Look east young shopper: China’s many malls are wide-aisled, well stocked and inexpensive. Oh, and they’re deserted. The FT reports:
As crowds shouted and pushed for the latest iPhone in Beijing on Friday, a glitzy mall across the street was bathed in silence, with just a handful of shoppers hunting for bargains.[The] empty SOHO complex cast a different light on what is happening in the world’s second-largest economy: consumption is rising, but not nearly as fast as vast shopping centres are being built.A boom in the number of malls without a matching increase in actual shopping gets to the heart of what analysts see as the fundamental problem of the Chinese economy: too much investment, too little consumption.
Trees do not grow to the sky, even in China. Years of double digit growth, state directed credit allocation, and go-go policies by growth and revenue hungry local officials have created conditions for a great and painful unwinding. World markets were exuberant today on news that the much-feared Chinese slowdown seems tamer than some predicted; the Chinese government will do everything in its power to stave off a crash.How it all will work out is a mystery; there has never been an economy quite like China before. But in no economic model or system yet devised have acres on acres of deserted shopping malls ever meant anything but big trouble ahead.