From the Wall Street Journal today:
A $91 billion industrial project here, mired in debt and unfulfilled promise, suggests part of the reason why China’s economy is wobbling – and why it will be hard to turn around. The steel mill at the heart of Caofeidian, which is outside the city of Tangshan, about 225 kilometers (140 miles) southeast of Beijing, is losing money. Nearby, an office park planned to be finished in 2010 is a mass of steel frames and unfinished buildings. Work on a residential complex was halted last Christmas, after workers completed the concrete frames. There is even a Bridge to Nowhere: a six-lane span abandoned after 10 support pylons were erected.
“You only need to look around to see how things are going,” said Zhao Jianjun, a worker at a plant that hasn’t produced its steel-reinforced plastic pipes for months. “Look north, west, east,” he said, gesturing to empty buildings. Chen Gong, chairman of Beijing Anbound Information, a Chinese think tank, says Caofeidian shows the flaws of the Chinese economic-growth model, in which the government plans investment and companies are expected to follow suit, regardless of market conditions. Chinese local governments are “driven by the blind pursuit of GDP,” said Mr. Chen.
There are reasons why I have doubted much of this “China will overtake the US and dominate the world” stuff and the details referred to above are part of it, though goodness knows state-driven mal-investment is hardly the preserve of China. Far from it. But there has been enough evidence around to suggest that vast sums of money poured into Chinese projects of this type will not bear fruit. And there will be a reckoning.