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China's Replica Of Manhattan Results In Yet Another Ghost City

Tyler Durden's picture




 

While the growth of China's ghost cities of entirely derelict and unlived-in residential real estate have become anathema; the story of the nation's 'if we build it they will come' commercial real estate bubble has been less exposed but is no less incredible. As Bloomberg reports, China’s project to build a replica Manhattan is taking shape against a backdrop of vacant office towers and unfinished hotels, underscoring the risks to a slowing economy from the nation’s unprecedented investment boom. Stunningly, the development has failed to attract tenants since the first building was finished in 2010 leaving one commercial real estate investor to proclaim, "Investing here won’t be better than throwing money into the water... There will be no way out - it will be very difficult to find the next buyer."

 

China's own Big Apple may be rotting from the core. A new central business district modeled after New York City is going up in Tianjin...but the nation's slowing economy is exacerbating the risks from its unprecedented credit binge...and that's putting China's Manhattan project in jeopardy. Bloomberg TV's China Correspondent Stephen Engle reports.

As Bloomberg explains,

The skyscraper-filled skyline of the Conch Bay district in the northern port city of Tianjin has none of a metropolis’s bustle up close, with dirt-covered glass doors and construction on some edifices halted. The area’s failure to attract tenants since the first building was finished in 2010 bodes ill across the Hai River for the separate Yujiapu development, which is modeled on New York’s Manhattan and remains in progress.

“Investing here won’t be better than throwing money into the water,” Zhang Zhihe, 60, said during a visit to the area last week from neighboring Hebei province to look at potential commercial-property investments. “There will be no way out -- it will be very difficult to find the next buyer.”

This is slowing growth dramatically as the realisation of building stuff that no one wants is not sustainable...

Tianjin, a city of 14.7 million people whose center is about 125 kilometers (78 miles) southeast of Beijing’s, saw its economic growth cool to 10.6 percent in the first quarter of 2014 from a year earlier, from 17.4 percent in full-year 2010, compared with a moderation in national expansion over the same period to 7.4 percent from 10.4 percent. An annual pace of 10.6 percent would be the weakest for Tianjin since 1999.

CHART

And Default risk is mounting...

“Both the central and local governments clearly know that a big slump in the property market will significantly magnify financial system risks, and they know it’s a delicate balance,” said Liu Li-Gang, chief Greater China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong. The government will try to do everything to ensure an “orderly de-leveraging,” Liu said.

As the streets remain deserted... Ghost offices...

 


Rather ominously Stephen Green, head of Greater China research at Standard Chartered Plc in Hong Kong concludes,

“There will have to be a reckoning,” as sales of bonds by local-government vehicles to repay bank loans are just “buying time,” he said. “The people will pay” for it through bank bailouts, recapitalization with public money or inflation.

But apart from that... and the residential real estate bubble.. and the commodsity financing ponzi scheme... and the promise of no major stimulus... we are sure China wil have a soft landing.

 

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Fri, 06/27/2014 - 20:33 | 4904433 konputa
Fri, 06/27/2014 - 20:36 | 4904437 COSMOS
COSMOS's picture

Who wants to replicate that SHIT STAIN of a municipality know as Manhattan.

Fri, 06/27/2014 - 20:41 | 4904444 Top Gear
Top Gear's picture

I love NYC. Right where it is.

Fri, 06/27/2014 - 20:43 | 4904453 Yen Cross
Yen Cross's picture

 That's a bit oxymoronic? Bikers and Chicks in Manhatten?

Fri, 06/27/2014 - 21:44 | 4904593 Never One Roach
Never One Roach's picture

RE prices [like everything else] moves in cycles. We have not seen a real, unmanipulated cycle for a long time. The next Bust will be Epic.

Fri, 06/27/2014 - 22:05 | 4904619 old naughty
old naughty's picture

Epic, no bust...just advert these on Mar's moon.

 

Sat, 06/28/2014 - 00:03 | 4904820 Boris Alatovkrap
Boris Alatovkrap's picture

Ai bai fulam yu, hubai fulam mi...?

