Under-occupied developments in China explained

Under-occupied developments in China are mostly-unoccupied property developments in China, and frequently referred to as "ghost cities" or ghost towns. The phenomenon was observed and recorded as early as 2006 by writer Wade Shepard, and subsequently reported by news media over the decades.^[1] Although a feature of discourse on the Chinese economy and urbanization in China in the 2010s, formerly under-occupied developments have largely filled up.

Terminology

Media outlets often label under-occupied development areas in China as "ghost cities" or "ghost towns".^{[2] [3]} However, the two terms are technically misnomers since these terms describe places that previously had economic activity but have since become defunct and abandoned, while many under-occupied developments in China are new installations that have yet to receive residential occupation.^[4]

Additionally, some reported cases of "ghost cities" are not in and of themselves administrative entities but instead districts built in the suburban region of functioning cities to provide accommodation for a growing urban population.^[5]

Background

The way in which property values are structured in China plays a role in the creation of "ghost cities", according to author Wade Shepard, who has traveled widely to research the phenomenon of China's underoccupied cities. "Economically affordable housing" must be lived in by the owner, and can not be bought and sold as an investment. The developer is only permitted to sell "economically affordable housing" at 5% over the cost of construction. By contrast, "commodity housing" can be bought and sold as an investment. Because housing is a physical object, and China's large population guarantees an ongoing demand for housing, commodity housing is considered a more secure way to store money. Except in some Tier 3 and Tier 4 cities, which have different government regulations, "commodity housing" generally sells as an investment.^[6] In addition, these homes typically serve as future homes for the buyer's offspring to live in when they get married.^[7]

Construction of "commodity housing" is driven by the disparity between urban and rural land prices. Rural land, which must be collectively owned, is redesignated by a municipality as urban-construction land, which can then be resold by the municipality at as much as forty times the price. Shepard explains that municipalities must pass on about 40% of their tax revenues to Beijing and are responsible for about 80% of their expenses. Hence, there is an incentive to seek non-tax-income streams. According to Shepard, as of 2015, "40% of the revenue that local governments in China make is from land sales." In 2012, this type of development created $438 billion (394 billion euros) for China's local governments.^[8]

In 2015, Wade Shepard reported that developers acquire new plots of land from local governments and are mandated to construct something more or less immediately. Developers can't sit idly on vacant land and wait for the surrounding area to develop until it's economically viable. This creates the quick-buck mentality in developers to rapidly build in the new area without the necessary demand for housing.

In 2021, Business Insider, reported that in 2020 China had about 65 million empty homes.^{[9] [10]} In the article, academic Xin Sun said in China there is a strong popular belief that real estate is the best way for preserving and generating wealth, leading to great demand for buying property; something the government encourages. The Economist reported that in some areas demand for property greatly outstripped supply, typically in cites. However, at the same time in poorer rural areas few people were buying properties, and in those areas there was a glut of empty houses.^[11]

Criticism

In 2015, Wade Shepard, author of Ghost Cities of China, criticized the "ghost city" term for focusing too much on the short term results, or "calling the game at halftime". A common assumption by foreign media is that local officials are strictly incentivized to start construction on this newly created urban land to boost GDP growth and look good within the Party. However, Shepard points out that many places which started becoming ghost cities were under the jurisdiction of an area with already strong GDP growth. He argues that these developments are seen as an investment for the future and promote development with timescales of over 20 years.

Ordos Kangbashi is often seen as one of the first and most prominent examples of the international Chinese ghost city phenomenon and fascination. Some journalists have pointed to the Ordos Kangbashi ghost city stories as an example of media hastily and often misinformed reporting of developments in China. Such reporting may not convey the perspectives of local officials and experts, and may seek to attract readers unfamiliar with China’s development model and bemused at China's perceived backwardness.^[12] As of 2015, it was reported that Ordos Kangbashi has a population of 100,000 people, 80 percent of which are full time residents, with the remainder commuting daily from nearby Dongsheng for work.

