China’s economy has become the second largest in the world, but its rapid growth may have created the largest housing bubble in history. Lesley Stahl of 60 minutes reports on the China RE Bubble.
China has been nothing short of a financial miracle. In just 30 years, this state-controlled economy became the world’s second largest, deftly managed by government policies and decrees.
One sector the authorities concentrated on was real estate and construction. But, as we first reported in March, that may have created the largest housing bubble in human history. If you go to China, it’s easy to see why there’s all the talk of a bubble. We discovered that the most populated nation on Earth is building houses, districts and cities with no one in them.
China RE Bubble 60 minutes video embedded below
China RE Bubble
Lesley Stahl: So this is Zhengzhou. And we are on the major highway, or the major road. And it’s rush hour.
Gillem Tulloch: Yeah –
Lesley Stahl: And it’s almost empty.
Gillem Tulloch is a Hong Kong based financial analyst who was one of the first to draw attention to the housing bubble in China. He’s showing us around the new eastern district of Zhengzhou, in one of the most populated provinces in China – not that you’d know it. We found what they call a “ghost city” of new towers with no residents, desolate condos and vacant subdivisions uninhabited for miles, and miles, and miles, and miles of empty apartments.
Lesley Stahl: Why are they empty? I’ve heard that they have actually been sold.
Gillem Tulloch: Absolutely.
Owned by people in China’s emerging middle class, who now have enough money to invest but few ways to do it.
Gillem Tulloch: They’ve all been sold. They’ve all been sold.
Lesley Stahl: They’ve all been sold? They’re owned.