Saturday, December 18, 2010

What Malinvestment Looks Like: Chinese Edition

Back in October I blogged about aerial photos of unfinished and abandoned real estate developments in Florida.  They are a pictorial manifestation of capital malinvestment undertaken in the housing bubble.

It appears that similar activity may have been taking place for awhile in China. A few days ago Business Insider published photos of, at most, barely occupied developments in various regions of China. Below is a picture of a residential apartment complex in Zhengzhou New District. It is completely empty.

Banks in China have now been told by banking regulators to cease lending to companies for the purchase of fixed assets, including real estate. It sounds as if Chinese authorities are beginning to suspect a bubble.