Sat, 06/28/2014 - 04:06 | 4904993 PT
PT's picture

But when supply goes up, prices come down until everyone who wants one can afford one and everyone is happy and lives happily ever after in their own little house that they could afford to buy due to the oversupply and ... oh, wait!  Maybe Chinese workers have to get paid less so those buildings will be cheaper and then they can afford to buy an apartment all for themse - , ummm, no that's not it.  Hang on, I've got an economics textbook here somewhere, it is going to explain it all to me, I promise, I just gotta keep reading these economics books until I know exactly what is going on ...

Sat, 06/28/2014 - 09:20 | 4905180 BigJim
BigJim's picture

Now all the Chinese 'security' services need to do, is get a few Uyghur terrorists to hijack a couple of fully-laden Cessnas...

Sat, 06/28/2014 - 11:41 | 4905354 zerozulu
zerozulu's picture

They look ready for the time when US collapses.

Sat, 06/28/2014 - 10:05 | 4905210 algol_dog
algol_dog's picture

PT - I was thinking along your lines as I read this article. At least China is producing something hard, concrete, and real with their human and financial capital. Compare that with US Capitalism and its emphasis on speculation, wild credit excesses and debt levels that produce nothing. What's being built here? How's are infrastructure? How many college grads are we producing with engineering, mathematical, etc. degree's? - China paints a picture to me of late 1800's industrial America, and in that same period, could sit the US, with respect to the British Empire.

Sat, 06/28/2014 - 10:17 | 4905222 Tsukato
Tsukato's picture

Hi,
I will not get into anything specific, or go into any details whatsoever, and I'm not trying to be mysterious, obtuse, or anything like that. I live in china. I have a serious question, but it's much too massive for me to get my head around. It's this:
If at some point in the next few years, china implodes with civil strife, warring factions, etc., kinda like the period before the japs came in, what affect will this have outside china? Any silver linings anywhere?
I'm not joking, so please anyone who could lay out some realistic scenarios, I'd be very grateful.
Thanks.

Sat, 06/28/2014 - 13:44 | 4905525 Nathan American
Nathan American's picture

Chinese based manufacturing would move local (USA) again, or to Vietnam, or some other place Dick Cheney owns.

Sat, 06/28/2014 - 13:55 | 4905549 Tsukato
Tsukato's picture

Such a monumental event would surely have much greater reverberations abroad I'd think.

Sun, 06/29/2014 - 06:15 | 4906712 PT
PT's picture

A couple of miles down the road people work their guts out to struggle to buy houses while these ones are empty.  Eventually they deteriorate and are demolished ... and our learned ones insist:
"there is no better way!"
"Oh!, we can't just give them away!"

Textbook capitalism asserts empty houses will be sold to the highest bidder.
Textbook communism asserts that the empty houses will be given to whoever needs them.

Meanwhile in the real world, both in China and US (and elsewhere), rich people make money out of keeping buildings empty while others are homeless.  And don't forget to re-use cloth bags because paper and plastic ones are bad for the environment.

Fri, 06/27/2014 - 23:03 | 4904720 TheFourthStooge-ing
TheFourthStooge-ing's picture

This article paints a solid ground standing of the 'americanism' blobbing up in China phenomenum. Bigtime.

What a cans kicking it is. How long could it remain credible?

Sat, 06/28/2014 - 04:13 | 4905002 PT
PT's picture

HERE IS ALL THE EVIDENCE YOU NEED!!!

"Build it and they will come!"
"Housing - led recovery!"

 

Bwah ha ha ha !!!

Sat, 06/28/2014 - 08:57 | 4905164 RaceToTheBottom
RaceToTheBottom's picture

I wish the US version of Manhattan would be more like the Chinese version, especially WS.

Then if you started having WS Banksters commit suicide for honor, well that would just be icing on the cake.

Sat, 06/28/2014 - 09:27 | 4905183 JackT
JackT's picture

How long until those buildings fall from lack of maintenance not to mention being hastily built to begin with

Sun, 06/29/2014 - 08:42 | 4906821 Joenobody12
Joenobody12's picture

I tell you who wants to do that -- brain dead Chinese government officials whith no self respect and who give birth to themselves by having sex with their mothers.

Fri, 06/27/2014 - 20:37 | 4904440 Anusocracy
Anusocracy's picture

At least they have something other than trillions of dollars of war debts.

