Over-production

Wang Shi, founder and chairman of Vanke, the world's largest home builder by sales."It's a real problem," he concedes. "Many cities have an oversupply of housing."…every Chinese city is ringed by empty developments…far too much was built and in the wrong places."In the west, if a city faces financial difficulties, it'll go bankrupt. But in China, cities will be subsidised by the Ministry of Finance. So some small- and medium-sized cities aren't worried about going bankrupt. They figure the central government will help them out."This is an extraordinary assertion from a major Chinese developer: that companies and local governments can spend, safe in the knowledge that Beijing will open its wallet if they run into difficulty. But this free spending by local governments has helped inflate the biggest debt bubble in world history – and it can't go on forever.