Progress stops at nothing. Not even a mountain. The race of the People's Republic towards infinite development seems to have to pass through the frantic search for more and more space for new establishments and activities. Chinese cities are ready for anything, even tearing down hills. But the costs are high, the mayors are in debt and a slowdown in growth could bring down the dreams of glory and put the Dragon in crisis. He dedicates a extensive article the American newspaper Wall Street Journal.
We are in Shiyan, a populous city in central China. Over 3 million inhabitants and great development potential for the local economy. But the industry needs space. And space is running out, in an area surrounded by towering hills.
The local authorities decided that the obstacle should not be circumvented, but rather eliminated. And so they decided to tear down the hills. Thus began a campaign to level hundreds of high and low floors. The goal is to increase the city area by 70% to give life to numerous industrial projects.
Shiyan's example shows the extent to which Chinese cities increasingly rely on land to sustain growth. This strategy should raise hopes for more investment and jobs, through new factories that will be built on the land that will be vacated.
However, this system creates more debt and exposes municipalities to various problems if the export boom does not continue. Not to mention the environmental and social costs of the practice.
"Chinese mayors use the land as if it were their bank - comments to the Wall Street Journal Karen Seto, professor of urban environment at Yale University - They look at the mountains and think about how to turn them into buildings".
In the rush for construction, such as industrial lots, local governments have to go into debt, sometimes heavily. To repay the loans, they rely on XNUMX-year land leases for commercial and residential buildings.
The model has worked so far. Demand for industrial and residential lots is still strong. But China's economic growth is slowing down and cities could start to experience some problems and become vulnerable.
“If the land market cools down, prices and sales volume will collapse. In this way, not only will the financing of some projects be jeopardized, but there will also be a risk of triggering a financial crisis,” said Ba Shusong, a researcher at the Center for Development Research, a state-run think tank in the People's Republic of China. , in an analysis published in local newspapers.
It is difficult to say how much Chinese local governments have gotten into debt, updated data is lacking. The National Audit Office, in 2010, had calculated the impressive figure of 1760 trillion dollars. Since then, the debt has risen between 2460 and 4920 billion. In other words, between 30 and 60% of the Chinese GDP. The estimates are those of the Beijing government, cited by the Wall Street Journal. In the US, state and local debt is about 18% of GDP.
