crisis; some 90m flats are thought to sit empty across the country. But a decade-long office-building boom has also left cities and ghost business parks littered with unfinished or unoccupied towers. In some inland cities more than 40% of grade-A offices are empty. The central Chinese city of Wuhan, for instance, may have nearly 200-football- pitches’-worth of idle prime office properties. Commercial projects in which developers invested before the covid-19 pandemic are still coming to the market, further pushing up supply and pulling down rents. Hangzhou has seen the worst of it. The government’s crackdown on tech that started around the same time as the property-market downturn led to sweeping lay-offs at companies such as Alibaba (whose founder, Jack Ma, was a particular target of the state’s ire). Shenzhen was rocked when its top employers, including Tencent, a digital behemoth, trimmed ranks. A dearth of tech tenants caused new square footage in the southern technology hub to collapse by half in the second quarter of 2022, compared with a year earlier. In both cities, vacancies at high-end offices subsequently rose from around 20% in 2019 to 30% at their peak, which in Shenzhen was as recently as late 2025. Similarly plush digs in central London were 93% occupied at the end of last year. China’s property crisis has yet to bottom out. But for prime office space in AI hotspots things are improving. In March demand from AI firms across China was triple what it had been the year before, calculates John Lam at UBS, a bank. This rise was from a low base—the country had many fewer machine-learning startups a year ago. But since their activity is concentrated in a handful of cities like Hangzhou and Shenzhen, it makes a difference. Grade-A office vacancies there are back down to around 20%. In early 2025, when DeepSeek shocked the world with an AI to rival America’s best, insiders joked that the lab might single-handedly revive Hangzhou’s real-estate market. That looks like an exaggeration: Alibaba, which is reinventing itself as an AI powerhouse, chipped in. And the local government has been rolling out rent subsidies for innovative firms, according to analysts at Savills, a property consultancy.
Tech companies are expected to fill many of the new offices at Westlake 66, an office-and-mall project in the centre of Hangzhou that opened in late April. The rapid expansion of AI firms is also fuelling demand for space from accountants, consultants, lawyers and other corporate hangers-on, notes Derek Pang of Hang Lung Properties, which built Westlake 66. The government has started constraining the supply of commercial real estate and selling less land for development, he adds. This should eventually nudge prices up. In the short run the court ruling in Hangzhou, which has spared the job of a quality inspector responsible for checking the accuracy of AI output at his company, may help keep the office boomlet going. Whether this turns into a more enduring boom will depend on how many office jobs AI eventually replaces. The countrywide explosion in demand from AI firms in March was due to a need to sit not software engineers but back-office and support staff, Mr Lam points out. This is precisely the sort of job that AI agents are expected to eliminate. ■ For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. This article was downloaded by zlibrary from https://www.economist.com//finance-and-economics/2026/05/07/deepseek-and-alibaba- rescue-chinas-office-landlords
Finance & economics | Disfigured Bad government statistics can cost the economy billions A new study tries to put a number on the value of reliable numbers May 7th 2026 THE LIFE of American government beancounters is tough, and not just at cocktail parties. They have a hard time persuading people to talk to them at work, too. A decade ago nearly nine in ten Americans, when approached, agreed to fill out the Current Population Survey, which is administered to about 60,000 households each month and asks about, among other things, employment. Fewer than seven in ten do so now (see chart 1). For the Consumer Expenditure Survey, which tries to capture 3,700 households monthly, the response rate is down from 68% to 40%. Low engagement is a problem because the surveys are much more than a way to satisfy Uncle Sam’s curiosity about the citizenry. Bosses and
investors rely on accurate data about GDP growth, joblessness, inflation and much else besides to manage businesses and allocate capital. When the information becomes less reliable, investment decisions get more difficult to make. Some may be delayed, creating a potential drag on the economy. But how much of a drag? A new working paper by Nicholas Bloom of Stanford University, Erica Groshen, former head of the Bureau of Labour Statistics (BLS) now at Cornell University, and Duncan Hobbs and Michael Strain of the American Enterprise Institute, a think-tank, hazards an estimate. Preserving trust in “the integrity and quality of official statistics”, the authors claim, generates economic benefits of about $25 for every $1 spent on the BLS, the agency with an annual budget of $700m that is responsible for many of these data. To arrive at their conclusion the quartet analysed an ignoble episode in the BLS’s recent history. On August 1st 2025 Donald Trump sacked Erika McEntarfer, appointed as the agency’s commissioner by his predecessor, Joe Biden. The president alleged, without evidence, that the BLS’s steep downward revision to recent jobs numbers had been “RIGGED in order to make the Republicans, and ME, look bad”.
