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China's Empty Cities (sbs.com.au)
75 points by BrandonMarc 675 days ago | 52 comments



I'm a Chinese and I'm not feeling strange at all why that old farmer would be so grateful to the government and Party. Actually there are a large mount of former-famers around cities attain sudden wealth, through selling their land to the government. Price varies with the economy situation of that city, but is generally comparable with dozens of year's income of their families. Also, there are a lot farmers failed to reach contract with government, then some of them are violently forced to sell their house and land, though this situation seems to be better controlled these years. Anyway, land and house are always big thing for almost everyone and every government, both good and evil will be stimulated.

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In purely economic terms, China has performed a fascinating ongoing experiment.

The Party looked at the "end state" of an industrialized, prosperous middle-class nation and then decided to will that end state into existence. In that end state, China needs to urbanize on a massive scale and these cities are simply the physical manifestation.

This is the grandest scale human experiment ever, collectivist decision making at its finest (those farmers who are forced to give up the land don't have much of a voice).

Will this work? I don't believe we can begin to calculate all the consequences of this experiment. In any case, it is not obvious the causality runs the way that is implicit in this experiment: build cities, move people, and forge a vast urban middle-class out of rural peasants.

This book is a somewhat sympathetic description of that grand experiment (mildly sympathetic to the Party):

http://www.amazon.com/Chinas-Urban-Billion-Migration-Argumen...

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Interestingly, this has long been one of the main Marxist criticisms of the policy of centrally driven industrialization (which Marx didn't believe in, but Lenin did). The traditional Marxist view is that socialism can only be instituted after capitalist industrialization, because it's a revolution driven by the urban proletariat that capitalist industrialization creates, not something that can be artificially created absent those material conditions. Hence the view of orthodox Marxists that "socialist" industrialization driven by a vanguard party would be internally incoherent, or at least non-Marxist.

(One hears less about this today, because the German revolution failed while the Russian one succeeded, so Lenin won out over Kautsky in dominating 20th-century leftist discourse.)

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Very interesting.

In typical state-planner fashion, the Chinese government completely misses a critical component of the rich-country population distribution: people (more or less) choose where they are going to live, i.e. it's not just a question of available bedrooms. Detroit has plenty of available bedrooms, and so does the most of the South and mid-West.

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Can foreigners buy/rent there? After living in cars, RVs, and the wilderness, will edgy hackers go for cheap digs and cheap food in the 90% empty Paris replica in the hinterlands of China? Get a dozen friends together and start something there. I'm sure you can find some cheap programmers there too. Heck, you could start a zh-combinator there.

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If they were cheap, they wouldn't be ghost cities. They're ghost cities because poor people got kicked out of their homes to build expensive buildings that they now won't let go of for low prices. Eventually of course they'll need to sell it, once China's real estate bubble starts to pop.

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Expensive for farmers who make $2kUSD per annum. Even in the central districts of tier two Chinese cities[1], rent is only $200-300/month for a decent two bedroom. In which case, they ought to just move to a functioning city. My total monthly expenses (rent, food, leisure, taxis, reasonably fast internet) are often <$800USD.

[1]ie not Beijing, Shanghai, Shenzhen, Guangzhou

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The farmers can't afford it, who can? China also has to reform its hukou system before these cities can really become viable communities; for a foreign kid having fun, whatever, but what if you had a family to worry about...medical care, schooling, and other social welfares become very important.

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Yes, these issues are major problems for China overall and for the individuals that make up the working poor (Still literally hundreds of millions of people.)

The parent comment was about creating cheap hacker spaces.

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If we want to use cheap art space as a guide, like 798, they don't last very long, or, if generic, are not very intellectually stimulating. Might as well crash someplace nice like Bali where at least Google+ and Facebook aren't blocked.

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I would join such a venture in a heartbeat. However I don't think the Chinese would appreciate their colonizing habits being put in reverse.

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I've been there, in these cities. They exist, they are massive and very much empty.

A lot of them are still being built, in those ones you find workers and business people who are part of the process to help sell the massive amounts of residential and retail space that has been created.

Having said that, people talk about how it has worked before. I dont know, maybe it will, but for now there are a lot of empty cities waiting for people to "step up" into the middle class.