Fri, 06/27/2014 - 21:23 | 4904548 Skateboarder
Skateboarder's picture

Chinese Ripoff 9/11 for Chinese Ripoff Manhattan.

Now that would be something.

Sat, 06/28/2014 - 18:41 | 4906012 Burticus
Burticus's picture

The United State_ has the billion-FeRN embassy in Oilraq...or are the rebels enjoying it yet?

Fri, 06/27/2014 - 21:33 | 4904570 post turtle saver
post turtle saver's picture

what's chinese for "potemkin village"

Sat, 06/28/2014 - 04:11 | 4904998 PT
PT's picture

Good question. Have they worked out that no-one will ever live in them yet?  You know, to the point where they don't bother to make the buildings structurally sound any more because they know that no-one will live in them anyway ("Well, not in my life time") and they need to cut costs ...

Sat, 06/28/2014 - 18:47 | 4905691 JuliaS
JuliaS's picture

Manhattan Project.

 

Sat, 06/28/2014 - 20:03 | 4906139 Anusocracy
Anusocracy's picture

US Manufacturer

Fri, 06/27/2014 - 21:38 | 4904585 JLee2027
JLee2027's picture

Central planning strikes again.

Sat, 06/28/2014 - 04:07 | 4904996 PT
PT's picture

In US, empty houses strewn across the whole country.  In China, empty houses stacked up neatly into empty cities.

Sat, 06/28/2014 - 04:23 | 4905006 PT
PT's picture

Hey!  I saw Dr Zhivago.  If their communism was working as advertised then those buildings would NOT be empty.

Depending, of course, on how close those buildings are to food and water.  But as long as you got water upstairs, who's gonna stop you from putting a garden on the roof?  Errr, might need to make sure those lifts keep working.

Sat, 06/28/2014 - 03:11 | 4904974 sidiji
sidiji's picture

huh, maybe chinese not so dumb...

Fri, 06/27/2014 - 20:35 | 4904436 LetThemEatRand
LetThemEatRand's picture

I feel bad for the Chinese workers that are making the nice pillow cases that these fuckers are using to populate their ghost cities.  

Fri, 06/27/2014 - 20:43 | 4904452 Top Gear
Top Gear's picture

Remember, they're better off than they were before, just like the English peasants were better off working in the Dark Satanic Mills after the factory owner's benevolent Enclosure Acts. Rand, Hayek, and Rothbard told me so.

Fri, 06/27/2014 - 22:39 | 4904679 TheReplacement
TheReplacement's picture

Why do people like you insist on attacking the people with ideas instead of the ideas themselves? 

Sat, 06/28/2014 - 01:28 | 4904918 StychoKiller
StychoKiller's picture

Thinking (and thus producing ideas!) is hard work.

Sat, 06/28/2014 - 03:09 | 4904972 Lin S
Lin S's picture

It's just what cocksuckers do.

Sat, 06/28/2014 - 09:03 | 4905167 BigJim
BigJim's picture

 Remember, they're better off than they were before, just like the English peasants were better off working in the Dark Satanic Mills after the factory owner's benevolent Enclosure Acts. Rand, Hayek, and Rothbard told me so.

I hate to say this but the Chinese ARE a lot better off than they were before. You have a burgeoning middle class in China... and they're not starving in their tens of millions anymore.

And where did Rand, Rothbard, and Hayek - all very different people, by the way - describe the Enclosure Acts as 'benevolent'? Links please, troll.

Sat, 06/28/2014 - 11:52 | 4905373 All is chosen
All is chosen's picture

Sadly, the voting suggests yet another irony miss.

 

Sat, 06/28/2014 - 02:11 | 4904939 prains
prains's picture

his 1 week tenure on ZH has brought out the best he/she has, which is exactly that, 1 week

Sat, 06/28/2014 - 07:47 | 4905109 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

tenure is a scam. How long you been here means nothing.

Sat, 06/28/2014 - 09:25 | 4905182 IndyPat
IndyPat's picture

No shit. Particularly for Prains...the Arctic Fucking Warrior.

Fri, 06/27/2014 - 20:42 | 4904448 homiegot
homiegot's picture

Send the Other Than Mexicans there.

