Looks like lots of places in California.
Overbuilding is not a prime concern in China. Some call it an economic strategy.
This is a nation of spanking new office towers and hotels and luxury apartment complexes, many built on spec, many financed with state-subsidized loans, or on state-subsidized property, or with low-cost steel from mills built with state subsidies. Many are more empty than full.
According to Colliers International, a real estate firm, Beijing’s central business district offices will stand roughly 38 percent vacant this year. That’s 12 points higher than the figure for San Bernardino, Calif., which the advisory firm REIS says was the worst major office market in America in the last quarter of 2009.
Yet what seems awful in San Bernardino is the norm in effervescent Beijing. Real estate speculation here is rampant, many experts agree that housing and finance are riding bubbles, and everyone expects a big reckoning somewhere — a year? two? — down the line. But there was a reckoning after the Asia panic in 1999, and another reckoning in 2004, and both times the government bailed out the big state-owned banks, and the boom went on.
Indeed, the government forgave the Agricultural Bank of China $120 billion in sour loans just last October without a peep of public protest.
If you build it, the feeling is, they will come. Eventually, in a nation this large, someone will fill the convention center and the water park. And if not, well, build it anyway. Building creates jobs, and feeds prestige, and pumps up the GDP. Here in the nation that is too big to fail, as long as the bad loans don’t overwhelm the good, the waste is tolerable.
“That, to me, is the essence of the Chinese strategy,” Eswar Prasad, a Cornell University professor and a former head of the International Monetary Fund’s China division, said in a recent telephone interview. “Just keep the machine going fast enough.”
http://www.nytimes.com/2010/02/07/weekinreview/07wines.html