When Ghost Cities Come Alive
Bloomberg Businessweek|September 06, 2021
Built on a grand scale with thousands of apartments, new roads and subway lines, and Instagrammable architecture, China’s overnight cities have something else now: People
By James Mayger, Lucille Liu, Yujing Liu, Lin Zhu, and Yinan Zhao

Conjured out of nothing and lived in by seemingly no one, China’s so-called ghost cities became the subject of Western media fascination a decade ago. Photos of these huge urban developments went viral online, presenting scenes of compelling weirdness: empty apartment towers stranded in a sea of mud; broad boulevards devoid of cars or people; over-the top architectural showpieces with no apparent function.

“In places called ghost cities you find massive, ambitious urbanizing projects that spark investment but don’t draw population all at once,” says Max Woodworth, an associate professor of geography at Ohio State University who’s written extensively on the topic. “The result is a landscape that appears very citylike but without much action in it.” China was under urbanized for many years, Woodworth says, and has raced to correct that. But the pace of building often outstrips the rate at which newcomers move in, even with investors snapping up apartments as Chinese home prices rise.

As the economy continues its long shift away from agriculture, urbanization and construction have become twin catalysts of China’s unparalleled growth. In 1978 just 18% of its population lived in cities; by last year that figure had reached 64%. The country now has at least 10 megacities with more than 10 million residents each, and more than one-tenth of the world’s population resides in Chinese cities.

To accommodate this massive influx, the country embarked on a vast scheme of the building—and at times, overbuilding. All the construction juices economic growth. It can also boost local government finances through land sales to developers and— when everything goes to plan—with new tax-paying businesses. The power of the state in China gives the cities an initial push toward vitality. Typically, government offices and state-owned enterprises are the first to move in. Public buildings such as conference centers, sports stadiums, and museums follow, sometimes in tandem with speculative residential development, as well as schools and perhaps a high-speed rail station. After that, these districts are meant to attract private investment.

Some former ghost cities, such as Shanghai’s Pudong District, are wildly successful. But kick-starting these projects means taking on debt. The property-fueled construction boom that underpinned China’s pandemic recovery last year was financed by a record 3.75 trillion yuan (about $580 billion) of local government borrowing.

The Chinese government wants the trend of urban migration to continue, and with good reason: Higherincome urban dwellers lift domestic consumption, reducing the economy’s reliance on external trade. And since Beijing and Shanghai strictly limit the number of fresh arrivals they’ll accept under China’s hukou (residency permit) system, new population centers have become all the more important.

The risk is that these new cities don’t eventually fill up with people and businesses and can’t generate enough revenue to pay back the money they were built with. Of course, a pile of debt is just one of the challenges in starting a city from scratch. A living, breathing community requires people, jobs, schools, and hospitals— at a bare minimum—to survive and grow.

It’s hard to say how China’s reputed ghost cities are faring collectively: Government data aren’t publicly available, and independent research is spotty. What is clear is that local governments can throw money at these projects for many years.

In the short term, not all of the cities are meeting the same fate, Bloomberg Businessweek discovered on recent visits to three of them. When it comes to urbanization, though, China is playing a very long game.

GROWTH AFTER A SLOW START

Kangbashi, Ordos City

Started → 2004

Population → 119,000

Sitting on the southern outskirts of Inner Mongolia’s Ordos City (population 2.2 million), Kangbashi was the archetypal ghost city 10 years ago, with barren boulevards and empty buildings standing forlornly in the desert. Local officials are adamant that things have changed. They say 91% of homes in the district are occupied. In fact, after a years-long construction freeze, the government approved six housing projects in 2020 and expects 3,000 homes to be built by the end of this year.

Apartments in a new development are selling for 9,500 yuan per square meter, and downtown they go for 15,000 to 16,000 yuan, according to Liu Yueyue, 28, a salesman at a new residential development in the district’s northeast. “Would houses in a ghost town sell at such high prices?” asks Liu. Half of his customers come from outside Kangbashi, and most are parents who want to send their children to the well-regarded local schools, he says.

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