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I lived in Xi'an for awhile which is considered a "small" city of over 8 million people. It doesn't take long to see the empty buildings. In less than 30 minutes, there's entire areas of emptiness. It's sad and pretty amazing.

As someone else mentioned, the reason they are empty is because they're too expensive to move to and there's zero opportunity there. Many of them are expensive even by US standards for what you get. They are purposely made to be expensive and ghost town like.

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About 10 years ago, a friend of mine wanted to lease out an old building on an old decaying street in Stockton CA, so he could build an indoor soccer field and start a league. The building was unleased, and the owner was happy to lease it to him at an excellent rate (it had sat unleased for 4 years). He had pre-orders for his first league session for almost 80 teams. He had a local investor that was willing to front the cost of the indoor field. He could comply with 100% of the local health and safety regulations, and only had one deterrent: The city planners. They insisted that this entire city block was to be used for upscale retail...no restaurants, no office space, no mini marts, no grocery stores, no movie theaters, no coffee shops, no used book stores, no NGOs, no news stands, and especially no indoor soccer facilities. The owner of the real estate declared bankruptcy a year or two later (it appears most of the other owners of property on the block followed suit) because he couldn't find a single tenant to get past the city planners. I believe the property has now been seized by the city, where it hasn't sold anything since. The zoning has still not changed.

This is what American cities would look like if American city planners had their way. They wouldn't tell you that though...they think they are way better at playing Sim City than their Chinese counterparts.

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One thing not mentioned here is how much the Chinese value brand new properties. By brand new I mean, properties that have never been used/lived in.

It's a common trend in real estate where investors buy properties and leave it vacant to brag about the place being brand new to sell at a higher price in the future.

This is likely to exacerbate the "empty" cities problem in China.

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Interestingly, in Japan, this preference is dealt with by building "disposable" houses with financing and a 25 year depreciating property valuation built around this concept.

Here's a great video https://www.youtube.com/watch?v=7tNpFkdZwpk

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I just took a train from Shanghai down to 黄山. While I can't confirm there are entirely empty cities (I don't doubt it though), There were massive modern housing complexes... with no one in them. It was so surreal.

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Those will get filled with people within about two years. It works about thise way:

1. A road grid are build with 4 lane roads, redlights, etc. 2. Housing complexed are build on the resulting squares with the ground floor for business and shops. 3. Small businesses get the ground floor spaces for free for two years, to make them move in here despite not having any peolpe living there. 4. People start to move in, because there are shops around and the rents and still low. 5. After two years, the buildings are largely rented or sold out, the shops start to earn money and pay rent too. 6. After 4 years it looks like the center of a city.

I have lived in such places, both at the very begining when there was nothing around, and later when it seemed to be an overcrowded city center.

All these stories about "Chinas empty buildings" are largely bullshit. At least on the east coast.

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> Those will get filled with people within about two years. It works about thise way:

Someone told me it would be like this 3 years ago for a project that is still pretty much empty..., I assume Anhui or Hubei is similar. There is just no industry and jobs around many of these projects to support them.

> All these stories about "Chinas empty buildings" are largely bullshit. At least on the east coast.

The coast has already been developed, but go inland just a bit into Hefei or Jiangxi...its bullshit to think that these projects are anything other than the result of a bubble.

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I'm in London. There are dozens of massive modern housing complexes... with no one in them. It takes time, and often the builders prefer to sell slowly at high prices rather than drop the prices enough to sell quickly.

I'm not saying none of these represents a problem, but it's not a given that large empty developments do. Especially in areas with very rapid growth.

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There's also the Pieds-à-terre phenomenon: http://www.nytimes.com/2013/02/12/nyregion/paying-top-dollar...

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The casual dismissal of their sincerity is annoying ("don't know if they're telling the truth, or just saying government-friendly things because the governmental people are here right now!"). At least do the due research if such claims are going to be made by trying to get interviews from these folks without governmental people's presence, or just don't doubt their sincerity. But please don't just sprinkle in the there's-no-freedom-in-China FUD willy-nilly that we've all heard enough of already. This is like how when the hacker faction of PLA is talked about there's an ominous music in the background and serious faces of reporters looking at you to set the tone of the piece as if China is this mysterious and strange entity that is going to bring us down, all the while America's Olymic Games programs hardly even ever get a mention.

