History has shown us countless times that centrally-?planned, command style economies do not produce long-?term economic growth. We’ve seen this will the Soviet Union, the UK, the US-?since the Tech Crash, and today in China.
I realize that many would argue China has adopted free market policies with its “free market zones.” However, even this terminology reveals China is nowhere near a free, dynamic market (a free market is simply a free market, not a “zone.”).
Instead, China should be viewed through the lens of rampant corruption, fraud, and insider dealing that has seen a select handful get rich (usually those with close ties to the ruling party) via paper wealth (real estate and stock prices).
First and foremost, no Chinese economic data is even close to accurate. The reason for this, is that unlike the US in which GDP is measured using final sales, China simply counts any and all economic production as economic growth.
So, let’s say that China built a city. Regardless of whether any of the buildings are ever purchased or leased, China will count the entire city in its GDP growth. As one can imagine, this has highly incentivized China’s government to build “bridges to nowhere” or economic projects that are never actually used.
As a result the country is replete with ghost towns...
China's ghost towns and phantom malls
"In Chenggong, there are more than 100,000 new apartments with no occupants," according to the World Bank's Holly Krambeck.
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