Why don't the Chinese give away living space in their ghost cities?

Before the current economic melt down with the Chinese stock market, China was experiencing a huge real estate bubble. Literally, the Chinese built whole cities filled with towering apartment buildings, shopping malls, parks, roads and everything else that no one (or very few people…the video I was watching earlier on this claimed less than 25% use for many of them) use. This was a way for China to show an ever growing GDP fueled mainly by their own command economy. My GQ questions are, why, in a country where they have real housing issues, doesn’t the Chinese government simply wave it’s magical fiat wand and give the housing to it’s citizens? I mean, it seems to me that doing so would give the Communist Party, the folks who created the bubble (both the current one and the past one), could win a lot of hearts and minds by just giving the apartments away to people and populating those ghost cities, which would, I assume, actually put businesses in those empty shops and malls. In many Chinese cities there are huge over crowding issues, and I know these fancy ghost cities are VERY expensive, but seems like the CCP could really boost it’s popularity with the people by doing this. Obviously, there must be something I’m missing here as to why they don’t do it, but for the life of me I can’t figure it out (water? power? some other resource?)…after all, the CCP is the one who built all that stuff, and they have poured billions (100’s of billions really) into trying to prop up their stock market screw up, so it’s obviously not a money thing.

The other GQ question is really asking about the basis of this thread…ARE the ghost cities still out there, relatively un-used? I know that the real estate bubble has pretty much broken now as China has moved on to bigger and better bubbles, but are those ghost cities still out there?

My understanding is that a lot of middle class folks have used these cities as their investments. So instead of an American putting a bunch of money into a 401(k), a Chinese may buy a condo that they may never live in or visit. Seizing those condos to give to poor people makes no more sense than the U.S. government seizing someone’s retirement savings to, say, build an important infrastructure project that would benefit a lot of people.

I’m not just talking about poor people though…even relatively well to do Chinese have serious housing issues and could use the space. The trouble, as I understand it, is that a lot of these properties are just to expensive for the average Chinese to buy. However, they are just sitting there, unused.

I didn’t know that the buildings were collectively owned by a large part of the population, though…I knew that they were built by the government, which poured truly staggering amounts of capital into those projects. I didn’t know it would be a matter of seizing them, so assuming that’s true that would certainly be a good reason why they aren’t being given to the average citizen. Still…they ARE just sitting there, idle, so they can’t be a good investment for anyone except the contractors who built them and those who maintain them.

Seems like a good idea.
Anyway, it’s doubtful the Chinese people who own them — if so — will see a return in their lifetime.

I’m not convinced that Chinese people in general have a serious housing problem. They generally don’t live in single family homes, true. But a middle class family will generally life in a nice enough condo that would be familiar to any global city dweller. China generally has walkable communities and lots of public space to make up for smaller private spaces. People who want more space can and do move further out, but most people seem to prefer the convenience of living somewhere more central.

So I don’t think moving to a ghost city would be a solution to that problem.

Do people want to live in these empty cities? Places like Guangzhou and Shanghai are overcrowded because these cities have a growing economy. People aren’t going to want to move to a city where there are no jobs.

Do they? Do you have a cite for that? From what I was watching and what I’ve heard from some people who came to the US from China a lot of times you have multiple families living in apartments that in the US would be considered small for a single couple, you have them sharing a communal toilet (not with each other but with other tenants in the building), etc etc. Maybe that’s just the very poor, but I’ve heard this is pretty much for what we’d consider even the middle class…only the really wealthy (or those connected with the party in some way, which aren’t mutually exclusive things) seem to be as you are describing, but if that’s not the case this is in GQ so I can learn this stuff.

In the video I was watching that sparked this thread, there were a bunch of people interviewed who were saying they would love to have one of those apartments but simply couldn’t afford them. Now…I don’t know if there are jobs there or not. I’m guessing not, since they are called ghost cities for a reason. But if people moved in, presumably, there would be jobs…at least I’d think so.

Presumably the builders, including the Party, intend there shall be jobs in these places at some point of time.
An interesting article, postulating that China has already overtaken America economically ( I have no idea ) and that this is not a challenge, from Vanity Fair earlier this year ( before the current Chinese economic crash ). Skowing how transient are world rankings.
Of course, in many ways—for instance, in terms of exports and household savings—China long ago surpassed the United States. With savings and investment making up close to 50 percent of G.D.P., the Chinese worry about having too much savings, just as Americans worry about having too little. In other areas, such as manufacturing, the Chinese overtook the U.S. only within the past several years. They still trail America when it comes to the number of patents awarded, but they are closing the gap.
*The areas where the United States remains competitive with China are not always ones we’d most want to call attention to. The two countries have comparable levels of inequality. (Ours is the highest in the developed world.) China outpaces America in the number of people executed every year, but the U.S. is far ahead when it comes to the proportion of the population in prison (more than 700 per 100,000 people). China overtook the U.S. in 2007 as the world’s largest polluter, by total volume, though on a per capita basis we continue to hold the lead.


Britain’s dominance was to last a hundred years and continued even after the U.S. surpassed Britain economically, in the 1870s. There’s always a lag (as there will be with the U.S. and China). The transitional event was World War I, when Britain achieved victory over Germany only with the assistance of the United States. After the war, America was as reluctant to accept its potential new responsibilities as Britain was to voluntarily give up its role. Woodrow Wilson did what he could to construct a postwar world that would make another global conflict less likely, but isolationism at home meant that the U.S. never joined the League of Nations. In the economic sphere, America insisted on going its own way—passing the Smoot-Hawley tariffs and bringing to an end an era that had seen a worldwide boom in trade. Britain maintained its empire, but gradually the pound sterling gave way to the dollar: in the end, economic realities dominate. Many American firms became global enterprises, and American culture was clearly ascendant.
*

There were some really expensive housing projects near me that were going up everywhere, with the worldwide recession and local slump these places were too expensive or those with the cash prefer a private villa on the hills instead of a similar price apartment. So a lot sit empty for years with AC and power turned off to save money, guess what happens in the Carribean heat when that happens?

