05-11-2019, 12:45 PM
** 03-May-2019 World View: Major Chinese 'ghost town' developer JC Group collapses
Yesterday, we described how the Chinese Communist Party (CCP) reacted
to the financial crisis ten years ago by lending massive amounts of
money for the construction of "ghost towns" and "zombie businesses."
Now, JC Group, one of the ghost town developers, has collapsed,
essentially going into bankruptcy. And it isn't just China's
government that's losing all it's money.
Many individuals have invested their personal savings in JC Group, and
they stand to lose all their money. The minimum buy-in to invest in
JC Group was set at one million yuan or $148,400. There are an
estimated 3,800 JC Group investors who are going to lose their
investments.
So, the total amount losts by investors has not been announced, but it
appears to be at least 3800x$148400 or $564 million.
The fact that 3,800 poor slobs may have lost their life savings is
just a part of this story. The more important question is whether
this will trigger the collapse of other such developers, and whether
the Chinese government will be forced to step in and pay off these and
other investors in order to avoid risking social unrest.
The JC Group was taking part in a CCP program called "A Thousand
Charming Towns," which was suppost to create thousands of beautiful,
liveable and themed villages.
JC Group was building more than 50 of these towns, with names like
Crayfish Town, Asian Games Town, Fairyland Town, Poetry Town and Happy
Town. For example, Happy Town’s original blueprints included a sex
toy shopping street, a sex exhibition center and an “adult-only”
hotel, with a total construction cost of 10 billion yuan ($1.5
billion).
AS for Crayfish Town, here's an artist's impression from JC Group
showing what it would look like:
![[Image: 1ae8be06-6bbe-11e9-994e-1d1e521ccbf6_ima...033545.jpg]](https://cdn.i-scmp.com/sites/default/files/styles/1200x800/public/d8/images/methode/2019/05/02/1ae8be06-6bbe-11e9-994e-1d1e521ccbf6_image_hires_033545.jpg)
Dear Reader, I'll bet that you would invest $148,400 of your money in
Crayfish Town, if you had the opportunity, wouldn't you?
---- Sources:
-- Ghost towns / JC Group / Wei Jie / The collapse of China’s ‘fake
towns’
https://www.inkstonenews.com/business/co...le/3008738
(Inkstone News, 3-May-2019)
-- JC Group / Wei Jie / China’s ‘charming towns’ plan turns into a
nightmare for investors, amid legal crackdown
https://www.scmp.com/economy/china-econo...stors-amid
(South China Morning Post, Hong Kong, 1-May-2019)
-- JC Group / Wei Jie / Head of Multi-Billion Dollar Fund Empire Faces
‘Illegal Fundraising’ Investigation
https://www.caixinglobal.com/2019-04-29/...10135.html
(Caixin Global, Beijing, 29-Apr-2019)
Yesterday, we described how the Chinese Communist Party (CCP) reacted
to the financial crisis ten years ago by lending massive amounts of
money for the construction of "ghost towns" and "zombie businesses."
Now, JC Group, one of the ghost town developers, has collapsed,
essentially going into bankruptcy. And it isn't just China's
government that's losing all it's money.
Many individuals have invested their personal savings in JC Group, and
they stand to lose all their money. The minimum buy-in to invest in
JC Group was set at one million yuan or $148,400. There are an
estimated 3,800 JC Group investors who are going to lose their
investments.
So, the total amount losts by investors has not been announced, but it
appears to be at least 3800x$148400 or $564 million.
The fact that 3,800 poor slobs may have lost their life savings is
just a part of this story. The more important question is whether
this will trigger the collapse of other such developers, and whether
the Chinese government will be forced to step in and pay off these and
other investors in order to avoid risking social unrest.
The JC Group was taking part in a CCP program called "A Thousand
Charming Towns," which was suppost to create thousands of beautiful,
liveable and themed villages.
JC Group was building more than 50 of these towns, with names like
Crayfish Town, Asian Games Town, Fairyland Town, Poetry Town and Happy
Town. For example, Happy Town’s original blueprints included a sex
toy shopping street, a sex exhibition center and an “adult-only”
hotel, with a total construction cost of 10 billion yuan ($1.5
billion).
AS for Crayfish Town, here's an artist's impression from JC Group
showing what it would look like:
- An artist's impression of the Crayfish Town, created by JC Group
Dear Reader, I'll bet that you would invest $148,400 of your money in
Crayfish Town, if you had the opportunity, wouldn't you?
---- Sources:
-- Ghost towns / JC Group / Wei Jie / The collapse of China’s ‘fake
towns’
https://www.inkstonenews.com/business/co...le/3008738
(Inkstone News, 3-May-2019)
-- JC Group / Wei Jie / China’s ‘charming towns’ plan turns into a
nightmare for investors, amid legal crackdown
https://www.scmp.com/economy/china-econo...stors-amid
(South China Morning Post, Hong Kong, 1-May-2019)
-- JC Group / Wei Jie / Head of Multi-Billion Dollar Fund Empire Faces
‘Illegal Fundraising’ Investigation
https://www.caixinglobal.com/2019-04-29/...10135.html
(Caixin Global, Beijing, 29-Apr-2019)
