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China's Ghost Cities

The grand architecture of the sparsely populated city of Kangbashi.

The grand architecture of the sparsely populated city of Kangbashi.

China's Empty Homes

By some estimates, there are enough empty homes in China to house all the people in France; that would be around 67 million vacant units. We can't know for sure how many Chinese homes are without residents because that's the sort of negative statistic the country's government goes to great lengths to suppress. Suffice it to say, there are lots of ghost cities in China.

China's Population Shift

Usually, ghost towns are places where an industry has died, and the people have left; China's ghost communities are places in which people have never settled in the first place.

Since the early 1990s, about 260 million Chinese citizens have moved from the countryside to the nation's cities. In The Wall Street Journal, James T. Areddy wrote about a woman called Wang Liangcui who moved from her mountain village to Shanghai:

“All over China, people like her moved to the city from similar hardscrabble hamlets, supplying the inexpensive labor that got the nation’s economy sizzling.”

To accommodate all those new urban dwellers, there has been a construction boom the like of which has never been seen in history anywhere.

Entire new cities have been built to house the influx but, in some cases, the new residents have not turned up.

By using a cellphone-based algorithm, researchers have been able to locate 50 cities in China cities that meet "ghost" definition—in China, that is places with a population density of less than 5,000 per square kilometre. Most of these semi-deserted communities are in the eastern part of the country.

Photographer Samuel Stevenson-Yang has documented China's ghost cities. He told ABC Australia that “All of them are bizarre, all of them are surreal. There's no other way to describe a city meant for thousands of people that's just completely empty.”

The Building Boom

China's economic growth has been fuelled to a large extent by real estate development and its companion businesses. That sector accounts for 30 percent of the country's gross domestic product; in the United States, real estate makes up 17 percent of GDP.

An economist with China's State Council is quoted by Nikkei Asia as saying “In normal countries, condominiums are built because there's demand. In China, condominiums are built to increase steel and cement production. It's backward.” This topsy-turvy economic model is showing signs of coming unglued.

In the fall of 2021, financial markets went into shock when a company called Evergrande revealed it was having money troubles. The company was a massive real estate developer in China and boasted that it “owns more than 1,300 projects in more than 280 cities.” But Evergrande was horribly overextended, with debts of more than $300 billion.

The Chinese construction boom has been built on debt.

The Chinese construction boom has been built on debt.

Encouraged by low-cost government loans, the company jumped into the construction boom of the past 20 years with both feet. One result was the building of Evergrande Splendor Kunming. It is a complete city fresh out of the box. Hospital, schools, recreation centre, all the amenities of a modern city, just waiting for the residents to arrive.

But the expected residents didn't turn up and Evergrande was stuck with massive quantities of housing stock it could neither sell nor rent. The COVID-19 pandemic made matters worse.

It's what's known in the banking trade as a liquidity crisis and Splendor Kunming is a commercial disaster repeated in other places. Evergrande began defaulting on loan repayments, the value of its stock plummeted by 90 percent, and the vultures began circling, ready to pick off its choice assets at bargain prices.

And Evergrande is not alone. Real estate developers Fantasia Holdings, China Properties Group, Modern Land, and Sinic Holdings have all failed to repay debts on time.

A massive Evergrande project in Yuanyang.

A massive Evergrande project in Yuanyang.

If You Build It They Will Come

Many Chinese real estate developers seemed to have operated on the shaky premise that people would flock to the shiny new cities they built. We can see this in action in Ordos New Town, also known as Kangbashi.

Construction began in the desert of Inner Mongolia in 2003 with the aim of housing one million people. Residents would be drawn there, it was reasoned, by the boom in the region's coal and natural gas reserves. Travel writer Wade Shepard reports:

“This is a place that has become known for its windswept, empty streets, abandoned high-rises, elaborate public buildings built for nobody, multiple stadiums without crowds, and roads to nowhere. Kangbashi is a boom town that died before it was even born.”

To some extent, the silent city has been rescued by education. Some of the best schools were moved into Kangbashi and what are called “tiger” parents followed. These are people who are fiercely competitive and aim to get their children into the country's top universities, and that means graduating from the best schools.

It's a completely artificial program to boost what is a completely artificial city, and it's tough on those communities whose schools were uprooted to help a failing urban plan.

Here's hoping that these schools offer a thorough curriculum in economics, starting with Supply and Demand 101.

Bonus Factoids

  • In April 2020, Evergrande began construction of a soccer stadium in Guangzhou. If it's finished it will hold 100,000 spectators, making it the biggest soccer venue in the world. When Evergrande got into financial trouble, the Chinese government took over the incomplete building.
  • According to Ghost Towns of America, there are at least 3,800 ghost towns in the United States. Most of these abandoned communities are the result of mineral extraction businesses closing down, forcing the workers to move on. Texas and California have the most ghost towns.
  • An oft-quoted statistic, attributed to Microsoft's Bill Gates, is that China used more concrete in the years 2011 to 2013 than the United States used in the entire 20th century.

Sources

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

© 2022 Rupert Taylor