In a few years time, when people are shaking their heads wondering whatever happened to the Chinese economic miracle, remember this image.
It seems a familiar sight. The highway into hundreds of cities all over the world looks pretty much exactly like this. But check a little more closely: this place is different.
It's called Ordos, an Inner Mongolian metropolis built in five years, from nothing, to house one million people.
Apart, however, from a few hundred maintenence workers who keep the gleaming new buildings ticking over, it's absolutely deserted. With no life or culture of its own, no one (can't imagine why) from the surrounding areas wants to live there, even though many Chinese have bought up its expensive apartments as 'a store of value'.
Is there, anywhere in the world, a greater monument to folly than this?
You can see Time Magazine's extraordinary slide show tour by clicking this link.
China's 'treadmill to hell' is, as previously noted in these pages, still running at a breathless pace; building projects like Ordos continue to contribute to the jaw-dropping rate of Chinese growth - over 50% of which now consists of construction and fixed-asset investment.
|South China Mall, the biggest in the world, |
But their latest inflation problem - a surge in food, raw material and property prices - is now becoming serious. Unless the cost of commodities abates inflation is in danger of over-running the economy, yet Bernanke's QE2 continues to fuel a price boom as rabid speculation in copper, oil, corn etc. refuses to die.
As the Chinese government reaches for ever more draconian policy levers to clamp down on soaring prices, the risk that they will inadvertently pop their own bubble, just as higher interest rates did in the US in 2007, becomes severe.
At some point - and ace bubble-watcher Andy Xie thinks it's still a year away - this credit boom will almost certainly turn to bust. At that point, construction growth will stall out. When it does, the collateral damage for a myriad of satellite economies (eg. Australia, Brazil, Russia), as well as for commodity prices themselves, is set to get ugly and fast.
Sharp-eyed reader, apologies: my monthly On the Money post scheduled for December 5th has had to be delayed for a week. So as not to miss out when it finally appears - and I can only promise that it will be worth the wait - why not have it emailed to you automatically the moment it's published? Just pop your address in the 'subscribe via email' box at the top of the page.