Throughout China, there are hundreds of cities that have all the makings of a modern city – shopping malls, skyscrapers, beautiful town squares, apartment complexes and even art installations. The only thing missing are the inhabitants – where are all the people?
Asian Property Review talks to Wade Shepard who has written “Ghost Cities of China: The Story of Cities Without People in the World’s Most Populated Country”. Wade argues that these “ghost cities” are actually super successful new urban developments and not ambitious visions gone bad.
APR: Several theories have been advanced as to why these ‘ghost cities’ have been created – among them are:
- China is preparing for mass rural- urban migrations up to the next 25 years involving up to 300 million citizens;
- As a solution to overcapacity and oversupply of construction materials and to provide jobs for its citizens;
- A result of compliance with regulations that make it mandatory for construction to start work immediately after approvals are given;
- China’s long-term plan is to build such enclaves for its citizens along the Belt & Road (BRI) countries. Eventually, China will have Chinese communities loyal to the Chinese motherland all over the world. In other words, it’s conquering the world without firing a single shot; and
- These buildings serve as a means
of parking the buyers’ money in something tangible and solid instead of parking them in banks. This explains why no one is moving in even though the properties are all sold out.
What’s your opinion?
WS: First of all, so-called ‘ghost cities’ do not exist in China. They are the physical manifestation of very advanced planning – say, a 15 – 30 year plan.
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China’s model is to build the basic infrastructure first such as airports, railway stations and highways, then link those up
with regional transportation and thereafter link up at the national level. At the same time, they build the commercial downtown core or Central Business District (CBD) which is usually built to the highest level of technology available at the time. Simultaneously, they build the residential component. A lot of times, the construction time is so fast that by the time these are completed, they are not ready to be used yet as that depends on several other factors.
In China, they build cities from scratch on a scale that’s unmatched and never been done before. It’s a top-down plan to rebuild or rephase the entire country.
By developing brand new infrastructure, for example, thousands of kilometres of highways and high speed rail network and new airports, they have completely rebuilt the transportation grid. The buildings are built around the same time – there isn’t a new city that’s not connected to this new transportation grid. The main reason is to control the dispersal of people throughout the country amid the increasing trend of rural-urban migration.
From year 2000, the Chinese government adopted a ‘Go West’ policy where they encouraged people to move west instead of moving to the Eastern seaboard which are dynamic engines of growth. This is because the government was well aware of the potential major social problems they might encounter
if too many people migrate to big cities in the east leaving behind the rest of the country in the backwaters. The disparity between the rich and poor areas will be exacerbated.
The policy makers look at the problem from a larger perspective – wide disparities between cities in the East and the western countryside might disrupt the stability of the country. At the same time, by ignoring the development of cities in the hinterland, they are missing out on their economic potential.
Hence, one solution proposed to take the pressure off the modern eastern cities was the building of cities in designated areas in the hinterland where they could house populations and industries. Basically, they just wanted to spread the economic momentum of the East to the West. And that’s what they did.
Between 2008- 2009, some foreign journalists began to notice the empty buildings in what appeared to be cities. But they didn’t really understand the reason for this. These journalists described the cities as “ghost cities”. They were eventually kicked out of the country for sensationalist reporting.
For example, the widely-quoted city of Kangbashi in the District of Ordos which is like the poster boy of a “ghost city” in China as seen from the perspective of a Western journalist – it was completed in 2009 after 6 years of construction. Now, let’s look at it from a contextualised point of view – in 6 years, they built an entire new city. No one in the West has ever successfully built a new city that quickly. That’s what some journalists call a ghost city. If it’s anywhere else, it would have been hailed as a development miracle.
In Europe, you might not see much development in 10-20 years of a long-term project. For example, Amsterdam took 30 years to develop new suburbs.
But in China, they can do it so fast. In 5 years – but these are not cities yet, they are still considered construction projects. They are not ready to be cities until the 20-year time line. So those “ghost city” reports were actually reports on super successful new urban developments and not the other way around. This disconnect between perception and the context exposes how fast places can be developed.