Anyway, I think we might be looking too hard for large problems where there might not be any. Don't forget that we have a similarly ridiculous situation in America: for every homeless person there are 26 houses that are vacant. Considering that China's population is a 1.35 billion (about a billion more than America's), at least in one respect it would seem like a prudent choice to build high-rises in place of crudely-made one or two-storey building houses in anticipation of future housing issues.

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To add further, doesn't America have its own share of "ghost cities" that were once booming but are now decrepit?

https://en.wikipedia.org/wiki/List_of_ghost_towns_in_the_Uni...

I'd be more interested in why two such different countries as the US and China seem to have independently arrived at the same problem of ghost cities. We know that China's problems arise from a top-down, state-directed model of development under a one-party rule. But that was never the case in the US, right?

Conversely, there are very few instances of such ghost cities in India (at least that I know of). Possibly because India's urban development has up till now (though today many new cities are currently being proposed as urbanization becomes the need of the hour in India) been much more organic and bottom-up, largely because we couldn't afford otherwise.

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Is my sarcasm filter off here? The ghost towns in the US are dramatically smaller, were pretty much all the result of organic growth, and were actually populated at some point. They're ghost towns now because the populations moved away for any number of reasons (the end of a boom, economic shift, major catastrophe, eminent domain).

The situation in China is completely different. Regional governments are naively trying to stimulate their economies with these huge construction projects. So, they're building giant cities without proper planning or consideration for population shifts. These cities have never been occupied and it looks like they never will. Worse, they're being paid for by highly rated bonds issued from the central government. The whole thing looks like a real estate bubble that could tank the Chinese economy.

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Not all US ghost towns are are dramatically smaller. There seem to be many with peak population in the (low) tens of thousands.

- http://usatoday30.usatoday.com/news/nation/2010-03-01-townha...

- http://finance.yahoo.com/news/american-ghost-towns-21st-cent...

And while I agree with you that they weren't unoccupied to begin with, unlike the case with many of China's ghost cities, I beg to disagree on the rest of your argument - namely that the US model was appropriate for its time (we have decades of hindsight) and that the Chinese model isn't appropriate for the present (we don't know).

Many experts have been prophesying a crash for China's investment driven economy for years now, and a dramatic correction in real estate prices. Yet, after a small correction prices are still rising - http://www.economist.com/news/china/21577118-soaring-house-p...

We may only know a decade or two later whether a few dozen ghost cities was a small price China paid for continuing to power ahead economically.

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>> namely that the US model was appropriate for its time

There was no model other than freedom. Freedom to invent, create, build, farm all as we saw fit. This is completely different and perhaps antithetical to what the Chinese are doing now. Their government is trying to will the result of prosperity into existence rather than allow it to culminate on its own as it does in a truly free society.

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Without defending the Chinese model (which for the record I despise), let us also not forget that "freedom" is relative and defined from the POV of the winners/majority.

In the case of the "building" of America, so to speak, were there not people who did not quite enjoy the same freedom you speak of? In fact millions would have forfeited their freedom so the rest could "invent, create, build and farm as they saw fit".

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America isn't a perfect country but it's the best one I know of.

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Ehhhh, lets not get crazy. I'm a US citizen and have lived in the US all my life, and I could name a handful of countries much better, based on GDP, happiness, or the accessibility of affordable housing and healthcare.

The US is nice, but perfect it ain't.

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Are these "generic" bonds, or does the government issue bonds explicitly tied to the development of one or another city development? Are these bonds to be paid out from new-city tax revenue streams? (Not enough plugged in to the China finance system to search for myself.)

If so, I'm surprised that financial institutions would buy these bonds, despite their high ratings.

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I don't know if you're baiting for a conspiracy, but I'd go as far as to say top level politics are to blame in both countries, albeit more directly in the case of China.

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Nope, not baiting. Genuine question.

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America's ghost towns were once thriving and now are deserted. China's ghost cities are relatively new and have never thrived before; they are just symptoms of a huge real estate bubble.

China overbuilds way too much, even in thriving cities like Shanghai and Beijing will you find almost completely deserted shopping malls.

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I only observed that America and China both arrived at the same end result independently - ghost cities. I am not saying that they followed the same approaches, or took the same time.

