House of cards: property glut could spell doom for Chinese economy
The Chinese economy has a long history of proving its doubters wrong. But a growing number of experts are wondering whether this time the doubters might be on to something. Beijing’s goal for 2016 is to keep growth ticking over at around 6.5 per cent but four issues, like horsemen of an economic apocalypse, are threatening those plans: industrial overcapacity, heavy business taxes, sky-high property inventories and financial risks. We examine each threat in a four-part series that starts today. Zhou Xin explores the real estate ambitions that have fallen to ruin in Anyang, Henan province.
Construction on the Venice Impression in Anyang (安陽), Henan (河南) province, started in 2009 during China’s boom days and hopes for the project were high.
The mall would be not only the largest in the region, it would give those living in the inland Chinese city a taste of luxury, of designer products and exotic lifestyles.
At least, that was the vision. Today the project appears little more than a complex skeleton of cement and steel.
On a chilly December morning, few signs of work could be seen, though huge red banners promised that the local authorities would “try a thousand ways to keep the project alive and spare no effort to protect the interest of the masses” – promises made, presumably, to comfort creditors.
Wang Teng, who was peeping into the 180,000-square-metre construction site through a hole on a blue iron door, was not convinced.
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“It’s over, it’s over,” said Wang, who said he had lent about 300,000 yuan (HK$357,000), his life savings, to the developer in 2010 for a promised annual interest rate of 18 per cent.