Having said that, this is not to say there is no problem. There are all kinds of issues – political shakeups, funding problems, and from 2003 – 2014, China was experiencing a building boom which was very much unregulated by Beijing.
Provincial or local governments then can develop cities unregulated on their own without any kind of oversight. Naturally, it got quite out of control.
China has a National Urbanisation Plan calling for more developments to take place. So, politicians told everyone to build, build, build – which is consistent with the national urban growth vision. So they built and built and built …
If one local government does it, another will build another city that’s more impressive so they get credit for it with their name attached to the city’s founding. In 2012, it looked like a mess because they got to a point where small cities like Wuxi was developing multiple CBDs! The question they should ask is does the city need one or three CBDs?
But China didn’t quit on them. Over the long-term, the gap in development was closed. Usually new government officials will start a new project, but different waves of new administrations will eventually finish the project.
Around 2015, China’s President Xi Jinping realised it’s a problem how quickly the situation was developing. There were too many new cities; up to that point, no one had a handle on how many. He laid down a new set of rules which governed who could build a new city. He gave Beijing more control; this stopped the new city building.
Since then, it is very much controlled by Beijing.
Local officials no longer get credit for building new cities with their names associated with it, so they have to finish existing projects. Among all the cities profiled in my book, not a single one looks like a ghost city today.
APR: Can you list down some of the ghost city locations that you have personally visited – in China or other countries?
WS: Shenyang, Zhengzhou (Zhengdong New Area), Tianjin, Chenggong near Kunming, new urbanisation projects near Guangdong provinces and some smaller projects in Zhejiang province.
Outside of China, the city building boom has expanded. More than 40 countries in the world have new cities especially in Asia and Africa. Simultaneous with the building boom is the modernisation of infrastructure.
Malaysia is one of the first countries engaging in new city building, for example, Cyberjaya. It is a positive step when looking at government- backed new cities such as Cyberjaya. Although it didn’t become the Silicon Valley of Asia, it has matured into a functioning city and its future looks relatively bright.
Usually for new cities in China, almost all are backed by Beijing and provincial level government with massive amounts of money, political will and influence to ensure their success. The mentality is different because it is a public project not made for profit. It aims mostly to stimulate long-term economic growth that would spin off and not make direct profit from the city building itself.
On the other hand, if it is a private city building venture, it aims to make profit, hence this changes the game; it changes what you build because you need to profit from it– the mentality is like the mentality of a housing developer because it is not for long term political or social reasons.
An example of private city building is Forest City in Iskandar, Malaysia. It is a complete anomaly in terms of new city building in the world today. This is because it is a private project aiming for 700,000 population on mostly reclaimed land.
It’s difficult to see where Forest City is headed because you have to see who’s backing it. It could work out fine in the long run, but what happens if this company goes down? We have examples in Anbang Insurance Group and Dalian Wanda, and a few other Chinese developers penalised by Beijing for corruption. What would happen to these new cities if such a thing happened to the developer?
I am not against private development, but if it’s 100 per cent private, independently-built private city, there are a lot of risks, mainly because a new city is a long-term endeavour, taking about 30 -40 years. Not too many private companies can survive that long despite thriving or booming conditions.
In China’s case, the risk of capital controls was not foreseen. They were imposed in 2017 to stem the massive outflow of capital. The capital controls affected sales of Chinese property developments outside of China which rely mainly on Chinese buyers.
Clearly, it’s difficult to foresee what’s going to happen in a city development with a 20- 30 year timespan. Changes in economy are guaranteed and so are changes in government.
And when it’s booming, Beijing comes up with various kinds of rulings to rein in speculation and over-enthusiasm.
If you look at other private cities, for example the CBD area of Songdo in South Korea, a lot of issues have cropped up mainly due to the fact that the developers are private companies which have to rely on economic fundamentals and don’t have infinite public money to use. It’s tough for any company to survive economic crises and crashes.
