As the article states, always remember one thing: It’s never a free market if the government has to intervene or wishes to manipulate the private sector. However, that’s one of the goals of Communist China: Manufacture the crisis, provide the solution — all of which aims to make capitalism look bad so the population will rally behind the state in times of need and accept the pre-selected alternative.
At present, the Chinese economy is a combination of free markets and bizarre central planning. These ghost cities are heavily financed by local governments and the money that investors use to buy the properties is pumped about by China’s central bank, The People’s Bank of China. So much money has been pumped out by the PBOC that price inflation is starting to cause civil unrest. The PBOC and the government of China are trapped, the only way they can prop up the bubble is by more money printing, but that will cause price inflation to accelerate even more. If they stop printing, the real estate market and stock market will crash. It is possible it will it could result in the greatest crash in economic history.
The below “60 Minutes” clip provides some sense of the bizarre ghost towns and is important to view, but fails to explore the money printing and government role in these projects.
Note: The video cannot be embedded on WordPress. Please click on the full article link for the video.
Full article: MUST SEE: “60 Minutes” on China’s Ghost Cities (Economic Policy Journal)