We’ve all heard of Beijing and Shanghai – China’s massive mega-cities that are known around the world. Millions of Chinese people live in these metropolises, and even millions more would do just about anything in their power to join them. In short, more people want to live there than actually can; as a result, home prices have skyrocketed in recent years and restrictions have even been put in place to control the amount of apartments an individual can legally own in the city. On the complete opposite side of the spectrum, however, you have China’s “ghost cities.” Never heard of them before? Well here’s a crash-course on this fascinating topic.
Urbanization
China has very ambitious plans to modernize and urbanize. For the first time in the ancient country’s long history, more Chinese people now live in urban areas than rural – and they’re just getting started. The government hopes to move hundreds of millions of people into cities in the next 10-15 years.
Despite the Great Recession of 2009 and the resulting economic downturn in the US and around the world, China has continued to grow it’s economy at an impressive rate. How have they managed to do this with most of their major customers buying less of their goods? The answer is simple – build, build, build! More construction projects equals higher GDP. As a result, the government has pumped trillions of dollars into huge developments to keep the economy cruising. New roads, shopping complexes, office space, and more high-rise apartments than you could imagine have been springing up all around the country. So what’s the plan for all of these new cities?
Growing Middle Class
Since the opening up of the Chinese economy back in the ’70s, the country’s middle class has continued to grow at breakneck speed. More and more Chinese people have extra money to burn these days, which would explain the massive popularity of companies such as Apple and Audi. Although a high percentage of China still lives on a few dollars a day, there are plenty of people who are doing more than just alright economically speaking. CNNMoney has a great article on the growing middle class in China. While sports cars and Audis are fun, though, these folks want to invest part of their money. Where and how do they do that?
A huge crowd gathers in front of a shopping mall in Wangfujing, a trendy area of Beijing.
Real Estate Boom
It’s between difficult and impossible for Chinese people to invest abroad, the banks don’t offer many great options, and the stock market in the country can be volatile. If you’re one of the new members to China’s growing middle class, your best bet in terms of an investment is home ownership. Just a generation ago, Chinese people depended on their work unit for accommodations; these days there is a booming real estate market with everyone trying to get a piece of the action. However, homes in the big, famous cities are often far too expensive for your average Zhou. Couple that with the restrictions on owning homes in places like Beijing and Shanghai, and these people are looking elsewhere for a place to buy.
Ghost Cities
Let’s try to sum this up a bit. The Chinese government wants to move millions of people into cities. It also wants to boost GDP and keep the economy growing. Millions of Chinese people have recently entered the middle class, and they’re looking to invest and buy apartments. Cities like Beijing and Shanghai are already too crowded, too expensive, and too difficult to buy in. This is where the ghost cities come into play. Huge cities have been built all around China, and yet almost nobody lives in them. The government’s philosophy in all of this is basically similar to “Field of Dreams” – if you build it, they will come. While the people haven’t shown up yet to live, they have shown up to buy. Most of the apartments in these ghost cities are already owned, but no one has moved in because, well, there’s not much going on just yet. Learn more about these ghost cities and check out some eye-opening photos in this article from PolicyMic.
Take a video tour of Ordos, Inner Mongolia – one of the biggest ghost cities in the country.
It will be interesting to see how this pans out in the years to come. Will these ghost cities become full of happy home-owning middle class Chinese, or will they just sit there and rot? Will the real estate bubble in China burst? What on Earth will that mean for the economy of the country and the world in general? We’ll just have to wait and see.
Sasha is an English teacher, writer, photographer, and videographer from the great state of Michigan. Upon graduating from Michigan State University, he moved to China and spent 5+ years living, working, studying, and traveling there. He also studied Indonesian Language & Culture in Bali for a year. He and his wife run the travel blog Grateful Gypsies, and they're currently trying the digital nomad lifestyle across Latin America.
I remember Shenzen being like that in the early 80s. I used to travel monthly from HK to Chiwan. The only people were living in a small ‘village’ around the border crossing and the rest of the city was empty. A very spooky experience driving through it.
The ghost cities will be filled, the question is when: 5, 15 or 25 years’ time. The developers have either sold or are able to hold on to the properties waiting for property prices or rentals to rise. Potential buyers and tenants are waiting for prices to fall and for better services, amenities & retail options.
As for the themed townships around Shanghai like Thames Town, the most successful seems to be the Scandinavian town. If these themed towns are to be successful, the tenants should also match the theme of the town, for example in the Spanish town, there might be a Spanish tourist office, a Spanish consulate, Spanish restaurants and tapas bars, Spanish shops like Zara, flamenco dance schools, Spanish language schools, representative offices of Spanish companies and banks, Spanish radio station, Spanish cultural performances and fiestas, and since there may not be so many Spanish tenants, look to Filipinos, Portuguese and Macau residents to add to the retail mix. These themed townships will only do well if properly curated, otherwise they will be mere foreign architectural facades for Chinese retailers and end up with a somewhat empty flavour.
The same for the Italian themed township, there could be Italian restaurants and cafes, Italian delicatessens, Italian shops and outlets for Italian cars and motorbikes, Italian theme art galleries and poster shops, Italian cultural centre, Italian tourism office and consulate and so on.
The mistake for the developer is to sell all the units to third parties. The idea would be rent some street front units back and curate to ensure the tenants keep to the them.
Comments:
steve flood:
I remember Shenzen being like that in the early 80s. I used to travel monthly from HK to Chiwan. The only people were living in a small ‘village’ around the border crossing and the rest of the city was empty. A very spooky experience driving through it.
Ayse Nur:
This article has added much to my knowledge. Thank you for such a detailed information about Chinese economy.
Casper:
The ghost cities will be filled, the question is when: 5, 15 or 25 years’ time. The developers have either sold or are able to hold on to the properties waiting for property prices or rentals to rise. Potential buyers and tenants are waiting for prices to fall and for better services, amenities & retail options.
As for the themed townships around Shanghai like Thames Town, the most successful seems to be the Scandinavian town. If these themed towns are to be successful, the tenants should also match the theme of the town, for example in the Spanish town, there might be a Spanish tourist office, a Spanish consulate, Spanish restaurants and tapas bars, Spanish shops like Zara, flamenco dance schools, Spanish language schools, representative offices of Spanish companies and banks, Spanish radio station, Spanish cultural performances and fiestas, and since there may not be so many Spanish tenants, look to Filipinos, Portuguese and Macau residents to add to the retail mix. These themed townships will only do well if properly curated, otherwise they will be mere foreign architectural facades for Chinese retailers and end up with a somewhat empty flavour.
The same for the Italian themed township, there could be Italian restaurants and cafes, Italian delicatessens, Italian shops and outlets for Italian cars and motorbikes, Italian theme art galleries and poster shops, Italian cultural centre, Italian tourism office and consulate and so on.
The mistake for the developer is to sell all the units to third parties. The idea would be rent some street front units back and curate to ensure the tenants keep to the them.