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Very unrelated. China also has its share of ancient ghost towns that are similar to ours; e.g. http://en.wikipedia.org/wiki/Niya_(Tarim_Basin)

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seanmcdirmind did not accuse you of saying anything. You asked a question and then he answered it. Are you replying to the right thread?

>>I only observed...

You didn't ONLY observe, you observed and then asked a question, and then the question was answered:

r0h1n>>"I'd be more interested in why two such different countries as the US and China seem to have independently arrived at the same problem"

Seanmcdirmind asked you if your question was genuine, you responded that it was, then he answered your question. There is no conflict here.

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That's a fair point.

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Interesting reading! A lot of the ghost towns in the US are pretty small, maybe 100-200 inhabitants maximum. They eventually seem to fold into nearby communities with better road/rail connections.

FWIW there are ghost towns like the US examples in Spain too - villages of about 50-100 inhabitants that eventually just seem to dry up as populations give up on agriculture/subsistence/mining or whatever and younger generations move to larger cities.

Then there's Valdeluz. Political corruption at its finest, producing a semi-ghost town with less than 2000 people living there. http://desertedplaces.blogspot.com.es/2013/06/the-spanish-gh... - I visited there a couple of summers ago. Nice and peaceful, plenty of playgrounds for the kids to play on, no queues at the supermarket :-)

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Also India is much more densely populated.

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True, but the examples in these cases are of cities that appeared to have been created anew - in China'a case in the middle of nowhere. India could never afford to create massive new cities using state funds like that, so it's city growth was organic by force, not by choice.

Also the reason these cities are ghosts isn't because there aren't enough people in China (it is after all the world's most populous country), but because they were ill-planned in terms of economic/social benefits for residents.

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> Also the reason these cities are ghosts isn't because there aren't enough people in China (it is after all the world's most populous country)

We have to talk about population density, not absolute numbers.

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Wonder why people haven't made movies in these locations yet. Great place for a gang to operate out of, surely?

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It is really hard to work out the truth of these stories.

They always mention these as "Ghost Cities" but the numbers are always mentioned like "This city was meant to house upto a million people"... a million people, is not a city, it's a large suburb. Or a very small city (in China), given they always build with med-high density housing.

Could the reporters please do there job and ask the farmers out of earshot of the "government minders" (What exactly are they?). Having spoken to a number of different government officials in China, there are many who are openly skeptical of the Communist party (and many who are die hard believers). This idea that if you say something wrong you'll be thrown away, doesn't seem to hold true. (Maybe it's different when talking to media).

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You know that the majority of US cities house less than a million people, right? Seattle, San Francisco, Detroit, Boston, Denver, Washington DC, Las Vegas, Atlanta, Miami, etc. There are only 9 cities in the whole US with over a million people.

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You know we are talking about China right? They don't build 400sm plots with a pool and a backyard. They build highrise apartments.

I thought I made that pretty clear when I said "med-high density houses".

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In Europe and much of America, any urban area with > 50k is often called a city. Heck, even around 10k could be called a city under certain circumstances.

The properties of concern are more like satellite cities. Often in crappy remote locations outside the original city's outer ring road.

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In the UK an area has to be granted city status, which traditionally has been based upon where cathedrals are. This means there are quite a few cities under 50k. St David's in Wales is a city with a population of 1,700 people :D

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Europe and much of america has tiny populations compared to china.

So is this story really: "Lots of people live in china" ?

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In season 1, episode 6 of Vice on HBO, they also went to the ghost cities of China. http://hbo.vice.com/episode-six

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60 Minutes also produced a segment which originally aired in March which covers the real estate bubble in China - http://www.cbsnews.com/video/watch/?id=50152767n

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Conceding that there are cases of failure on real-estate investment, for many of these new towns, it is still far too early to call them ghost town. Constructions are just too quick that immigration has not caught up(, and some correspondents did count unfinished projects in). Only time would tell.

The current urbanization would not stop without a huge impact(, in a good, a bad, or a mixed way). In near future, real ghost villages, from which people emigrate, are more likely than real ghost town, like what happened in Japan during urbanization years post-WWII.

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Video - https://www.youtube.com/watch?v=V3XfpYxHKCo

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