China’s rapid economic growth combined with central urban planning has produced dozens of ghost cities, which are brand new cities with almost no inhabitants. Some of these cities, such as Kangbashi, were built to house 
over a million individuals, but currently hold only 20,000. This unused housing is shocking since China’s population is rapidly urbanizing. The percentage of the Chinese population living in cities has doubled since 1990 and is expected to continue to increase. This demographic shifttrend caused the government to plan the construction of brand new cities. However, migration did not always occur in predicted patterns, and some cities went uninhabited.
Another cause of these ghost cities is economic incentives established by the central government. Local governments are encouraged to achieve the highest GDP growth possible. Since large-scale investments
and construction are the easiest way to boost GDP, many local officials push for large development plans. Due to slowing population growth and an already sufficient infrastructure system, China will need to shift their growth strategies from investment to consumption.
While these ghost cities have drawn large amounts of international criticism, they must be looked at with the correct time frame. These cities are usually planned with a 10-15 year timeline. As a result, some ghost cities are simply in between the construction and population stages. Also, while these cities receive a large amount of press, ghost cities that become inhabited go relatively unnoticed. In the long term, some of these cities may remain uninhabited, but the majority will be filled.
Another potential cause of the ghost cities might be the gap of wealth. Wealthy people buy a number of houses as the investment. However, the price of housing increases because of this behavior and impoverished people are less likely to afford houses. In this situation, rich people can only save the empty houses for future potential buyers while the poor just become poorer.
Good to note that not all ghost cities remained that way. I look at sites discussing Ordos from time to time. It’s built to house over 1 million people, but at one point had only 10,000. It’s now up to 100,000 but it still means empty streets and empty buildings. Now were the apartments sold in advance? – I suspect not. But it would require going through multiple sites to try to find that information.
Perhaps one of you who can read Chinese can look at relevant web sites such as 鄂尔多斯市 on (Chinese) Wikipedia?
I’ve checked the Chinese Wikipedia on Ordos. So right now Ordos have 1949500 citizens. And the ones that actually live in the Ordos are 582500. The total population is from the 6th National census in 2010, and comparing to the data from the 5th one, the population has grown 545212 in 10 years. The GDP of Ordos is actually ranking the 3rd among mainland cities. Unlike the Silicone Valley, Ordos is a large provider for coal, wool, and cashmere. Therefore, I’m assuming that the reason there aren’t many people live in the city but so many houses might be that businessmen are travelling a lot to get more business partners and buyers and they do want to own houses in their hometown.
As you point out in your conclusion, a majority of these cities will be filled. So was it really unwise of the Chinese government to build up these places? It benefited the GDP through large amounts of investment, and it will eventually solve a migration problem too. Beijing does not plan to stop construction of ‘ghost cities’ either. According to Forbes, “The Communist Party planners in Beijing want to urbanize over 100 million rural Chinese over the next five years alone.” The way of doing this is by constructing urban areas around the rural Chinese. This, again, should continue to prove beneficial for China’s GDP and also for the goal of large-scale urbanization.
http://www.forbes.com/sites/kenrapoza/2015/07/20/what-will-become-of-chinas-ghost-cities/#3d3fb929751b
I do wonder what percentage of these ghost cities that Mr. Miller would describe as “efficient” and inefficient. As mentioned above, construction is an easy way to increase GDP. But how many of these cities are similar to building a bridge, taking it down, then rebuilding it–just for the sake of increased GDP? This is one of the many contributors to China’s mysterious economy: surely sprawling cities and increased GDP’s are signs of growth, but vacancies are not.
Interestingly enough, it was recently released that these ghost cities are contributing to the massive debt-to-GDP (270%) issue that China is facing- which is the largest of any emerging market economy. Over investment on real estate and capital in general has caused a negative return on capital. Perhaps we will see the negative impacts of inefficient GDP investment on China’s economy in the coming years.
http://indianexpress.com/article/opinion/columns/chinese-economy-renminbi-shanghai-stock-exchange-bad-news-from-beijing-gdp-growth/
Try searching for “ghost” and “Ordos” on this blog to see what your peers wrote in past years!
Oh, and there’s now a book “Ghost Cities of China” by an American who studied in Hangzhou and then spent time over the past 5 years traveling from ghost city to deserted town.
According to the Wall Street Journal, the housing market accounts for nearly a one-fifth of China’s gross domestic product. Recently, China has tried to reduce inventory by encouraging individuals to increase borrowing. When purchasing a home, home buyers put down one-third of the cost of a new property upfront. Property developers have been providing home buyers with down payment loans, which makes purchasing a home more attainable. However, down payment loans are very risk because “agents say these loans can attract annual interest rates of up to 24%.” Consequently, the rate of nonperforming loans in residential mortgages was 0.31%, up from 0.21% in 2014.