Fri, 06/27/2014 - 20:42 | 4904449 Yen Cross
Yen Cross's picture

 Iron builds strong bones and muscles. (plywood/bamboo scaffolding)  An Anonymous says so...

Fri, 06/27/2014 - 20:47 | 4904459 Argos
Argos's picture

On sale!  Buy now Round Eye.  CHEAP, CHEAP, CHEAP.  Great movie

set for End of World movies.  No traffic.

Fri, 06/27/2014 - 20:51 | 4904469 Democratic koolaid
Democratic koolaid's picture

is there even 1 billion people in China?

The soviets use to fix and exagerate the amount of fish they where catching to give a false mirage of prosperity in their communist ideaology. Are the Chinese using populis, yes populis, and their population like a nuclear deterent?

P.s.  Zero headge come into the 2010's and get grammer corections on this site.   

Fri, 06/27/2014 - 20:55 | 4904473 Yen Cross
Yen Cross's picture

 "P.s.  Zero headge come into the 2010's and get grammer corections on this site.       

" corrections"?

Fri, 06/27/2014 - 21:56 | 4904610 shovelhead
shovelhead's picture

That was unkind, Yen.

He's probably the smartest guy in the trailer-park.

Fri, 06/27/2014 - 22:38 | 4904676 Yen Cross
Yen Cross's picture

   Unkind? Like the Fed, plunge<>fucking your Mother's pension?

Sat, 06/28/2014 - 09:16 | 4905174 BigJim
BigJim's picture

 is there even 1 billion people in China?

The soviets use to fix and exagerate the amount of fish they where catching to give a false mirage of prosperity in their communist ideaology. Are the Chinese using populis, yes populis, and their population like a nuclear deterent?

P.s.  Zero headge come into the 2010's and get grammer corections on this site.

Errors this numerous have to be deliberate, surely? Are posters using errors, yes errors, like a nuclear deterrent?

But +1 for questioning the official number of Chinese. I suspect there are only a few thousand of them... I mean, when have you seen more than that in a single photo? They just move them around a lot.

Sat, 06/28/2014 - 23:53 | 4906479 Emergency Ward
Emergency Ward's picture

Ideaology and headge are the Greek (or maybe Olde English) spellings, populis is vox populi plural, deterent is an actual typo, should be detergent [nuclear detergent], gramer corectios I don't have no clue.

Fri, 06/27/2014 - 21:02 | 4904492 pathetic looser
pathetic looser's picture

where you gonna buy a flat ?            IN A GOSTCITY  !!!!!   YEAAAAAAA

Fri, 06/27/2014 - 21:04 | 4904495 Downtoolong
Downtoolong's picture

leaving one commercial real estate investor to proclaim, "Investing here won’t be better than throwing money into the water...

Too bad there was only one out of two billion people who did see it coming. Give that guy a medal. Oh well, maybe next time things will be different, for the better.

Fri, 06/27/2014 - 21:03 | 4904497 Thisson
Thisson's picture

Can you say "Cargo Cult"???

Fri, 06/27/2014 - 21:33 | 4904568 garypaul
garypaul's picture

I know what you mean, but who knows, maybe the development is more solid than we think.

 

Sat, 06/28/2014 - 01:32 | 4904920 StychoKiller
StychoKiller's picture

Hey, my painted-rock radio can leave a sizeable dent in yer head (solid indeed!)

Sat, 06/28/2014 - 14:08 | 4905561 garypaul
garypaul's picture

Well, the "iRadio" device that you listen to was indeed made in China. The only rock in this conversation is the one in yer head.

Fri, 06/27/2014 - 21:14 | 4904526 gdpetti
gdpetti's picture

Keeps the game going until 'the rug gets pulled out', nothing more is necesssary at this point... just keep the herd contained and ready for 'market'.

Fri, 06/27/2014 - 21:19 | 4904539 Chief Wonder Bread
Chief Wonder Bread's picture

Sweet!!!!

Fri, 06/27/2014 - 21:20 | 4904540 Dr Benway
Dr Benway's picture

Time to package all the toxic shit into securities and dump them on granny investors.

 

Australia can provide the fudge packaging and the cocky sucker victims. Quick, list it all on the ASX.

