The Economist

The EconomistAugust 4th 2018 China 45

2 Tianjin’s annualGDPgrowth has averaged
just 3.5% since 2017 compared with 13.5%
under Mr Huang a precipitous drop.
Tianjin’s woes are an extreme version
of China’s. Over the past decade cities
have rushed to expand. Yang Weimin a se-
nior official revealed this year that based
on electricity usage China’s housing va-
cancy rate is higher than Japan’s which
stands at 13%. In downtown Tianjin that is
almost palpable. Colonial buildings dat-
ing to the 19th century have been beauti-
fully restored. Yet they are eerily quiet. “All
the units have been sold but few people
have moved in” says a guard at the Tai’an
Avenue luxury complex.
The question of whether Tianjin can re-
coverthen is of national salience. Coming
clean about its problems is a good first step.
But in two other ways the Tianjin example
is worrying. First local officials appear
willing to tolerate only a limited reckoning.
Tianjin like other parts of China has relied
on government-owned companies to pay
for investments. Zhang Zhiwei an econo-
mist with Deutsche Bank has estimated
that in Tianjin these companies only have
enough revenue to cover about 40% of
what they owe in interest the third-worst
ratio among China’s provinces. Tianjin is
he says a “pilot experiment” for how the
government will resolve its debts.
The experiment is not going all that
well. In May two city-owned developers
flirted with defaults on loans that together
were worth 700m yuan ($103m). In both
cases they conveniently came up with
cash in the end. But some analysts saw that
as a missed opportunity. In the absence of
genuine defaults banks will go on lending
to rotten state firms knowing the govern-
ment will always prop them up. “China
hasn’t killed off this implicit guarantee”
Mr Zhang says.
Second Tianjin shows that China’s pre-
ferred solution to debt problems—growing
out of them—is getting harder. As the econ-
omy slows it takes longer to digest bad in-
vestments. Binhai is not a ghost city but it
is far from attaining critical mass. The train
to Tianjin’s centre is a tenth full during rush
hour. The big excitement these days is that
the Juilliard School an American perform-
ing-arts conservatory will open a campus
in Binhai next year its first such venture
abroad. But it is also a marker of reduced
ambitions. The Juilliard will occupy just
one new building. Planners hoped that
many more would house big firms by now.
The appeal of Tianjin for foreign inves-
tors has waned amid soaring labour costs.
ItsGDPper person has passed $17000 ten
times higher than in the late 1990s when
manufacturing firms flocked to the city.
Samsung a South Korean electronics giant
once operated several factories in Tianjin.
It has shifted its focus to Vietnam where la-
bour is much cheaper.
It does not help that Tianjin is also one

of China’s most rapidly ageing cities. Near-

ly a quarter of those with local hukou or

residency permits are more than 60 years

old up from a tenth in the 1980s. As pen-

sion and health-care costs rise social-secu-

rity provisions will consume nearly half of

Tianjin’s pared-down budget this year.

Younger migrants have also started to drift

away to faster-growing regions in China’s

interior. Tianjin lost52000 residents last

year its first such decline in five decades.

In May the city made a bold move to at-

tract young professionals. It offered hu-

kous usually hard to obtain in big cities to

anyone under 40 with a university degree

willing to live in Tianjin. In one day

300000 people applied. With a Tianjin hu-

kou they could send children to local

schools a big enticement. But many appli-

cants simply wanted to base their families

in the city. So officials added a condition

requiring applicants to work there too. Just

5800 applicants made the first cut.

There is one big wild card in Tianjin’s

future. The central government talks of

unifying it with Beijing to create a huge

city cluster. If it truly did that and moved

some government functions from Beijing

Tianjin’s office gluts could vanish says Tin

Sun of CBRE an international property

agency. So far it has taken only baby steps.

In the meantime Tianjin is trying to pick

itself up. It is pitching itself to companies in

Beijing as a location for back-offices. Tech

firms including Bytedance a developer of

popular apps have based censorship

teams in Tianjin. This is not the glitzy fu-

ture of the city’s dreams but it pays the

rent. On July 17th when Tianjin officials re-

ported a grim batch of economic data they

added a rallying cry: “we must summon

the courage that it takes to roll a rock up a

mountain.” A worthy ambition so long as

they can avoid the fate of Sisyphus. 7

Greyhound racing in Macau

Bow-wowing out

T

HE kennels reeked of excrement. The

dogs inside looked weak. Many were

suffering from visible injuries. Such was

the scene that greeted Zoe Tang at the

Canidrome a greyhound-racing stadium

in Macau an autonomous region of

China on the morning of July 21st. The

evening before its billionaire boss had

left behind all 533 race dogs owingto the

expiry of the venue’s operating conces-

sion forcing the authorities to step in to

mind them. Since then Ms Tang (pic-

tured) who works for Anima a local

animal-welfare organisation has been

recruiting volunteers to help feed walk

and bathe the forsaken canines. Hun-

dreds of people have turned up daily far

more than had been betting on the races.

The Canidrome is one of the last

vestiges of a grittier seedier Macau. The

greyhound track opened in 1963 (after a

false start in the 1930s) when Macau was

a Portuguese colony and drew crowds of

day-trippers from Hong Kong. Owned by

the family of Stanley Ho who once en-

joyed a stranglehold on local gambling

concessions it was the last place in Asia

where punters could wager legally on

dog racing. But in the new Macau with its

glitzy casinos it had lost its lustre. Atten-

dance dwindled to just dozens a day.

Animal-rights groups had urged the

track be closed. They alleged that grey-

hounds were put down if they failed

repeatedly to win races. In 2011 the head

of Macau’s animal-control division said

that 30 dogs a month were being killed.

Angela Leong wife of Mr Ho boss of the

Canidrome and an elected lawmaker

denied any cruelty. She said her charges

were the “happiest dogs in the world”.

Macau’s government had threatened

to fine Ms Leong up to 100000 patacas

($12330) for each abandoned greyhound.

On July 27th she announced a plan to

house them at a new air-conditioned

facility. Anima agreed to run it. Ms Tang

says the priority now is to find perma-

nent homes for the pooches. About 700

prospective owners have filed applica-

tions though she worries that some

might spirit them to illegal tracks or even

dinner tables elsewhere in China. Candi-

dates will be scrutinised closely. Victory

for the greyhoundsis in sight at last.

Asia’s last dog-racing track has closed

But the rabbit got away