I’ve discussed the black box that is China’s economy on many occasions, but Bloomberg has a special running this week on the Chinese economy in which they shed some light on it. In their first segment, they covered the ghost cities of China. This government has literally been building entire cities just for the sake of hitting a GDP target. Out in the middle of nowhere, they will pay workers to construct massive and modern cities that are to be populated by no one. This is incredible stuff. If there ever was a ponzi scheme this is it – by definition (via Bloomberg):
Bloomberg’s Adam Johnson reports on the construction boom in Kangbashi, a city in China’s Inner Mongolia originally designed to accommodate around 1 million people that currently has about 30,000 residents. The desert city is part of the Chinese government’s plan to add 36 million units of affordable or social housing in the next five years. Critics warn that “ghost cities” like Kangbashi are adding to the nation’s real estate bubble.
(Source: Bloomberg)
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
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