Country is on an unsustainable spending spree.
by Gwynne Dyer
Building a skyscraper is the ultimate expression of economic confidence, and more than half of the 124 skyscrapers currently under construction in the world are being built in China. But confidence is often based on nothing more than faith, hope and cheap credit, and a frenzy of skyscraper-building is also the most reliable historical indicator of an impending financial crash.
The Empire State Building and the Chrysler Building, the twin symbols of New York's emergence as the world's financial capital, were started at the end of the "Roaring Twenties" but completed in the depths of the Great Depression. The Petronas Towers in Malaysia were built just before the Asian financial crash of 1998. Burj al-Khalifa in Dubai, now the world's tallest building, was just starting construction when the Great Recession hit in 2008.
China avoided that recession by flooding its economy with cheap credit — but that credit has mainly gone into financing the biggest property and infrastructure-building boom of all time. Such booms always end in a crash. This time, we are told, will be different…
About Gwynne Dyer
Gwynne Dyer is a London-based independent journalist whose articles are published in 45 countries.
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