 

Australian granny investors are spread wide open for "business".

Sat, 06/28/2014 - 04:38 | 4905007 PT
PT's picture

Why, just the other day, the telescreen was telling me that 3% compulsory super, I mean 5%, I mean 7%, err, I mean 9%, no that's not it, I mean 12 % super might not be enough!!!!!!  What are they talking about now?  Did I hear them say 20%?

Don't worry rest-of-the-world!  Us Aussies will save ya!  With our 76948 kajillion percent compulsory superannuation we can buy up the rest of the world and we might just have enough money to retire on, but I'm not too sure about that.  We may have to increase our contributions.

 

 

 

And for those mathematicians who think we can't contribute more than 100% of our salary towards super, that's not how they calculate it.  Total money out of employer's pocket = wage + x% of wage as super.

Fri, 06/27/2014 - 21:21 | 4904543 The Blank Stare
The Blank Stare's picture

Maybe they were going to make another Omega Man movie.

Fri, 06/27/2014 - 21:23 | 4904549 atomp
atomp's picture

I don't subscribe to global warming theory, but if it happened, I'd be quite giddy to see that under water in a few years.

Fri, 06/27/2014 - 21:29 | 4904563 californiagirl
californiagirl's picture

Hollywood should open a division there. Great city for filming.  They won't have to worry about pesky permits, traffic and tourists.

Fri, 06/27/2014 - 21:49 | 4904602 pachanguero
pachanguero's picture

in Thailand where I live we have a huge bubble

Fri, 06/27/2014 - 21:57 | 4904611 orangegeek
orangegeek's picture

if you run past the clip of the boat on the river and you look closely, you can see floating pigs with bath caps on doing the backstroke

 

it's a helluva surreal job they've done here

 

the good news is that exposed structural metal weakens over time, especially when it's encased in concrete - so the nice unfinished building shouldn't take long to fall over

Fri, 06/27/2014 - 22:05 | 4904622 goldhedge
goldhedge's picture

China needs to learn how real wealth is generated...WAR

 

 

Fri, 06/27/2014 - 22:15 | 4904637 Who was that ma...
Who was that masked man's picture

They shoulda burried Jimmy Hoffa in one of the foundations.

Fri, 06/27/2014 - 22:42 | 4904682 Yen Cross
Yen Cross's picture

 They should'a burried the "Constitution" about yesterday!  What are you going to do about it?

Sat, 06/28/2014 - 07:34 | 4905101 Who was that ma...
Who was that masked man's picture

I don't know.  Maybe I'll consult a fortune cookie.

Fri, 06/27/2014 - 22:52 | 4904695 franzpick
franzpick's picture

China could fill up a new ghost city project with millions of tourists attracted to a GHOST CITIES OF AMERICA THEME PARK, featuring DEETROIT, STOCKTON, VALLEJO, COMPTON, CAMDEN, NEWARK, CHICAGO and others, cheek-to-jowl NYNY Las Vegas style. 

Sat, 06/28/2014 - 00:13 | 4904836 verum quod lies
verum quod lies's picture

They will need to import city and civilization killers for that. Maybe Jesse Jackson or Al Sharpton can send some over along with our new 'Dreamers'.

Sat, 06/28/2014 - 04:58 | 4905015 RichardParker
RichardParker's picture

Send Kwame Kilpatrick over there to get them back on the road to "prosperity"...

Fri, 06/27/2014 - 22:58 | 4904708 Aussiekiwi
Aussiekiwi's picture

Contrarian investing says, buy up big now.

Fri, 06/27/2014 - 23:00 | 4904711 nink
nink's picture

Build it and they will .. Oh crap

Sat, 06/28/2014 - 01:52 | 4904929 bunnyswanson
bunnyswanson's picture

China's 1 child policy has left a HUGE gap in labor force.  Just in time for the Americans!  "Let's twade praces"

Mon, 06/30/2014 - 13:07 | 4910122 MeelionDollerBogus
MeelionDollerBogus's picture

make me ho ho ho!
Now every 'citizen' can also be an 'american' in China's peopleism of central 'party'

Sun, 06/29/2014 - 06:30 | 4906725 PT
PT's picture

nink:  ... and "housing - led - recovery" !

