We are on a dirt track snaking its way uphill through rice paddies and groves of yellow bamboo. Behind us, spread out across a vast, smoggy plain, are the homes of tens of millions of dirt-poor migrant workers who struggle to earn a living in some of the most polluted cities on the planet: Huizhou, Dongguang, Guangzhou and Shenzhen, the clustered sweatshops of southern China. Yet there in front of us, as we turn a final corner through the dust, is an Alpine vision.
A neo-Gothic church rises like a mirage. It is surrounded by the spotless wooden roofs of well-tended chalets, scores of them, a picture-postcard village set beside an artificial lake. Welcome to Hallstatt, the UNESCO-listed Austrian resort. Welcome to Hallstatt, China.
Never afraid to ‘borrow’ or imitate, Chinese planners have now designed what might be called the ultimate counterfeit: a settlement copied wholesale for the benefit of wealthy industrialists and located just an hour or so by chauffeur-driven limousine from their grim factories in the smoky distance.
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There is, however, a flaw in this otherwise impressive feat of construction: no one is buying.
China’s real-estate market, booming as recently as last summer, has gone into freefall. For the moment at least, Hallstatt, Austria, will keep the prize for visitor numbers.
This sudden reversal of fortune might generate a few wry smiles among lovers of the original. But the state of the Chinese property market is no laughing matter; in fact it has caused waves of alarm as the world’s second biggest economy heads for a crisis of confidence.
China is growing at its slowest pace for more than two years and property prices, which have grown fivefold in the past decade, are projected to shrink by as much as one fifth in the next year to 18 months. The price of new homes in China fell for the third consecutive month last December, official statistics show, with annual growth in real-estate investment slowing to its weakest pace for a year.
The property ‘bubble’ is a source of grave anxiety for economists and a potential disaster for China’s newly monied classes, who for years have snapped up luxury homes, often leaving them empty to preserve their treasured ‘brand new’ status, apparently secure in the knowledge their value could only rise.
Unable to invest abroad (the regime does not permit individuals to send money out of China) and with precious few options for domestic investment, tycoons and middle-class buyers have put their faith and their money in real estate. And this, in turn, has become one of the engines driving China’s extraordinary development.
Finding that so much of China’s ‘growth’ is paper profit based on empty bricks and mortar is scarcely better news for us in the beleaguered West. China’s expansion has fuelled the global economy, driving demand for raw materials and creating an enormous appetite for consumer goods and foreign luxuries.
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Nor is it just the rich who have seen the value of their investments plunge; legions of middle-class city dwellers have ploughed their life savings into urban property, too. In recent months, apartment owners have erupted in protest as they watch developers slash prices for neighbouring – and identical – properties because of shrinking demand. And such protests hint at a social disquiet that terrifies China’s leaders.
One of their darkest fears is the prospect of an uprising by the country’s middle classes who, in an unspoken pact, tolerate single-party rule in return for prosperity and continuing economic growth.
And for some additional irony:
The same fate has befallen Thames Town, the English-style development built near Shanghai in 2006, which a visitor last year described as being ‘like the set of The Truman Show’ deserted but for a handful of couples having their wedding photographs taken with ‘British’ backdrops.
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