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China's Ghost Cities: Could The Real Estate Bubble Burst? (VIDEO)

China Economy

First Posted: 05/17/11 09:29 AM ET Updated: 07/17/11 06:12 AM ET

So many new high-rise urban centers have sprouted across China in recent years that you can almost hear the bubble popping.

Kangbashi, a city in Inner Mongolia, is the subject of Bloomberg's first video installment on these underpopulated, but investment-heavy "ghost cities." And Kangbashi is just one city in the government's larger plan to create roughly 36 million affordable apartments in the country.

Currently, only around 30,000 people live in Kangbashi. But that hasn't stopped the government from investing $160 billion in the city's real estate construction in order to provide accommodation for an expected one million people, Bloomberg TV reports.

Could China be on the verge of a bubble? Much of the economy has been driven by real estate construction designed for an expected influx of people from rural farming areas to urban industrialized centers. But well-known economist Jim Chanos of Kynikos Associates tells Bloomberg he isn't sure this will happen as planned. Many of the overly optimistic now could be too stubborn to admit it.

"People don't want to think that the Chinese growth model might not have as much to it as they thought," Chanos says in Bloomberg's video.

See the first installment of Bloomberg's Chinese "ghost city" series below.

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Filed by Harry Bradford  |