China's Ghost Towns: Deserted Cities Raise Fears of Debt Crisis [PHOTOS]
By Umberto Bacchi | Mar 04, 2013 05:29 PM EDT
China is sitting on a huge real estate bubble that could lead its economy to melt down, a report by CBS 60 Minutes has claimed.
The report shows fresh footage of a virtually deserted city in Zhengzhou.
Skyscrapers, condos, entire malls and multiple-lanes roads lie almost empty.
Property development in China rocketed following the opening up of investment for the Chinese people 15 years ago and it has been driving the country's economic boom since.
But it has resulted in millions of speculatively built empty apartments across the country. It has been estimated that there are 64 million vacant homes.
They remain vacant because they are overpriced, which has sparked fears of the property bubble bursting.
"You have got seven to eight million people entering the workforce in China every single year, so you have to give them something to do in order to retain the legitimacy of the government," Kevin Doran, a senior investment fund manager at Brown Shipley, told the BBC.
"Maybe 10 or 15 years ago they were doing things that made sense - roads, rail, power stations etc - but they have now got to the point where it's investment for investment's sake."
Wang Shi, CEO of real estate developer giant Vanke, said: "It is dangerous. That's a bubble and if it burst it would be a disaster."
The government is trying to slow down new projects but that may cause a debt crisis among construction firms, experts have warned.
It has been esteemed there are about 64 million vacant homes in ChinaSource: Reuters
Newly planted trees line a new street in front of residential buildings under construction in the Kangbashi district of the town of OrdosSource: Reuters
A policemen stands in front of a traffic light at a deserted intersectionSource: Reuters
Residential homes line a deserted street in the Kangbashi district of the town of OrdosSource: Reuters
Empty condos are seen in ChinaSource: Reuters
Real estate development in China rocketed following the opening of investment in properties for Chinese people 15 years agoSource: Reuters