With concerns rising about the China bubble, Chinese officials are moving to restrain bank lending but will that be enough?
Jack Rodman, who advises private equity and hedge funds on Chinese property and banking, says China is a disaster in the making. He has told Bloomberg that China is full of empty office buildings. "Beijing's office vacancy rate of 22.4 percent in the third quarter of last year was the ninth-highest of 103 markets tracked by CB Richard Ellis Group Inc., a real estate broker. Those figures don't include many buildings about to open, such as the city's tallest, the 6.6-billion yuan ($966 million) 74- story China World Tower 3. Empty buildings are sprouting across China as companies with access to some of the $1.4 trillion in new loans last year build skyscrapers. "
Adding to these worries are the concerns that China might be cooking the books to give the illusion of high speed growth. As Jordan Calinoff writes in Foreign Policy , China seems to be fudging the numbers. He says the growth isn't coming from consumers buying but from state owned companies buying from one another, in effect just playing ping pong with the goods.
Calinoff writes: "The government insists that even though China's all-important export sector has been devastated – contracting about 25 percent in the past year – a massive uptick in domestic consumption has kept factories producing and growth churning along. A close examination of retail sales and GDP growth, however, tells a different story. China's domestic retail sales have risen about 15 percent year on year, but that does not really translate into Chinese consumers purchasing 15 percent more televisions and T-shirts. The country tabulates sales when a factory ships units to a retailer, meaning China includes unused or warehoused inventory in its consumption data. There is ample evidence that state-owned enterprises buy goods from one another, simply shifting products back and forth, and that those transactions count as retail sales in national statistics."
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