In fact, it was the wanton dismissal that looked bad in the eyes of many observers. In the following seven days there was a 50% leap, relative to the week before, in the average value of the index of Economic Policy Uncertainty (EPU), which tracks the number of articles mentioning such uncertainty that are published daily in American newspapers. This was a discernible jump even when compared to the chaos caused by Mr Trump’s trade war in April 2025 and his real one in Iran in the past two months (see chart 2). Based on Mr Bloom’s earlier study with other colleagues of the EPU’s impact on business investment, industrial production and employment, the authors estimate that the jump reduced American GDP by over $100bn (0.3%) and non-farm payrolls by 168,000 (0.1%). Some of this may not have been the direct result of Ms McEntarfer’s firing. A part was probably due to the big jobs revision itself. The unrelated resignation of a Federal Reserve governor on the same day may have played a role, too. But even after controlling for those variables, the researchers reckon that the McEntarfer affair trimmed GDP by at least $20bn and employment by 31,000 jobs. A brazen presidential attack on statisticians’ dependability may, admittedly, do more damage than a slow-motion crisis caused by unco-operative respondents. But the study shows that reliable statistics have real value. Forsaking them would be an incalculable loss. ■
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Finance & economics | TrumpAID Donald Trump’s foreign policy gets a muscular finance arm The Development Finance Corporation’s loan book may soon rival the World Bank’s May 7th 2026 BEN BLACK is no marine or sailor like those sent by Donald Trump to reopen the Strait of Hormuz. But the American financier may be no less instrumental in helping ships pass through the war-torn waterway. As boss of the International Development Finance Corporation (DFC), Mr Black has been tasked with insuring the oil tankers stuck in the Gulf against damage they may sustain if they attempt passage. It is not the DFC’s only high-priority mission. Administration officials talk excitedly of its potential role in everything from mining Greenland for critical minerals to rebuilding Cuba. To that end, the DFC is being beefed up
from a scrawny federal agency making loans to companies in poor places into the muscular new finance arm of Mr Trump’s foreign policy. Mr Black’s vision is of an “America First” institution, several insiders confirm. The DFC is a product of Mr Trump’s first term. The idea then was to fuel growth in the world’s poorest countries by lending to companies there at market rates. The bank also offered insurance to intrepid foreign investors that paid out if money was lost to corruption or war. Unlike USAID, an agency Mr Trump gutted, it picked projects likely to turn a profit, favouring industries like mining where America lags behind China. It was staffed with corporate lawyers and financial analysts rather than aid bureaucrats and development economists. Profits were returned to the government. Annual lending grew during Joe Biden’s presidency, from $5bn in 2020 to $12bn in 2024. But most still went to firms working on worthy causes such as poverty alleviation or fighting climate change. No longer. Now money will go wherever America competes with China, and to projects with Mr Trump’s other foreign-policy goals. Do-goodery is out; hard-nosed geopolitics is in. The board, which approves new investments, includes Marco Rubio and Howard Lutnick, secretaries of state and commerce, respectively. Mr Lutnick in particular has been puritanical about blocking proposals he considers insufficiently in line with Trumpian priorities, say two officials at his department. In December, at the president’s behest, Congress extended the DFC’s life to 2031, lifted a ban on investing in rich countries, including America, and set aside $5bn for equity takes in companies worth up to 40% of their value. Lawmakers also lifted its ceiling for total lending from $60bn to $205bn, not that far off the World Bank’s loan book of $285bn. New loans declined to $4bn in 2025, amid the latest reorganisation after Mr Trump’s return to office. But Conor Coleman, the DFC’s investment chief, insists that the plan is very much to reach that ceiling. In order to do so, the DFC will operate like a Wall Street investment firm, insiders say. In February Mr Black opened an office in New York. This makes it easier to work with hedge funds, which the DFC favours as partners over development institutions. Mr Coleman says the DFC plans to make 60-