China Developer’s Lament

As part of a Forbes special on the billionaires of the world, Gady Epstein profiles real estate developer Zhang Xin, chief executive of Soho China:

This is the Chinese economy in a nutshell–sellers selling a product for which there’s no natural demand, buyers buying whether they need it or not. In a market boosted by government-directed lending, both sellers and buyers have been getting only more ambitious and frenzied.

For the seller, at least, this is perfectly rational. To not get in while the economy is hot means missing easy profits. Even as Zhang the Cambridge-educated leftist argues the real estate bubble is disserving the nation, Zhang the Wall Street-trained executive can argue reasonably that not participating in it would be disserving her shareholders. Sales at Soho China nearly doubled last year to $2 billion.

As Zhang wonders where her country is heading, the tycoon is at the peak of her capitalist career, 15 years after she cofounded the company that became Soho. Fifteen years from now, will Soho China’s many skyscrapers in the Beijing’s skyline be admired? Or will they be scorned as icons of short-cut capitalism, built cheaply and sold for piles of cash to mining magnates and corrupt officials?

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