The primary reason why “ghost towns” have popped up all over china is because over the past decade plus there has been a strong incentive by local governments to finance real estate construction. Another contributing factor to the real estate construction binge in China is the lack of investment options for the bulk of China’s population [1] which creates inflated demand for real estate as a “store of value” beyond its intrinsic purpose as a shelter.
As they say, “real estate is local” and that is no different in China. The projects were sponsored by thousands upon thousands of local governments that spanned the entire spectrum of competencies, corruption levels, leadership personalities and local economies (i.e. supporting tax base).
As a result, you end up with a wide variety of projects and outcomes. Many projects were very successful, some less successful and others have (thus far) been fantastically unsuccessful. The “fantastically unsuccessful” ones are the “ghost towns” you see and likely the result of high levels of incompetence and/or corruption as well as the occasional local government that is flush with so much cash that it can’t find enough ways to spend it all (Ordos, deep in China’s coal country, is an example of this).
Another reason is virtually all buildings in China were built in the same way. The buildings did not meet the minimum safety requirements; they weren’t designed to address the needs of a modern society; they were dirty, difficult to control, and not least they were ugly buildings.
In a word, with the economic boom, it became clear that China could no longer be represented by these buildings covered with dirty white tiles. The emerging Chinese middle class could no longer live under certain conditions.
This plan that runs parallel to the Chinese project to empty rural areas to thicken the population in large urban centres (in China today there are more than 100 cities with more than 1 million inhabitants, and not for the population growth, which in fact is ageing abruptly, but simply because millions of migrant workers left the countryside) naturally inflamed the real estate market, which has greatly contributed to the growth of the Chinese GDP.
Given that Chinese build these new districts not for fun but because they are simply following their five-year plans of urban development involving the movement of oceanic masses of people from countryside to city, each so, perhaps more frequently than expected, some of these projects will fail, leaving only abandoned buildings with them, huge holes in local budgets, and often leaving countless citizens who had invested their savings or turned on mortgages to buy these glittering apartments.
Si tuambiwe twende tukaishi huko.
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