A new Al Jazeera documentary finds:
• Time is fast running out for China to pay off its bad debts
• China has more than two billion square metres of empty residential space – that’s enough to house more than 100m people. Entire neighbourhoods have become ‘ghost towns’
• “It’s a craziness on a level that you haven’t seen elsewhere in the world and you have to think that that’s going to create a crisis on a level that hasn’t been seen elsewhere” Analyst Anne Stevenson-Yang
• Economists predict global fall-out that could send world’s economy into a tailspin
In The End of China Inc?, Al Jazeera’s 101 East travels to Shenfu, one of hundredsof new cities in China built during the boom years that are now deserted. Scores of abandoned high-rise buildings stretch for kilometres - a ghost town of epic proportions.
Presenter and senior reporter Steve Chao says officials spent hundreds of millions of dollars building the new city but construction ground to a halt last year. Shenfu now stands as a silent testament to the country’s faltering economy.
“There’s an eerie feeling, walking through these abandoned buildings.It’s like time has come to a standstill,” says Chao. “According to the government, China has more than two billion square metres of empty residential space – that’s enough to house more than 100 million people. These empty shells have in many ways become symbols of a wild spending spree that some say has gone on far too long.”
China’s transformation into an economic powerhouse has been astonishing, but now the economy is slowing and cracks in the system are appearing.
Some economists warn the country’s building boom never delivered real prosperity and that, with all the bad investments, the country’s debt is mounting at an alarming pace. “In 2005, China owed 164% of its GDP,” says Chao. “Today it’s almost double. This mountain of debt is piling up faster than its economy is growing.”
Anne Stevenson-Yang, who spent 20 years in China and witnessed the boom years, says thefailed building projects 101 East visited are just the tip of the iceberg.
“It’s a craziness on a level that you haven’t seen elsewhere in the world and you have to think that that’s going to create a crisis on a level that hasn’t been seen elsewhere,” she says. “If China had been willing to give up that hyper growth, then it might have avoided the potential for a serious crash and a serious debt crisis. But it didn’t and it won’t.”
In China, many people are reaching breaking point, with falling wages and lay-offs fuelling anxiety and anger. A group of coal miners recently went on strike in the country’s southwest after learning their company had cheated them out of their medical and retirement funds.
“We feel in our hearts that life is so unfair,” a miner tells 101 East. “We are treated like the lowest of the low. When the economy goes bad, we are the ones that bear the brunt of it.”
While government economists claim China will be able to cover its bad loans, others fear that defaulting on it could send the world’s economy into a tailspin.
“China is roughly 16% of global population and it’s been consuming roughly 50% of global resources,” says Stevenson-Yang. “That’s going to stop and that’s going to be hugely impactful… There’s a huge chain of consequences.”