A major problem is the huge quantity of unsold housing and business properties. The government looked into this and found the situation was worse than anyone had imagined. It turned out that about 50 million housing units (mostly newly built apartments) are unoccupied. That’s about a fifth of all housing in the country. To make matters worse, a lot of the new construction (like so much else in China) is shoddy because of the corruption by builders and government officials who are supposed to prevent such fraud. A growing number of Chinese don’t believe their government can handle this mess and that results in hundreds of billion dollars’ worth of Chinese currency trying to get converted to more trusted foreign currencies (like the dollar, euro and yen).
The Chinese government can hide that for a while and move money around to pretend there is no problem. When does China run our of time and money to avoid dealing with the worsening problem?
You'd think that the Chinese rulers--long renowned in the West for their genetically based long-term planning abilities--would have seen this coming in time to prevent it.
But oddly enough, Chinese decision makers are actually just humans just like the rest of us.
UPDATE: More on China's debt and financial problems.
Not that we in America (and the West in general) don't have a growing debt problem ourselves.
Tip to Instapundit on both articles.