Fri, 06/27/2014 - 23:11 | 4904733 blindman
blindman's picture

oh man,
p
...
http://jessescrossroadscafe.blogspot.com/2014/06/have-pleasant-weekend.html
27 June 2014
Have a Pleasant Weekend
.
Where Do The Children Play - Cat Stevens (Lyrics)
http://www.youtube.com/watch?v=7a4DCxAi020

Sat, 06/28/2014 - 03:11 | 4904968 Lin S
Lin S's picture

"China-bashing American propaganda!  China is the country of the future!  Everything China builds is state-of-the-art!"

Blah, blah, blah... 

Just more evidence of a misguided state with massive overcapacity, huge imbalances, and epic bubbles.  The end of these things will be fun!

Sat, 06/28/2014 - 03:13 | 4904975 Fire Angel
Sat, 06/28/2014 - 05:20 | 4905021 Bernoulli
Bernoulli's picture

Thanks for the link. well written!

Fires burning so many countries, I can't keep up...

 

Sat, 06/28/2014 - 03:27 | 4904981 RaiZH
RaiZH's picture

I don't know whether I should find this funny or scary... 

Sat, 06/28/2014 - 05:21 | 4905022 Bernoulli
Bernoulli's picture

Scary. Definitely.

Sat, 06/28/2014 - 03:39 | 4904985 Obamanism
Obamanism's picture

Almost as if the Chinese know that the east coast and New York is doomed and they want to build and model on the old empire, like Constantinople was basically Rome in the Near Asia. Once the Dollar Empire falls then the Yuan empire has already been built and ready to move it to. Notice the street signs were in English as well as Chinese.

Sat, 06/28/2014 - 04:12 | 4905001 Obamanism
Obamanism's picture

Almost as if the Chinese know that the east coast and New York is doomed and they want to build and model on the old empire, like Constantinople was basically Rome in the Near Asia. Once the Dollar Empire falls then the Yuan empire has already been built and ready to move it to. Notice the street signs were in English as well as Chinese.

Sat, 06/28/2014 - 05:24 | 4905023 goldhedge
goldhedge's picture

Anyway the model looked good.

Only way to solve this is...WAR

Sat, 06/28/2014 - 07:15 | 4905086 Fix It Again Timmy
Fix It Again Timmy's picture

This is an unnatural act.....

Sat, 06/28/2014 - 07:32 | 4905096 AdvancingTime
AdvancingTime's picture

Fast growth tends to mask flaws and weakness within a system, and China has been growing like a weed for years. To make things worse many of the investment decisions were driven by politics and often influenced by corruption. This has created massive overcapacity. Money has been poorly allocated and often shoveled into deep holes like ghost cities and bridges to nowhere.

Currently a 6.6 trillion dollar spending spree used as stimulus to combat global economic slowdown is coming back to haunt China. This has greatly expanded credit and created huge overcapacity during the past five years. A massive debt crisis now looms in the offing. At stake are trillions of yuan in bank loans that companies producing everything from ships to steel to solar power are struggling to repay as the world’s second-largest economy in in the mist of a major slowdown and the weakest annual growth since 1999. More in the article below.

http://brucewilds.blogspot.com/2013/11/china-land-of-overcapacity-and-de...

Sat, 06/28/2014 - 07:34 | 4905100 Chuck Knoblauch
Chuck Knoblauch's picture

Did China build a new U.N. building yet?

 

Sat, 06/28/2014 - 10:35 | 4905245 1stepcloser
1stepcloser's picture

where is the scores!

Sun, 06/29/2014 - 12:17 | 4907109 StrikerMax
StrikerMax's picture

China is the ultimate Example of totally failed Central planned (pseudo) Economy and society.

China banks are leveraged 1200:1 ... yes it is not a typo: a thousand and two hundred to one Leverage ... think 20 to 1 (EU) or 40:1 (USA) is to much leverage for the banking sector? You are absolutelly right, now Imagine 1200:1 ...

Mon, 06/30/2014 - 13:05 | 4910109 MeelionDollerBogus
MeelionDollerBogus's picture

a) these people are nuts & spending like drunken sailors
b) these people are smarter than a fox & think those dumping the West in its failure will want to go some place familiar to do business as they always did

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