Ghost town, Inner Mongolia: Inside China's empty cities

They're building it, but will they come? Why China's real estate boom looks so troubling from the outside.

Are China's banking and real estate sectors in a bubble, destined for collapse and an equity wipeout of the first order? Or is the country's government proving to be a far more measured and steadier hand at the till than their discredited Western counterparts? It's an argument of the never-the-twain-shall-meet sort, which is all the more ironic considering the Kipling was speaking of the differences between East and West when he coined the term.

Last week, the naysayers were handed quite a piece of convincing evidence in the form of a research report from Hong Kong-based outfit Forensic Asia entitled China: Ghost Cities. Gillem Tulloch, the analyst who wrote it, did some shoe-leather (of the virtual web surfing sort) research to compile a list of seven ghost cities in China that should strike fear into the heart of anyone with exposure to the country's financial sector.

We're not talking ghost towns of the old West type, the ones that time passed by and left as mere intersections with a saloon and a hardware store. We're talking massive cities that the Chinese government is in the process of building in the hopes that people will come. But the people have not come. Yet the billions are in the process of being spent. (more)