retailers to begin with. One mall, called the South China Mall (also known as the Great Mall of China), was supposed to be the biggest retail mall in the world, with over 1500 shops under one roof. Instead it sits virtually empty, with few operating shops and even fewer customers.

To see how bad it is, an Australian news crew visited one of the new cities. Thousands of apartments sit empty, as do many of the retails shops.

Billions of dollars spent on ghost cities where very few live. This is what happens when the government decides what the demand will be rather than letting the private sector figure it out and build only what they can sell.