Circa 2016, Chicago-based photographer Kai Caemmerer investigated and noted the discrepancy between the news reports and actual situation. He noted, "Many of these new cities are not expected to be complete or vibrant until 15-20 years after they begin construction."^[13]

2018 onwards

Many developments initially criticized as ghost cities did materialize into economically vibrant areas when given enough time to develop, such as Pudong, Zhujiang New Town, Zhengdong New Area, Tianducheng and malls such as the Golden Resources Mall and South China Mall.^[14] While many developments failed to live up to initial lofty promises, most of them eventually became occupied when given enough time.^{[15] [16]}

Reporting in 2018, Shepard noted that "Today, China’s so-called ghost cities that were so prevalently showcased in 2013 and 2014 are no longer global intrigues. They have filled up to the point of being functioning, normal cities".^[17]

Writing in 2023, academic and former UK diplomat Kerry Brown described the idea of Chinese ghost cities as a bandwagon popular in the 2010s which was shown to be a myth.^[18]

List of cities

• Dantu – has been criticized as being a ghost city by Business Insider in 2010, and described as being "mostly empty" for least a decade.^[19]
• Pudong – one of the first ghost cities, now a prominent global financial district of Shanghai.^{[17] [20]}
• Chenggong District – the chief zone for the expansion of the city of Kunming., much of the newly constructed housing in Chenggong was still unoccupied, and it is reportedly one of the largest ghost cities in Asia.^[21] However, some commentators expect it to become occupied over the next few years, as central Kunming is overcrowded. Some Government departments are to move to Chenggong in 2012,^[22] and a subway line to the city center opened in 2013.
• Ordos City, Kangbashi New Area – in 2009, a reporter from Al Jazeera, had reportedly accidentally visited Kangbashi and despite the city having 30,000 people at the time, had written the place as being a "ghost town". But writing in Forbes in 2017, Wade Shepard had noted that when Al Jazeera had visited Kangbashi, the city back then was a "mere five year old" city, and that it really should "have impressed the world" for being able to build an entirely new city and have it partially populated in half a decade's time. Shepard also noted the population has grown to 153,000 people and housing prices have risen by approximately 50% on average by end of 2015 and around 4,750 businesses were now in operation in the city, and that it was getting harder to justify the label of "ghost city".^{[23] [24]}
• Nanhui New City
• Yujiapu Financial District
• Yingkou – a prefecture level city in Liaoning province.^[25] The prefecture level city has five years of unsold apartments with a number of abandoned projects.
• Lanzhou New Area
• Zhengdong New Area – was deemed as a "ghost city" in a 2013 news report by 60 Minutes, which described the area as having, "new towers with no residents, desolate condos, and vacant subdivisions uninhabited for miles and miles and miles".^[26] Though years later, Bloomberg in 2021, had described the area as "bustling with life", and noted that the district's economy has grown at an annual rate of 25% from 2013 to 2018, and the population has grown 27.5% from 2019 to 2020.^[27]

See also

• Chinese property bubble (2005–2011)
• Chinese property sector crisis (2020–present)
• Housing in China
• Real estate in China
• Spatial mismatch
• Caojiawan station
• – formerly occupied towns, now abandoned

Further reading

• Book: Shepard. Wade. Ghost Cities of China: The Story of Cities without People in the World's Most Populated Country. 2015. Zed Books. 9781783602186.

