As the property sector collapses, international economists warn that the global financial system relies heavily on the continued building of uninhabited ghost cities.
GUANGZHOU — The monsoon rain streaks the tinted glass of the Marriott executive lounge, blurring the jagged, unlit silhouette of a half-finished Country Garden residential complex across the Pearl River. Below, in a puddle of diesel runoff, a stray dog sleeps on a rusted rebar staging ground.
For decades, the global economy has relied on a simple, elegant engine: Chinese developers taking on catastrophic debt to build millions of high-rise apartments that no human being will ever occupy. Now, as the property sector collapses under the weight of Evergrande’s $300 billion in defaulted liabilities, the international community is pleading with Beijing to restart the vital, civilization-sustaining work of pouring concrete into empty voids.
The consequences of China’s sudden refusal to construct unneeded structural husks are being felt in every major financial capital. In Perth, Australian iron ore magnates are staring at plummeting commodity futures. In the Ruhr valley, German manufacturers of luxury elevator buttons face unprecedented layoffs simply because there are no longer phantom skyscrapers in Guizhou requiring their installation.
A copper trader in Santiago, nursing a lukewarm pisco sour, recently described the panic on the London Metal Exchange. For years, the trader explained, Chile’s export economy was buoyed entirely by the understanding that a local government in Henan province would continually issue municipal bonds to finance the construction of identical, eternally vacant shopping malls.
The entire foundation of global macroeconomic stability rests on the assumption that China will indefinitely erect forty-story towers in the middle of cabbage fields.
Voss noted that if Beijing does not immediately resume construction of at least twenty million apartments destined to slowly rot under the Guangdong sun, the resulting drop in heavy machinery demand could trigger a European recession. Outside the hotel window, a single red crane swiveled aimlessly in the smog, a silent testament to a world starved of pointless infrastructure.