1/7
"Tianjin was a poster child for rapid economic growth in the years following 2008," this very interesting article by Frank Tang reminds us, "when China decided to roll out a massive stimulus plan to offset the impact of the global financial crisis."
scmp.com/economy/china-…
"Tianjin was a poster child for rapid economic growth in the years following 2008," this very interesting article by Frank Tang reminds us, "when China decided to roll out a massive stimulus plan to offset the impact of the global financial crisis."
scmp.com/economy/china-…
2/7
Tianjin's growth exploded in response to the stimulus which, among other things, recreated Manhattan's office space on a remote river bank. Tianjin grew so quickly that it led to widespread speculation that the city would was becoming a major engine for national growth.
Tianjin's growth exploded in response to the stimulus which, among other things, recreated Manhattan's office space on a remote river bank. Tianjin grew so quickly that it led to widespread speculation that the city would was becoming a major engine for national growth.
3/7
Instead, massive overbuilding left a "Manhattan" ghost town (and a kind of tourist attraction). The city became one of the most indebted in China, locking itself into a downward spiral in which high debt slowed the economy and slowing growth worsened the debt burden.
Instead, massive overbuilding left a "Manhattan" ghost town (and a kind of tourist attraction). The city became one of the most indebted in China, locking itself into a downward spiral in which high debt slowed the economy and slowing growth worsened the debt burden.
4/7
Tianjin is no longer a poster child for Chinese growth, but I'd argue that it remains a model for the economy. It relied on soaring debt to grow, but because this debt mainly fed non-productive investment, once debt could no longer grow, economic growth had to collapse.
Tianjin is no longer a poster child for Chinese growth, but I'd argue that it remains a model for the economy. It relied on soaring debt to grow, but because this debt mainly fed non-productive investment, once debt could no longer grow, economic growth had to collapse.
5/7
More importantly, unless the city is able to resolve debt quickly and efficiently, mainly by directly or indirectly liquidating city assets to pay down debt, it will remain locked into its downward spiral.
There are many who argue that Japan's experience after...
More importantly, unless the city is able to resolve debt quickly and efficiently, mainly by directly or indirectly liquidating city assets to pay down debt, it will remain locked into its downward spiral.
There are many who argue that Japan's experience after...
6/7
the debt-fueled investment boom of the 1970s and 1980s can tell us almost nothing about China's future growth trajectory because of income, political and institutional differences between the two countries. But it is hard to make the case that China is structurally...
the debt-fueled investment boom of the 1970s and 1980s can tell us almost nothing about China's future growth trajectory because of income, political and institutional differences between the two countries. But it is hard to make the case that China is structurally...
7/7
different from Japan in a way that Tianjin isn't. I would argue that Beijing should be experimenting with ways for Tianjin to use its own internal resources to revive itself so that it will know what to do if (when) the problem of Tianjin becomes the problem of China.
different from Japan in a way that Tianjin isn't. I would argue that Beijing should be experimenting with ways for Tianjin to use its own internal resources to revive itself so that it will know what to do if (when) the problem of Tianjin becomes the problem of China.
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