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if trouble comes in threes then what'll be the next global market to melt down
after the u_s_ and europe
summer looking nervously actually not
china has been nothing short of a financial miracle in just thirty 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 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
the story will continue in a moment
said this is jenks job
and we are on the major highway or the major road
and it's a rush hour
almost anthea gil until it is a hong kong based financial analyst
was one of the first to draw attention to the housing bubble in china
the showing us around the new eastern district of shan jao
in one of the most populated provinces in china
not that you'd know it
we found what they call aglow city
of new towers with no residents
desolate condos and bacon subdivisions uninhabited for miles and my nails
ten miles and my own spoke anti apartments
why are they empty uh... i've heard is that they have
i've actually been sold
they've all been sold
they've all been albans possible
along the bike people in china's emerging middle class
who now have enough money to invest
fuel ways to do it
they're not allowed to invest abroad
banks offer paltry returns in the stock market is a roller coaster
but fifteen years ago the government changed its policy allowed people to buy
their own homes and the floodgates pulpit so what they do is they invest in
property because property prices have always gone up by more than inflation
and i believe that a lot was go out
yet just like they believed in the u_s_
actually property values have doubled
tripled and more
so people in the middle class of something every last penny into buying
five even ten apartments
fueling a building bonanza unprecedented in human history
no nation has ever built so much
how important is realistic to the chinese economy
is at central
yes is the main drive a person has been for last few years some estimates have a
despised twenty or thirty percent of the economy
but they're not just building houses
their building
cities yes the science cities
being built
with people not coming to live here
yes i i think that building some of the screen twelve and twenty four
new cities every single year
unlike our market driven economy
in china it's the government that has spent some two trillion dollars to get
the city's built
as a way of keeping the economy growing
the assumption is if you build it dell com
but no one's coming
significant thing really
completely totally empty and it goes up
killing took us to the shopping mall thats been standing vacant
for three years tonight finance all over china
yes you can
they said people too much emphasis should too quickly but i see
k_f_c_ behind you
at the starbucks over there i see some other
very recognizable american franchises coming in here
deadly threat
does that mean they have faith that that this is going to ignite that is ralph
eight science assisted if potential bias there
pressure what it might look like it's a myth that they're not really folk can
see didn't
drive is based around the state from there they have starbucks net
they just put the time
that's right
it's all make believe non-existent supply for non-existent demand look at
that
throughout the city
p_r_k_ they're hoping for a high and feel free to manza
perfect mix up
potemkin
it's a real and its everywhere
like the city of or does in mongolia
built for a million people whom didn't show up
and no you're not in inland
your intense town a development near shanghai built like an english village
and it was finished i think about five or six years ago
they must have cost close to a billion u_s_ dollars
annealed she is still standing there and see
heard that there his some industry there are some business one business there
marriage
wedding divisions that right
and what's more interesting than a wedding
worked hand
you can see these mt developments on the edge of almost every city in china
what about the idea
china is urbanites people
flooding into cities or want to anyway from the world areas
by the hundreds of millions dept
at this really is a smart move build a housing to accommodate the organization
process over so people are being moved into the cities but that doesn't
necessarily mean that they can afford these apartments which in a cost in two
thousand u_s_ dollars or whatever
i mean he's a poor people moving into the city so that building the wrong sold
apartment and what's worse to build all these matters it is
they've had to take care down what was there before
clearing rice fields and displacing by some pounds
tens of millions of villagers
on the edge of yang job gillam and i came up on ustream sites
and just watching
what they're doing do you have any idea
appetizer recycled breaks
barclays villagers are salvaging what's left of their homes bulldozed to make
room for more empty condos
already encroaching on the distance
they are all these empty apartments over here
candidate conceivably more than ten dollars up-scale places there's people
in china the banks lester
two dollars a day
these apartments probably cost upwards of fifty or sixty thousand u_s_ dollars
uh...
