China's empty 'ghost' city
Ordos is a hyper modern city, full of brand new glass walled residential and commercial buildings, yet devoid of inhabitants. In its attempt to present a "growing" economy, and to "invest" its $585 billion stimulus into anything and everything, courtesy of comparable idiocy on the other side of the Pacific, China's communist party is now ruling over ghost towns. One wonders just how many such "efficient" projects sustain China's magical 8% growth.
The World’s Largest Shopping Mall - another 'ghost'
Unfortunately this video cannot be embedded - watch it here.
The largest mall in the world turns out not to be the famous Mall of America in Bloomington, Minn. It’s the South China Mall outside of Guangzhou, China. Outdoing the techniques of American consumerism, South China Mall is Disneyland, Las Vegas and Mall of America rolled into one. There are carnival rides, mini-parks, canals and lakes amid classic Western-style buildings with space for hundreds of shops.At the root of all of this 'ghost' real estate development is corruption.
But along with the glitz and glory of middle-class shopping, the mall’s Chinese developers seem to have imported something else — a cautionary tale of capitalist hubris. Alex Hu, a local Guangzhou boy who made it big in international business, wanted South China Mall to be a hometown monument to his success — even though Guangzhou has no major airports or highways nearby. And four years after its construction, the mall sits virtually empty of both shops and shoppers.
Communist mantra leads to corruption in high places
"To get rich is glorious" has been the mantra in communist China for 30 years,China's economy is a bubble just waiting to burst. The real estate development is being fueled by cheap government money and corruption. How many empty housing developments, office buildings and malls can China build before the real estate market there collapses?
An example is Wen Qiang, a former head of the judiciary and ex deputy police chief in Chongqing, who amassed assets valued at over 100 million yuan (14.7 million dollars), but now stands accused of protecting crime bosses in exchange for 'gifts' and kickbacks.
The 54-year-old is one of dozens of top judicial officials, including the former deputy head of China's top court, ensnared in high-stakes graft scandals, despite repeated Communist Party pledges and campaigns to stamp out corruption.
"When people like the deputy head of the Supreme Court accept bribes and engage in corruption, you can draw your own conclusions as to how serious the corruption in China's judiciary is," Beijing lawyer Mo Shaoping told AFP.
Wen, who became Chongqing's top judicial official last year after 16 years on the police force, stands accused of protecting an intricate web of businessmen, officials and mobsters in the city of over 30 million people. According to state media, his misdeeds extend to shielding businesses in numerous sectors such as real estate, transportation, gambling and prostitution, as well as an illegal loan racket worth 30 billion yuan last year.
Of the approximately 2,000 suspects who have been placed under investigation in the case, at least two dozen top city officials have been caught up in the crackdown, including Chongqing's high court deputy president, Zhang Tao.
The China Youth Daily commented that: "What is more shocking than Wen Qiang's ties with businessmen and the mafia, is the role which government officials at all levels played." "If a string of government officials from top to bottom had not been linked together to form bridges, then Wen Qiang would not have had the power nor the ability to establish such a protectionism umbrella."
But “that is how the country and it’s judiciary has been running since it was setup.” commented Mrs Ma, a former accountant at a state run company in China.
"The big issue for China is corruption -- corruption is related to the fact there is no checks and balances mechanism on political power," Joseph Cheng, a political scientist at City University of Hong Kong, told AFP. "This is related to the Party wanting to maintain a monopoly on political power and not being ready to adopt restraints on power. So it is a vicious cycle that lets them not effectively fight corruption."
Cheng said disclosure would be helpful, but suggested that greater freedom of the press - to report on official corruption - and more oversight from the nation's rubber-stamp parliament would make anti-graft efforts more effective.
Mo, a high-profile Beijing rights lawyer whose firm often handles compensation cases tied to land acquisition, said corruption was rife in both civil and criminal courts, though bribery in civil cases was more common.
Top court officials in Beijing as well as Guangdong, Hubei and Liaoning provinces have recently been convicted for taking money from attorneys in exchange for favourable rulings. The former deputy head of Beijing's Western District court, 58-year-old Guo Shengqui, was sentenced to death with a two-year reprieve for taking bribes and kickbacks from real estate developers and lawyers.
"You can know the law and you can have a clear-cut case, but if the court is really corrupt, then the law does not matter," said Mo.
A Chinese political analyst, Jiang Weiping offered a different insight: The arrests of Wen Qiang and Li Qiang (another corrupt officer in Chongqing), were mearly part of a political battle between Bo Xilai, He Guoqiang and Wang Yang". Bo, He and Wang are all top leaders in the communist central committee.
It would not be the first time. Back in the 1990's a similar boom in real estate in Hainan collapsed and resulted in lawsuits. Caught up in one of those lawsuits was Zhou Xiaochuan, the head of China's central bank. He and his partners were bailed out by Goldman's Sachs back when Hank Paulson was the CEO. Another person involved in this swindle was Wang Qishan, who is now Vice Premier of the People's Republic of China.
Just take a look at this graphic from the New York Times.
click on image to expand
The image comes from this New York Times article from March 4, 2005 - Horse Trading for a Venture in China.
What was so unusual about the Goldman deal is that a blueblood American firm was willing to pay $67 million to help the government dissolve an entirely unrelated state-owned enterprise, Hainan Securities, whose officials have been accused in lawsuits of embezzling millions of dollars from investor accounts.No fraud? Right. The NYT's lawyers want to make it clear that they are not accusing anyone at Goldman or in China's government of fraud. It's called CYA. "Don't sue us. We never said anything about fraud. We're just reporting the facts." Then why bother even reporting this story if there is nothing fraudulent going on? Astute readers are expected to read between the lines.
Why the Chinese government chose Hainan Securities remains unclear. But Mr. Fang and another power broker at the dinner table that evening, Wang Qishan, the mayor of Beijing, had ties in Hainan Province - Mr. Wang had been Hainan's party secretary from 2002 to 2003. And Mr. Fang had overseen a real estate investment with Hainan Securities in the mid-90's.
Goldman officials declined to comment on any aspect of the Hainan Securities money or the joint-venture loan, including what kind of collateral Mr. Fang pledged to back the loan.
But there is no evidence that Mr. Fang or Mr. Wang was involved in fraud at Hainan Securities, or that Goldman's donation money will benefit them in any way.
The corruption doesn't stop at China's borders. The corruption is in the US government, in the US Treasury Department and the Federal Reserve, in Wall Street - and especially in Goldman Sachs.