China's mall glut reflects an unbalanced economy

DONGGUAN, China — The world's largest shopping center looked almost deserted on a recent afternoon. While schoolchildren rode the sidewinder and roller coaster, there were few shoppers and fewer tenants at South China Mall in central Dongguan, a city of six million north of Hong Kong.

"They did this mall all wrong," said Stephen Liu, a Hong Kong businessman visiting clients in Dongguan who came by to see the place for himself. "They never found out if there were enough people to fill it. All the Chinese in this town are factory workers. They can't afford to shop here."

That is a problem for more than just the mall's owner, Dongguan Sanyuan Yinghui Investment & Development. South China Mall stands as a symbol of China's failure to stimulate more spending by its 1.3 billion people and to curb runaway investment in real estate projects. The results: A record $232.5 billion trade gap with the United States and increasing concern about unsustainable growth at home.

"Until Chinese economic growth shifts from exports and building factories and real estate to consumer spending, China's trade surplus will only grow," said Nicholas Lardy of the Peterson Institute for International Economics in Washington. "That will make trade frictions and a protectionist backlash even more likely."

A walk around the mall's 220 palm-tree-lined acres takes a visitor past an indoor amusement park, replicas of seven cities including Venice, Milan and Amsterdam, an 85-foot, or 25 meter, model of the Arc de Triomphe and a 1.3-mile, or 2.1 kilometer, artificial river with gondolas for hire. There is retail space for 1,500 stores in the 89-hectare mall, only a handful of which are leased.

The mall's developers expected to attract 100,000 visitors a day, the number that it would take to keep its vast shopping areas from looking deserted, according to Ian Thomas. His firm, Thomas Consultants in Vancouver, British Columbia, helped with leasing and marketing. Instead, more than a year after it opened, the mall gets about 10,000 a day, said a spokeswoman for the mall, Joanne Zhu. That leaves its open-air pedestrian streets almost empty.