very unlikely what will happen to have to think w forced to relocate somewhere
i have no idea what ok these are the immediate casualties of the building
boom
and there's another problem
analysts warn that all this building has created a bubble that could burst
so if the bubble burst
also left holding the bag
there are multiple
classes of people they going to get
white tag by this down people who have invested three generations worth of
savings save grandparents parents and children into properties will see their
savings evaporates and then of course this fifty million construction workers
who are working on a limb
projects are enjoying it
the prognosis of a bubble about to burst isn't only coming from financial
gloaming tumors
we heard it from the most unlikely source argue had
biggest home builder in the world that uh... thinker and he did the the
alligators out only the quantity not quote
when juror is modest
but his company cranky is a fifty three billion dollar real estate empire
building more homes than anyone in china
he was born on the front lines of communism and joined the red army
but he secretly weird forbidden books about capitalism
so that when china liberalize its economy
he rushed to the front lines of the free market
even he thinks today's situation is out of control
our homes in china too expensive
here here's a number that i saw a typical apartment in shanghai
cost about forty five times the average
residents annual salary
lena hai
even flag named for your economy of it
if it's just two weeks
benson for
the bass majority of people
so i think that uh... tenure
dangerous next time
baba
so i think that the problem
is there about what
and ethel call there is a bubble on the issue is will it burst or not that's the
big thank you for that the bubble
that uh...
negative after
if it burst you've blessed that can happen
to try and prevent the disaster
the chinese government decided to act
curd of their one-child policy
since twenty eleven china has had what amounts to about one apartment policy
where it's very hard to buy more than one apartment in major cities
because of this prices plunged the bubble was being taint
and yet the taming was creating all kinds of unintended consequences
are many developers in the dept
weekend are many
stopping development in the middle of projects
they don't have the money to go forward
you know that problem
that the huge public
a problem because the slowing down of construction
led to a downturn in the overall economy
unfinished
projects dot china
and not just apartment buildings
analyst and stevenson yang who was travels across china shabbat ajar and
project all but abandoned in the port city of t engine
with concrete skeletons as far as the eye can see
the plan is to build a new financial district to rival manhattan
including a lincoln center and a world trade center only taller
but it all seems frozen they're supposed to be a rockefeller center here
i hope that the christmas tree temp
skating rink
city officials told us everything stopped
because developers want to build all of the sides it wants to match
but on the ground we heard a different explanation
workers told us
that many of these buildings haven't had any work
donald for weeks and months
as if the developers just don't have the money to go on
trees through that happened first date
migrant workers will go
that's often the first time
but the debt crisis is starting
the debt crisis
dugout hillsdale everything stops
it could be camping debt crisis
because of the huge loans most of the developers took out
if they can't repay them the whole economy he'll caesar
the government's great fear is that all this could lead to social unrest and
that's not hypothetical
last year when home prices fell
it infuriated all those owners of multiple dwellings
who watched the value of their nest eggs
plummet
and there's already been some demonstrations over
realestate around the country
have you had demonstrations against your show runs anywhere
your company
someone from *** sure shudders to think what would happen if the bubble actually
burst
if that uh...
papa brunch
ultimately
who know what's been happening
maybe left fifteen px x maybe unfit
maybe next politics sprint there have been doing you mean people would coming
out and demonstrate
water mcconnell say that it's too big for even this government to control no
harm
the billions out
papa lucas uh... of those novels mt
traditionally that
and i think that your playing a good you going like that
and construction
meanwhile people who can afford it are still buying as much realestate as they
can
their even finding ways around the one apartment restriction in big cities
can't buy in beijing
plasticity online
and at home isn't
full swing on a walk down the flyers advertising new projects
potential buyers browning buses to senior construction
and new homeowners who might have to register their new apartment
like us department
they just don't believe the good times will ever again
go to sixty minutes over time dot com to your would one of the richest women in
china
has to say about producers in recovering sponsored by bankrupt