Ghost Towns

The Chinese growth story is often questioned by outsiders, sometimes due to envy, at others, because they are so secretive and who knows what they might be hiding? Are they over-constructing without any demand, some wonder? (The construction spending shows up as GDP growth)

I got a glimpse of this when I saw empty high rises all along the Shanghai-Wuxi highway; and then more of them, around Wuxi. Unlike the ones in India, where the reason they are empty is because they are still under construction, in China, they are complete and yet they are empty! But empty buildings are nothing: it turns out there are entire cities that are constructed and lie practically empty! There is even a term for them: ghost cities. 20 such cities came up in 2013 alone.

I asked my American counterpart why anyone would construct entire cities without a corresponding demand? Why would they take such a big financial risk? His answer: you are thinking like a capitalist, this is a communist country. I realized that I only understand the theory of the two systems; in practice, things are far more weird that I can even begin to imagine!

Ideology aside, Peter Calthorpe points out other reasons:
- In China, one cannot buy land, only lease it. There are no property taxes, so cities make money by developing land. Even if there are no amenities or demand!
- Poor phasing of services and amenities.
- As the average citizen gets richer, he seeks investment options. Without a real stock market, real estate remains the only practical option. And with no property tax, the holding costs stay low.

Adrian Brown describes one such ghost city he visited in 2011:
“Wide, empty boulevards. Grandiose architecture with confused themes. And an eerie shortage of people. At times you have to pinch yourself and say, “Yes, it's real.”
Even if you can’t go there yourself, you can see the emptiness for yourself on Google Maps. Brown was escorted out of the city because, as the Chinese official told him, “Not like you”. All this just reiterated what many others told me: we foreigners only get to see what the Chinese authorities “allow” us to see.

I thought such things didn’t happen after the Berlin Wall fell; I guess I was wrong.

Comments

  1. KumarMarch 15, 2014 at 4:50 PM

    Very strange indeed.

    I feel like discussing this: The mighty Russian empire collapsed like a pack of cards one day, because the whole foundation lacked internal substance in it. That is to say, despite the government propaganda about the greatness and appropriateness of communistic governance, the people there themselves had little faith in that. Some of my friends who believed that communism was good because it focused on the prevention of exploitation by those who are 'above', used to argue that since capitalism lacks intrinsic strength and is "based on false premises" (as they called it) it would collapse soon. While we may have to wait longer for that to happen, right in front of our eyes the collapse of Russian hegemony occurred. That was real, not imagination.

    The surprise is that China defies that kind of logic that one cannot build a lasting empire based on falsity, dissociation with good finance basis, totalitarianism, freedom - to name some main ingredients. China continues to look strong. We are left with no option but to conclude that it seems possible to indoctrinate the people of Mongolian race into some level of unquestioning regimentation! :-) I may sound like a racist but I am sure I am not. If my reasoning is silly, can you tell me what is it that holds such a strange governance that we see in China never showing signs of weakening?

    ReplyDelete

Post a Comment

Popular posts from this blog

Why we Deceive Ourselves

In their book, The Elephant in the Brain , the authors describe this weird aspect of deception that we practice: deceiving ourselves! That is so weird: “If our minds contain maps of our worlds, what good comes from having an inaccurate version of these maps?” The Sigmund Freud school of thought treats self-deception as a defense mechanism, “a way for the ego to protect itself”. The mind seeks to protect itself from anxiety and other negative emotions. Many object to this reasoning: since accurate information is so critical to our survival, surely distorting information would be dangerous. Wouldn’t the goal of protecting our self-esteem have been better achieved by making the brain’s self-esteem mechanism stronger instead? The new school of thought explains self-deception as “primarily outward-facing, manipulative, and ultimately self-serving”. This is based on Thomas Schelling’s work on game theory: “In a variety of scenarios, limiting or sabotaging yourself is the winn...
Read more

Europe #3 - Innsbruck

The last city we visited in Europe was Innsbruck in the Austrian Alps. After the cold and windy experience (at times) of Paris and Netherlands, Innsbruck was a wonderful change – it didn’t feel that cold, it was not windy all of which made it easy to walk around. Something absolutely necessary given how scenic the place is.   Since the hotel check-in time was much later in the day, we left the baggage and went to the Swarovski HQ-cum-museum about an hour by bus from Innsbruck. The crystal exhibits were brilliant – colorful, bright, shiny. Jewellery aside, it was a display of what one can do with crystals. While my wife and daughter loved the jewellery, I liked the superhero themed exhibits of Batman, Spiderman, the Hulk, and Star Wars. We didn’t buy anything there, though we did buy stuff in the Swarovski store in Innsbruck – jewellery, not the superhero stuff.   Innsbruck is a major tourist attraction during the skiing season but now in summer, we saw many groups of ...
Read more

The Thrill of the Chase

So many people complain about the difficulty in making decisions while shopping. Do you buy Brand X that gives 20% extra free? Or Brand Y that has 10% off? Or Brand Z that gives something else free with it? Do you buy that flat screen TV today or wait for the sale at Diwali? Now since the customer is king, shouldn’t companies be simplifying pricing choices? Like maybe offering consistently low prices all the time? Not so fast, as the US store, JC Penney discovered to its cost. Turns out that while people do complain about pricing choices, they are irrational. Also, they enjoy the thrill of the chase. Huh? The word “sale” acts like a siren call for many people: it lures them in to make that purchase. Consistently low prices don’t do the same. Besides, if a competitor lowers their prices just one time of the year, and Poof! Suddenly that low price claim becomes suspect in shoppers’ eyes. Then there are those sites that offer coupons: have lunch at Restaurant A on Wedne...
Read more