City building is cyclical. People build when there’s a boom and slow down when the economy is bad. The ‘China ghost city’ phenomenon came about during the 2009 economic crisis. These developments got caught in the middle of a crisis so work slows down
or stops, and it starts looking like a ghost city. When times are good, these companies can go back to redevelop if the city still exists. For example, in Kangbashi, District of Ordos, developers can still redevelop the area.
APR: Have any of these cities been fully or mostly occupied now, as far as you know, for example, Zhengzhou’s new district, Zhengdong New Area, Ordos in Inner Mongolia and other smaller cities that are near big cities bursting at the seams with overpopulation?
WS: None of them are fully occupied. Not a single city in China is fully occupied, for example, Beijing is still 22% unoccupied.
Ordos has over 2 million population including Kangbashi which has about 150,000 population. It is built for 300,000 people, so it still has a long way to go before being fully occupied. It’s a functioning city, but by China’s standard, it’s not that big.
Ordos Kangbashi is nothing more than a new city at a mid-point of development. By 2023, the year when the project is initially slated to be completed, Kangbashi will more than likely to be fully populated, inconspicuously blending in with the urban landscape of China.
There was a coal boom in Kangbashi at the time, so they decided to develop real estate in anticipation of a massive influx of people. It even has all the best schools; and in China, if you want to send your children to the best school, you need to live near the school.
But these multiple developments in Kangbashi weren’t very co-ordinated. Once it is completed however, expect it to be fully populated as the Chinese government knows how to entice people to do what they want them to do. It knows how to move people.
APR: If these buildings and infrastructure are built and occupied, say 15 – 25 years down the road, won’t these structures be extremely outdated not to mention structurally weakened through lack of maintenance by the time people come to fill them up?
WS: These structures are supposed to last at least 30 – 40 years; I am pretty sure they can last a long time. More often than not, parents buy these properties in anticipation of their children living there when they get married.
In reality, these kids don’t want to move in owing to a myriad of reasons – the buildings are old and not located in a trendy part of town. Things move so fast in China that trendy places can change location every 4-5 years. This is a huge issue as the owners can’t sell them and no one wants to live in them. I have personally interviewed some people who thought they had bought good quality properties who now can’t get people to buy or even view them.
The common sentiment is: “Why buy an old house when you can buy a new one for the same price?”
We have not seen the statistics yet; wait till 2020 – 2021 when there are a lot more sellers than buyers. The sellers won’t be making good money from their investment and this would pose an issue.
Then again, China is very good at solving such problems. It might tear down the buildings and rebuild new ones. It could even confiscate them and create a new area out of an old area.
After the first wave of urbanisation, the government went back for a second wave by rebuilding those built in 2002 – 2003. It’s a cycle that‘s not going to end anytime soon. By 2020 – 2021, expect to see if this will take place.
APR: Will there come a day when there is no more need to embark on such long-term city building projects?
WS: The Belt & Road Initiative is akin
to another phase of globalisation, where China looks beyond its borders as with previous global powers such as England, Holland, Japan and the US. Historically, when countries developed to an extent where they have a certain amount of power, they would go beyond their borders and interact with other countries.
There are two main reasons:
- To ensure continued economic stability/ growth. All economies need to continue to grow. To feed their own economic engine, they would go international.
- Following that, they ship back goods to China at a cheaper rate. Just like what the US did – ship back to the US goods made overseas at a cheaper rate. As more Chinese companies set up overseas, and once the infrastructure is built, they would place their factories there and would import back the finished goods at a cheaper price.
You can call this phenomenon by many names – the geopolitical spectrum, flavour of the day, transnational integration or continuation of globalisation in the last stages. The last 20 -30 years are considered the last stages of globalisation.
The question is of course once there are no more emerging economies, where’s the growth going to come from? Where are they going to build next?
I believe when this happens, when everyone is on the same technology page, when everyone becomes interactive, maybe equality might be a result. Maybe there won’t be any more trade wars because everyone can’t do without each other. On the other hand, the opposite might happen where everyone retreats back to their own country.
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