Global economies are struggling.  Europe’s economy is stalling out.  The Japanese economy’s shrinking at an annualized rate of 7.1 percent.  But we won’t dwell on Europe or Japan at the moment.  For today we set our sights on a Chinese bull’s eye; namely, China’s miracle engine of growth that appears to finally be slowing down.

Naturally, when an economy slows many problems that had been covered up by new growth are exposed.  For example, after years and years of stimulating the Chinese economy with borrowed money, the mistakes and distortions have literally piled up as far as the eye can see.  There’s a gross overcapacity of property.

“According to Chinese data, cities have built enough for 97 million new city residents, but over the past 5 years, only 35 million people have moved into these cities, a gap of 62 million people.  These are the potential ghost cities.”

Typically a ghost city appears following a long period of economic prosperity.  Overtime the fundamentals that supported the prosperity change.  Population flight – like in Detroit where the population peaked out at 1.8 million in 1950 is now at just 688,000 – follows. Continue reading →