Fiscal Risk Increases with Buildings’ Heights

Several minor skyscrapers in the Lujiazui area of Pudong, Shanghai. From left to right: World Financial Mansion, China Merchants Tower, China Development Bank Tower, China Development Bank Tower, Shanghai Stock Exchange Building, China Insurance Building, Standard Chartered Building, Pudong International Information Port. (Image:  DXR   via   wikimedia  /  CC BY-SA 4.0)
Several minor skyscrapers in the Lujiazui area of Pudong, Shanghai. From left to right: World Financial Mansion, China Merchants Tower, China Development Bank Tower, China Development Bank Tower, Shanghai Stock Exchange Building, China Insurance Building, Standard Chartered Building, Pudong International Information Port. (Image: DXR via wikimedia / CC BY-SA 4.0)

These days, skyscrapers over 500 metres tall have become common in China and cities continue to build even taller and taller skyscrapers. The Wuhan Greenland Centre, which was originally planned to be 606 metres tall, is now expected to be increased by 30 metres to become China’s tallest building.

Additionally, the officials of Changsha City in Hunan Province have announced they will build the world’s tallest skyscraper, which will be 50 floors taller than the Burj Khalifa in Dubai.

Many people worry that the popularity of such skyscrapers will lead to increased safety issues. Meanwhile, some experts have pointed out that China’s “skyscraper fever” may be an indicator of an economic crash.

More than 200 skyscrapers are now under construction in China. The Zifeng Tower in Nanjing reaches 450 metres; the East Tower in Guangzhou is 530 metres; the buildings of Wuhan Greenland Centre and Shenzhen Peace Financial Centre are 606 and 660 metres respectively.

It is estimated that a new skyscraper will be built every five days in Mainland China for the next three years. Accordingly, China will have 800 skyscrapers in five years, which is four times the total number of skyscrapers in the United States today. Approximately 80 per cent of the new buildings will be built in underdeveloped areas of China.

The leading Chinese real estate developer, Greenland Group, revealed that it’s the Chinese Communist Party (CCP), not them, who are endeavouring to construct the landmark buildings.

Shengli Gong, the famous Chinese scholar and independent financial critic, said: “China is engaged in image projects in its cities and provinces. The skyscrapers are the products of those image projects. Without these remarkable achievements, how can the local CCP officials justify their jobs?”

Dangers related to China’s skyscraper craze

According to the media, the plans show that Changsha’s “Sky City” project will be completed in anything from 90-210 days. Since it took six years to complete the Burj Khalifa in Dubai, netizens question the safety standards of China’s skyscrapers.

Fighting fires in such skyscrapers is another problem. An official from a Beijing fire station pointed out that in case of a fire, the chance of successfully escaping from the high-level floors is almost zero. On Nov 15, 2010, a fire in a 28-storey apartment building on Jiaozhou Road in downtown Shanghai claimed 53 lives.

Shengli Gong continues:

‘Skyscraper fever’ an indication of impending financial collapse for China’s economy?

Research has found that over the last 140 years, “skyscraper fever” had been a reliable indicator of an impending financial collapse. Soon after the establishment of the Chrysler Building and Empire State Building in New York, the New York Stock Exchange crashed, followed by the Great Depression of 1929. Recently, the skyscrapers in Dubai were built just before the Great Recession of 2008.

China’s macro-economy has shown weakness in recent years, which can be taken as a warning. Statistics show that fiscal revenue growth during the January-May period was much lower compared to the same time period in 2011. The most recent reading of the Purchasing Managers Index (PMI) indicates economic deterioration. The Producer Price Index (PPI) fell 1.4 per cent from last year, dropping to the lowest point since December 2009.

According to Shengli Gong: “Being a country with a population of 1.3 billion, most of its funds are gathered in the state-owned companies. China has such a large quantity of citizens and industries such that if they only focus on image projects like building the tallest buildings, there will be an economic risk.”

According to statistics, 87 per cent of the skyscrapers currently under construction in the world are in China. Shengli Gong believes that it won’t take long for the fatal flaws of China’s skyscrapers to be revealed and the outcomes will most likely shock the world. Does this skyscraper craze portend an impending danger to China’s economy?

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