China's Ghost Cities

China's Ghost Cities Have Potentially Spooky Consequences
By: /
November 15, 2012
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Fellow, International Relations and Digital Technology Project and Social Media Editor, OpenCanada.org

As the 18th Party Congress ends in Beijing, CBC's Adrienne Arsenault reported this week from the ghost city of Ordos in Inner Mongolia. From Arsenault's report:

We pulled into the hotel driveway at around 9 p.m. on a Saturday night. This is a city supposed to be able to house a million people. But stepping out of the car the only sound was the pinging of the crosswalk countdown timer across the road.

It actually echoed.

The hotel looked like something out of Las Vegas, and the reception when we arrived was oddly enthusiastic. The staff almost seemed surprised to see people wander through the door. It was as if they’d been all dressed up waiting for a very long time for someone to show up, and didn’t quite know what to do now that they had.

The lobby bar lights were quickly turned on and the piano started playing. By itself. There was no pianist in sight, just a computer program with a playlist that must have been set to “generic hotel lobby.”

Ghost cities, it seems, even have ghost pianists

Chinese ghost cities are nothing new. While both Australia's SBS Dateline and Qatar's Al Jazeera have previously reported on China's ghost cities, the story's importance has not diminished over time. While Ordos is China's most famous ghost city, there are many others visible from satellite imagery, primarily scattered across China's central provinces:

Bayan Nur, Inner Mongolia

Erenhot, Inner Mongolia (China's answer to Palm Springs)

Xinyang, Henan

There is some indication, however, that two of China's famous ghost cities have begun to attract residents, albeit slowly. The 'New Area' of Zhengzhou, the capital of Henan Province was labeled China's biggest ghost city in 2010, but there is at least one report of activity taking place:

There were people on the sidewalks, though not the numbers typical of an older, more dense section of a Chinese urban area  […] In short, the Zhengzhou New Area is alive and not a Ghost City. It may well be that it took longer than expected for the place to come alive.

Changsha, the capital of Hunan province was also outed as a ghost city in 2011 by Business Insider, but was quickly contradicted by an on-the-ground report.  However, both Zhengzhou and Changsha are the capitals of major Chinese provinces (Henan and Hunan, respectively), so that their 'ghost districts' are reportedly being filled is no surprise, especially as China becomes increasingly urban. (On a side note, Canadian journalist Doug Saunders' book Arrival City is an excellent read on the global shift from rural to urban environments. Highly recommended.) But why are there ghost cities in China in the first place? The most common explanation blames ill-advised, erratic and unsustainable government decisions to maintain high economic growth though relentless infrastructure investments. Blogger Brian Wang has also speculated that ghost cities are a convenient way for corrupt officials to hide their ill-gotten gains. While Wang's hypothesis is only idle speculation, Evan Osnos has commented elsewhere on the difficulties of hiding cash in China:

When investigators caught him [the brother of former Minister of Railways Liu Zhijun], he was living among mountains of money so large and unruly that the bills had begun to molder. (Storing cash is one of the most vexing challenges confronting corrupt Chinese officials, because the largest bill in circulation is a hundred-yuan note, worth about fifteen dollars.) 

Notwithstanding the first world problems faced by China's corruptariat, Yale professor (and former chairman of Morgan Stanley Asia) Stephen Roach takes a very different view of China's ghost cities:

Reports of ghost cities, bridges to nowhere, and empty new airports are fueling concern among Western analysts that an unbalanced Chinese economy cannot rebound as it did in the second half of 2009. With fixed investment nearing the unprecedented threshold of 50% of GDP, they fear that another investment-led fiscal stimulus will only hasten the inevitable China-collapse scenario.

But the pessimists’ hype overlooks one of the most important drivers of China’s modernization: the greatest urbanization story the world has ever seen. In 2011, the urban share of the Chinese population surpassed 50% for the first time, reaching 51.3%, compared to less than 20% in 1980. Moreover, according to OECD projections, China’s already burgeoning urban population should expand by more than 300 million by 2030 – an increment almost equal to the current population of the United States. With rural-to-urban migration averaging 15 to 20 million people per year, today’s so-called ghost cities quickly become tomorrow’s thriving metropolitan areas.

Shanghai Pudong is the classic example of how an “empty” urban construction project in the late 1990’s quickly became a fully occupied urban center, with a population today of roughly 5.5 million. A McKinsey study estimates that by 2025 China will have more than 220 cities with populations in excess of one million, versus 125 in 2010, and that 23 mega-cities will have a population of at least five million.

China cannot afford to wait to build its new cities. Instead, investment and construction must be aligned with the future influx of urban dwellers. The “ghost city” critique misses this point entirely.

All of this is part of China's grand plan.

While Roach correctly observes that China is quickly becoming a nation of urbanites - ironic given the Party's historical agrarian pretensions (see: the Down To The Countryside Movement) - the ghost cities that are being populated (Pudong, Zhengzhou, and Changsha) are the ones adjacent to existing urban developments. Furthermore, it is puzzling for anyone to claim that a government that can encompass tens of thousands of corrupt officials can even purport to have, much less execute, any sort of 'grand plan'. Nevertheless, there is little indication yet that the ghost cities that have sprung out of nowhere, such as Ordos, will soon become thriving metropolises. Worryingly, the consequences of China's ghost cities might have farflung conseqences. If Chinese demand for commodities dips due to a construction slowdown or excess housing capacity, it could adversely impact other commodity-dependent economies. As Derek Thompson wrote last year: 

China's housing problem is Latin America's commodity mess is the world economy's crisis. China gobbles up half of some of the world's highest selling metals. A dip in demand hurts Australia (coal, iron ore, natural gas), South Africa and Brazil (industrial metals) and Chile (copper). […] A slowdown in demand would send ripples in all directions. Currencies in Australia, Brazil, Chile peso would decline. Ditto industrial production out of South Korea, Taiwan and Japan. […] China's empty homes are worth watching.

In any case, neither ghost cities nor government corruption are going anywhere anytime soon in China. As the planning objectives of the new Xi Jinping-Li Keqiang administration become clear over the coming months, Ordos will continue to spook visiting journalists and worry wary China watchers.