From Andrew Collier of Orient Capital Research via BeyondBrics:
Some of the excess construction in Sichuan’s rural areas can be laid at the feet of disgraced former Chongqing Party Secretary, Bo Xilai, who was removed from office under a cloud in 2012. Bo had set an objective of building 40m sqm of affordable housing for 2m people at a cost of Rmb140bn from 2010 to 2013. Way too much for Sichuan’s 80m residents many of whom can ill afford to upgrade.
But we believe Sichuan is not an outlier when it comes to rural construction. To prop up ailing rural economies, local governments – prodded by the 2009 stimulus –rushed to throw up building after building. But excess construction has finally come home to roost. A leading indicator of property is land sales, which fell 25 per cent in 2014 and are down 54.8 per cent in the first half of 2015.
