Et tu Shiyan?

In Shiyan, China, mountains are literally being moved to "make land" for development.  At sea coast locations, new land is being created by creating small islands off- shore.  Local officials are being rewarded with promotions by creating more opportunities for industrial and commercial development no matter the cost to their own towns and districts.  Multiple high-rise apartment buildings mass at the new satellite cities for the potential population expected.  But many of the newly created cities or city expansions are suffering lower than expected occupancy rates and customers are being offered free cars to buy apartments.

Debt for the new development is now 30% to 60% of China's GDP, compared to state and local debt in the U.S. of 18% of GDP.  The model of borrowing to build and paying the loans with land leases from tenants only works as new tenants keep coming.  But as the economy cools, municipalities are vulnerable and lenders are unwilling to loan to governments or apartment buyers.  Even farmers pushed off their land are unhappy - the cost of their land does not compensate for the loss of their livelihood or for the loss of arable land.

The similarities to current development patterns in the U.S. and other countries are strong and point to underlying problems withdrew direct government involvement in commercial and residential development - if only because economic missteps put an entire city, state or country at risk rather than affecting an individual business.

The Chinese experiment is fascinating if only because of the dramatic efforts to reshape the earth to their needs at such a breathtaking scale.  You can read the article and see the photos on the WSJ website  - worth the look!