China’s property bubble has already started to burst as the country struggles to avoid a hard-landing after the housing market became overheated with soaring prices.
China’s commercial and residential property sectors are not doing well, especially in the city of Hangzho, which has “become the symbol of a market in distress”, according to Forbes.
The world’s largest retailer, Wal-Mart, is closing its Zhaohui store in Hangzhou on April 23 as a part of its overall plan to dump unprofitable locations. The sale of the large store comes as the city has too much supply of commercial properties, according to Forbes.
Hangzhou’s Grade A office buildings at the end of 2013 had an average occupancy rate of 30%, according to real estate broker Jones Lang LaSalle.
In Hangzhou’s residential sector, occupancy is weak and prices are declining due to massive overbuilding.
All of this was predicted here, back in 2012 when Elizabeth Warren insisted that we needed to be more like China. And I said, Elizabeth Warren apparently never heard of the Chinese bubble and Stimulus:
Warren has just demonstrated how clueless she is and how she is unable to look beyond government-spending talking points.
China started from a much lower point of development, so it has to spend more on infrastructure just to catch up.
China is rife with overinvestment in physical capital, infrastructure, and property. To a visitor, this is evident in sleek but empty airports and bullet trains (which will reduce the need for the 45 planned airports), highways to nowhere, thousands of colossal new central and provincial government buildings, ghost towns, and brand-new aluminum smelters kept closed to prevent global prices from plunging.
Will any lessons be learned by progressives? From China’s bubble, or how our own was fed by government policies?
(Featured Image Source: China’s Ghost Cities)DONATE
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