Kilamba, Angola. Image Source: Daily Mail.
Last year, the BBC reported (here and here) on a city the Chinese built on the outskirts of the capital city of Angola:
A giant new Chinese-built city has sprung up on the outskirts of Angola's capital Luanda. Nova Cidade de Kilamba is a brand-new mixed residential development of 750 eight-storey apartment buildings, a dozen schools and more than 100 retail units. Designed to house up to half a million people when complete, Kilamba has been built by the state-owned China International Trust and Investment Corporation (CITIC) in under three years at a reported cost of $3.5bn (£2.2bn). But on a recent trip back to Luanda, the BBC's former Angola correspondent Louise Redvers discovered that most of the buildings currently lie empty, as this footage she recorded shows.
Images Source: Daily Mail.
BBC concludes that this is simply an overheated construction boom, with Chinese construction interests building for a non-existent middle class. Money for Sino-African construction projects has come from oil revenues and Chinese loans:
This is one of the peculiarities of the Great Recession, which lingers, even as it spreads to new areas of the globe. Critics take aim at China's 'scramble for Africa' and a new era of colonialism. But construction booms are also happening elsewhere. Construction of houses and shops increases, despite a limping housing market and lagging consumption.Oil revenues and associated Chinese loans have bankrolled an ambitious national reconstruction programme of roads, airports, bridges, hospitals and schools. In the sprawling cities, where the war-weary sought refuge during the height of the conflict, urban slums are being given a facelift. And once productive agricultural fields are now being cleared of landmines ready for replanting; industries like cotton and coffee are being revived and old copper, iron and gold mines are being re-opened for prospection. Meanwhile, foreign investors are flocking to Angola hoping to share in the boom times and Luanda's tiny Fourth of February airport is overwhelmed by new flights coming from across Africa as well as Europe, Asia and the Middle East.
Similar empty housing developments have been built in China, in Ireland and Spain. People cannot afford the mortgages there, either. Construction projects of this kind reveal where money has migrated in this financial crisis, and the way investment interests are over-reaching toward an imagined and unknown future. These are signs of evolution toward a new system. What are investors expecting, exactly?
Conspiracy theorists favour the Ben Bernanke Web meme, based on this Little Rascals clip of Spanky throwing money out the window. Image Source: Godlike Productions.
When the world changes in ways which mark a significant shift from the past, the Web's conspiracy theorists are never far behind. They are drawn to the cognitive dissonance and confusion which arise from the fact that the way things evidently are simply does not line up with the way we expect things to be. One conspiracy theorist commented:
Housing for post apocalyptic living.
The Chinese know.
The Chinese know.
Others on this conspiracy theory forum drew from the usual fears: anti-Semitism, Illuminati, New World Order, etc.
The mortgage-less housing boom could be a sign of things to come: a lost middle class. Or, perhaps, this is simply the old system, grinding through a downturn in the usual, flawed fashion; and the only difference is the scale and global scope. Perhaps this Chinese construction boom is a sign that the recession is moving to engulf China (and particularly Hong Kong, as well as India, Thailand, Singapore, Australia and South Korea).
Consider an earlier example. After reunification in 1990, the former areas of East Germany experienced an enormous multi-year housing boom. In the early 90s' recession, unemployment hit first; but construction companies in former East Germany kept building. The construction sector felt the economic impact later. On 18 February 1996, Bloomberg reported:
In 1996, construction spending, which accounts for one-tenth of gross domestic product, will hit the wall, dropping 1%, to $284 billion, according to industry associations and private analysts. As a result, unemployment among construction workers should rise 55%, to some 250,000. Bankruptcies among construction companies are predicted to rise more than 10%, to 6,000.