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The finances of many cities are in ruins. China is getting slammed for making buildings, cars, and infrastructure out of Tofu. It is the problem of Communism and a society that is corrupt to its core.
This is an excellent video on the problems of Tianjing, a port city that wanted to be a financial hub—and no one in finance or high-tech thought it was a good idea. Now, Tianshri is $145 billion in debt with buildings left unfinished. Tianshri is yet another city that spent billions on development only to stop because it ran out of money to spend on bad ideas.
https://www3.nhk.or.jp/nhkworld/en/news/videos/20240405160621414/index.html
Many of China's projects are poorly designed and built. Under the governance of the Chinese Communist Party, Mainland China has witnessed recurring incidents of road, bridge, and building collapses, leading to countless tragedies.
No Rebar in the Tofu-Dreg Bridges? Only Two Cars Can Topple the Bridge
“Hongqi Viaduct, a multi-span simply-supported bridge in Zhuzhou city, Hunan Province, China, collapsed progressively during the mechanical demolishing of the bridge on May 17, 2009. Totally nine spans collapsed in the accident and it is a typical domino-type progressive collapse. The accident resulted in the loss of 9 lives and 16 injuries.”
From an open comment, “In China, there is no construction project that does not cut corners and no supervisor who does not take bribes,” followed by, “After thorough verification by experts and joint investigation teams, it was confirmed that the two cars were overloaded surpassing the bridge’s design capacity.”
Now, on to Electric cars in China; they are a disaster. When YouTubers make videos of cars blowing up. There might be a problem.
The statistics coming out of China on electric cars and the green environment are all a con job. You cannot trust a single word coming from the Chinese government nor from most of the companies or their auditors.
From 2009 to 2022, China spent more than 200 billion yuan (US$28 billion) on EV subsidies and tax breaks. In 2022, the country sold more than 6 million EVs, accounting for half of all global sales. But how many of those sales were false sales, ledger entries only? How many of the vehicles in the fields even have engines or batteries?
We have warned our clients off of Chinese companies since Unicus was founded several years ago. In November of 2021, there were 260 US-listed Chinese companies with a market value of 1.8 trillion USD. January 8th, there are 265 companies with a market value of 0.84 trillion USD and over 50% decline in total value. The paper from which this information came is listed on the end note and is an excellent dissection of Chinese-based companies listed on US stock exchanges.
The problem is the utter lack of transparency in all sectors of China’s commercial economy. There is no checking to see if the numbers proffered by a company are real, and little effort is made to ensure that the numbers are not manipulated or just made up. Further, instead of dissecting failures to understand why something failed, failures are not discussed. They are buried. Sometimes, they are literally buried like train cars after a fatal high-speed train collision. Nothing to see here. Look away, no filming.
When I asked a Chinese auditor in 2004/05 in a half-jest how much they would charge to manage an audit's numbers, the answer was not in jest: “Mr. Files, it depends upon how much management is requested. The more management requests, the larger our fee will be.”
Business in China is very transaction-oriented and very short-term. There was a time when investment in China brought big dividends when significant short-term gains could be made. That time has passed. China is the land of shortcuts and facades. As a foreigner, you will absolutely not understand why it is a business will quickly take advantage of your trust and why being scammed is such a common occurrence.
As Chinese buildings fall down, bridges collapse, and cities go broke, even more central planning and control are being exerted. Like every other government, a problem caused by the government requires more government intervention.
Communism and central planning have led to many countries' downfall and/or impoverishment. Nothing new is to be seen except the raw scale of the impending cascade of failures that will beset the people of China.
I have no malice against the Chinese people or their choice of government. It is their country and their choice. We are here to share with our clients and readers that China is an immensely difficult place to invest and to receive a return on your money.
Dave Alvin & The Guilty Ones "Harlan County Line"
L. Burke Files, CACM DDP
Senior Researcher and Advisor to the Founder
Unicus Research LLC
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