From today’s perch we can only guess of the consequences of LSGO, but we’ll gain that clarity after the fact – a luxury we don’t have. Newspapers that are praising the Chinese growth miracle today will write exposes on what went and is going wrong in China.

I have absolutely no facts to back up what I am about to say, but it is not hard to imagine future stories about poverty stricken farmers that moved to big cities for a better life and found despair; or that inland migration (from farming to factories) only brings a onetime productivity jump as poorly educated farmers-turned-factory-workers add little to productivity improvements afterwards; or how weak and debt ridden the financial system is; or the devastating impact that pollution has on health and productivity; or how the biggest shopping mall in the world, that happens to be in China, is almost completely empty.

Oh wait, the story about the shopping mall is not a figment of my imagination (I'm not that good): It's already taken place. In 2005 NY Times ran an article titled China, New Land of Shoppers, Builds Malls on Gigantic Scale, which talked about the biggest shopping mall in the world, located in Dongguan, China.

From the article:

“Not long ago, shopping in China consisted mostly of lining up to entreat surly clerks to accept cash in exchange for ugly merchandise that did not fit. But now, Chinese have started to embrace America's modern "shop till you drop" ethos and are in the midst of a buy-at-the-mall frenzy…. by 2010, China is expected to be home to at least 7 of the world's 10 largest malls… Already, four shopping malls in China are larger than the Mall of America. Two, including the South China Mall, are bigger than the West Edmonton Mall in Alberta, which just surrendered its status as the world's largest to an enormous retail center in Beijing.” (Emphasis mine.)

Fast forward three years and you find a very different story: the biggest mall in the world - the South China mall, with space for 1,500 stores, only has a dozen stores open for business – it's empty. Shoppers never materialized. Billions of dollars have been wasted.