As I was expelled from Bible class for smoking, smirking and lustful glances at female class members, I can’t dredge up the perfect quote to accompany our Gold Calf.
We are all too aware of the 08 and beyond building frenzy in China after the banks turned the loan spigot on to full, so lets focus on some of the more creative ways these loans were spent by provincial officials. While no needing to borrow for their building ambitions, the inhabitants of Huaxi Village, Jiangsu Province showed those wannabees in Dubai how to do it in style.
Zhou Li, deputy party chief of ( the 2,000 individuals who form the village-shareholders), said: ‘The building is a symbol of collectivism’.
It has taken four years for the work to be finished on the 74-storey hotel and residential block at a cost of 3 billion yuan (£301m).
Read full article HERE, and note where I pilfered the above photos.
The gold ox cost 31m English pounds, and the whole gig is intended as a tourist attraction. After the novelty wears off, its hard to envisage this phallic structure fulfilling its intended function. Aside from its massive energy requirements, it will probably end up comping high level cadres and their floosies. Perfectly rational behaviour.
Lets review some of the exceptions.
Take the poverty-stricken county of Dancheng in central Henan province. Officials there spent $1.3 million on a sightseeing rail line with a replica steam-powered train, although there’s little to see but farmland. The locomotive overturned on its first day in operation last year. It’s now sitting idle at a park.
In the remote city of Ganzhou in southern Jiangxi province, officials splurged on a $45-million mechanical clock tower touted as the largest in the world. But so far there have been few visitors; officials haven’t finished paving a road to the site.
“There’s nothing to see,” said one local travel agent. “It’s just a building. You can see it but you can’t go inside.”
What sort of linthead cadre came up with these ideas?
Earlier this year, a small city in central Anhui province announced plans to spend more than $44 million on a hotel designed to look like a pingpong paddle.
The Funing county government in eastern Jiangsu province spent $7 million on a park and ersatz Sydney Opera House that houses a hotel and restaurant. Think iconic white “shells” slapped on top of a large brick box — and no opera.
Read full article HERE and no, don’t submit your own examples as I’m trying to be economical with bandwidth.
Highways to nowhere, ghost cities HERE for a pretty good compilation, so lets look at the provincial account books.
The Telegraph provides the short version on the post 08 building splurge and the mountain of debt piled up by provincial governments HERE.
However, if you have time this Special Report by Reuters China’s debt pileup raises risk of hard landing is the one to read HERE.
Long, detailed, highly recommended, and it builds on the path-breaking provincial debt number crunching undertaken by Victor Shih, both on his China Elites….. site and in The Diplomat. I have linked them so often by now, if you are still unaware of Shih’s research, it is homework time.
While Justrecently and I discussed provincial debt and related matters HERE, I want to focus on a money quote found in the above Reuters Special Report.
“…..investment bank Credit Suisse called Wuhan one of China’s “top 10 cities to avoid”, warning in a report this year it would take eight years to sell off its existing housing stock, let alone the tens of thousands under construction.
Wuhan Urban Construction Investment and Development is the largest government financing vehicle in the city, employing 16,000 workers and sitting atop total assets of 120 billion yuan.
Despite its debt woes, Shen Zhizhong, a deputy director at the vehicle’s media office, argued his firm should not be blamed for the profusion of red ink.
“What we do is all decided by the government. We don’t have any project that belongs to us,” Shen said, adding it was “unscientific” to ask his company how Wuhan plans to pay off its debt. “We are like a sportsman, not a coach or a referee. How can you ask a sportsman something only known by a coach or a referee?”
I suspect that Beijing realises that it is now about to reap a world of economic trouble, and reports are coming through thick and fast.
Clamping down on the underground banking system and promising credit access for SMEs HERE.
Central Huijin, an arm of China’s sovereign wealth fund that is in turn an agent of the State Council, has started buying the shares of Chinese banks listed in Shanghai and Hong Kong to pump up prices (after they took a serious cold shower). NYTs HERE.
Finally, China Daily reports HERE that the Ministry of Railways will offer tax breaks on interest for new bond purchases in the hope of paying off part of the actual (lets not think about pending} shitload of debt owed.
These are the kind of news reports which tell us about the future trajectory of China’s economy, and they are well worth the read.
Finally, reality could be taking hold in Beijing since they also just allocated a large sum to repair many of the crap dams built in the ’50s and ’60s, which would threaten numerous cities if it rained for the proverbial forty days and forty nights.
And, on that Biblical note.
Meet Boss Sun in Wenzhou who played both sides of the dual credit society – In Cooling China, Loan Sharks Come Knocking – and holiday camped his staff, lost, disapeared himself and then somehow returned to the fold.
“My capital chain broke completely,” he said in the interview. “I was driven to foolishness by the debts and was forced to flee.”