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

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