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The $91-Billion-Dollar Example of Failed State Capitalism (Chinese Edition)

One illustration, of many available:

CAOFEIDIAN, China—

A $91 billion industrial project here, mired in debt and unfulfilled promise, suggests part of the reason why China’s economy is wobbling – and why it will be hard to turn around.

The steel mill at the heart of Caofeidian, which is outside the city of Tangshan, about 225 kilometers (140 miles) southeast of Beijing, is losing money.
The Ruins of China’s Slowdown

Nearby, an office park planned to be finished in 2010 is a mass of steel frames and unfinished buildings. Work on a residential complex was halted last Christmas, after workers completed the concrete frames. There is even a Bridge to Nowhere: a six-lane span abandoned after 10 support pylons were erected.

“You only need to look around to see how things are going,” said Zhao Jianjun, a worker at a plant that hasn’t produced its steel-reinforced plastic pipes for months. “Look north, west, east,” he said, gesturing to empty buildings.

Chen Gong, chairman of Beijing Anbound Information, a Chinese think tank, says Caofeidian shows the flaws of the Chinese economic-growth model, in which the government plans investment and companies are expected to follow suit, regardless of market conditions. Chinese local governments are “driven by the blind pursuit of GDP,” said Mr. Chen.

This debt-fueled, state-capitalist approach is doomed to fail (and make matters worse):

Boosting lending further to pay for more investment, Beijing’s traditional remedy to pump up growth won’t work any longer, economists argue.

When credit is growing at twice the pace of GDP as it has been recently, said Ms. Chu, the Fitch analyst, “mathematically, there is no way to grow out of the poor investment decisions of the past.”

Via Stalled Project Shows Why China’s Economy Is Wobbling @ the Wall Street Journal.

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