External links

• Crumbling buildings and broken dreams, Al Jazeera, 2023-10-31

Notes and References

1. News: China's eerie ghost cities a 'symptom' of the country's economic troubles and housing bubble . 26 June 2018 . Tracey . Shelton . Christina . Zhou . Ning . Pan . Australian Broadcasting Corporation.
2. Book: Shephard. Wade. Ghost Cities of China: The Story of Cities without People in the World's Most Populated Country. 2015. Zed Books. 9781783602186.
3. Web site: 34 Unforgettable Photos Of China's Massive, Uninhabited Ghost Cities . 28 April 2019 . Natasha . Ishak.
4. Web site: The myth of China's ghost cities . https://web.archive.org/web/20150422211316/http://blogs.reuters.com/great-debate/2015/04/21/the-myth-of-chinas-ghost-cities/. dead. 22 April 2015. Reuters. 21 April 2015 . Wade. Shepard.
5. News: China's Largest Ghost City Is Now Almost Completely Full - But There's A Twist . Forbes . Wade . Shepard. 23 April 2016.
6. Web site: Shepard. Wade. Ghost Cities of China: A Discussion with Wade Shepard. Chengdu Living . 1 September 2015 . 10 September 2015. chengdu20150901.
7. News: What China Is Doing About Its 450 Million Square Meters Of Unsold Housing. 31 March 2016 . Shepard. Wade. Forbes. en. 2019-02-09.
8. Web site: The future of China's 'ghost cities' . China Daily. 2016-08-21 . 3 July 2015 . Wade . Shepard.
9. Web site: Batarags . Lina . China has at least 65 million empty homes — enough to house the population of France. It offers a glimpse into the country's massive housing-market problem. . 2022-07-11 . Business Insider . en-US.
10. Huang . Youqin . He . Shenjing . Gan . Li . 2021-01-01 . Introduction to SI: Homeownership and housing divide in China . Cities (London, England) . 108 . 102967 . 10.1016/j.cities.2020.102967 . 0264-2751 . 7546956 . 33071420.
11. News: Can China's long property boom hold? . The Economist . 2022-07-11 . 0013-0613.
12. Web site: Shepard . Wade . 19 April 2016 . An Update On China's Largest Ghost City - What Ordos Kangbashi Is Like Today . Forbes.
13. Web site: FotoFirst — See China's Brand-New, Empty Cities Waiting to Be Populated .
14. News: China's growth breathes new life into old ghost towns. 2019-02-09. The Globe and Mail . Nathan. VanderKlippe. 2 January 2017.
15. Web site: The truth about China's futuristic ghost cities. 2018-07-27. Richard van Hooijdonk. en-US. 2019-02-09 . https://web.archive.org/web/20191019100859/https://richardvanhooijdonk.com/blog/en/the-truth-about-chinas-futuristic-ghost-cities/ . 19 October 2019.
16. News: 2021-09-01. China's Ghost Cities Are Finally Stirring to Life After Years of Empty Streets. en. Bloomberg.com. 2021-09-23. limited.
17. Web site: Shepard . Wade . Ghost Towns Or Boomtowns? What New Cities Really Become . Forbes.
18. Book: Brown, Kerry . China Incorporated: The Politics of a World Where China is Number One . 2023 . . 978-1-350-26724-4 . London . Kerry Brown (historian).
19. Web site: Rathod . Chandni . And Now Presenting: Amazing Satellite Images Of The Ghost Cities Of China . 2023-10-02 . Business Insider . en-US.
20. Web site: Why China Never Gives Up On Its Ghost Cities . Wade . Shepard . . 30 August 2016.
21. News: China's ghost towns and phantom malls . BBC News. 14 August 2012. Robin Banerji. Patrick Jackson . 14 August 2012 . https://web.archive.org/web/20120814201727/https://www.bbc.co.uk/news/magazine-19049254 . 14 August 2012.
22. News: China: No one home . . 21 February 2010 . subscription.
23. Web site: . China's Empty City . video . YouTube . 9 November 2009.
24. Web site: Shepard . Wade . China's Most Infamous 'Ghost City' Is Rising From The Desert . 2023-09-26 . Forbes . en.
25. Web site: This Chinese City's Property Market Is Even Chillier Than Its -22-Degree Weather. Fung. Esther. 2016-08-21. subscription.
26. Web site: 2014-08-03 . China's real estate bubble - CBS News . 2023-09-26 . www.cbsnews.com . en-US.
27. Web site: 2021-09-08 . China's infamous ghost cities are finally stirring to life . 2023-09-26 . Australian Financial Review . en.