One place I have heard of a large multi tower complex has sparse residents, I hear if you go to see it they redo the hall on the floor you buy and your unit is pretty much gutted and rebuilt. The place is full of mold and crumbling drywall and roosting fruitbats on the unused floors.

Sure, if a bunch of people gather in one area, there’s going to be some economic activity. But an economy that’s just serving the internal needs of the community isn’t going to be as strong as an economy which is producing goods which are being traded outside the community.

So if China wants to jump start these ghost cities, I feel they’d do it better by building some factories in them (or create incentives for private businesses to do so). If there are jobs in these cities, it’ll create a market for housing in these cities. And once the factory workers move in, other people will move there to provide services to the workers.

No particular cite, but I did spend a couple of years China in a not-particularly-rich city and visited countless ordinary Chinese homes.

I never encountered multiple families sharing a dwelling (I did have a family in my building that lived across two apartments), though college students and single folks will have quite a few roommates and I’m sure it happens among the very poor. For middle class families you’d typically you’d see maybe 5 people and a kid (a couple, a kid, a cousin or other relative and a set of grandparents) in a compact 2-3 bedroom apartment. It’s not spacious, but it’s not intolerable.

I lived in an old-fashioned Cold War era housing block for low-ranked university staff. It was rough around the edges (our kitchens were tiny enclosed balconies, some open to the elements, and our toilet rooms were tiny blocks off of the balcony) but it wasn’t horrible. I think the worst house I visited was an apartment that was 10 stories up with no elevator (which is not up to code, most residential buildings in my city were 8 floors, which is as high as you could go without an elevator). I also had an eccentric friend who lived in a storeroom in the countryside, but I’m pretty sure that was a choice.

Apartments as rough as my university staff housing were rare among the people I knew. Frankly, most of the apartments I visited felt like an IKEA catalog, including the newer staff housing on my campus.

I definitely only saw a small slice, and in the countryside it’s a completely different story. But among middle class folks on my city it seemed okay.

This is a WAG…

But, my guess is they want to goose their housing bubble, not pop it. And if I understand the OP’s proposal, that would run the risk of popping the bubble. I suppose it’s already popping, but they probably don’t want to add to the poppage.

This doesn’t actually require a WAG. These buildings are privately owned property. If the government wanted to fix them away, it would have to buy them, which would be stupid.

In Melb.Vic.Aus, you don’t lower the rent on your empty building, because that will crystallize (?) your loss.

Your bank uses the rental return to calculate the capital value, and will alter the terms of (or recall) your commercial loans if the value of your security changes.

Yes, I understand that it is crazy for banks to work like that.

Why do you always insist on tangling with me? You know in an economics debate, I’m going to trounce you.

But, yes, I agree it would be stupid for them to buy it. But I don’t actually think you know why it would be stupid.

You put forth a WAG theorizing that manipulating the housing market is the main reason why the Chinese government doesn’t give away the buildings.

Does that really make more sense than “they don’t own the buildings, and it’d be stupid to buy them, so they aren’t really in a position to give them away?” It’s fun to image the devious machinations of the Chinese government, but this particular questions happens to have a really simple answer.

In any case, your first theory doesn’t map to reality. The Chinese government is terrified of the housing bubble. They saw exactly what happened here, and they know that in their context the situation would be more dire. They don’t want it to pop, obviously. But they most certainly aren’t trying to “goose” it. They’ve put in regulations to try to cool off the housing the market (such as limiting purchases of second homes), and are desperately hoping they can keep the bubble in stasis until the rest of the economy catches up.

I definitely don’t have anything against you. We seem to agree on most things (???). Perhaps I was too confrontational in my post, my apologies.

For background, here’s a 60 Minutes story on ghost cities from 2013.

“They’re all sold.”

Supply and demand will work itself out, but on a side note the ownership of real estate in China is by millions of individuals in some way very similar to the US. The Chinese government can’t redistribute this (effectively) privately financed and owned housing without getting epic pushback from the people who have invested in it.

These “ghost cities” are just overgrown versions of normal speculative real estate investments and don’t “belong” to the government unless the mortgage holders start defaulting. The government could (hypothetically) move unilaterally to take possession of this real estate if the economy was collapsing but that’s not where they are right now. And if they did what would they do with it? Sell it for pennies on the dollar? Force people to occupy it? Put displaced farmers into the urban high rise condos? When you have vastly too much supply there are few magic solutions.

This has been asserted multiple times but can you give me a cite on this? We aren’t talking about a few buildings here, we are talking about whole cities. Who are these private owners who can afford to building entire cities, malls, housing complexes and all the rest and have no one live in them. In the US, where you have private ownership, this would and could never happen, so I’m a bit skeptical that in China you have guys so vastly rich (PRIVATE citizens so vastly rich that is) that they can and have afforded to build, using their own money, entire cities that are sitting vacant. So…how about some cites on this. I’d also like to know who these guys are who ponied up the money for this…are we talking about (really, really stupid) Chinese billionaires or are we talking about party officials (or are we talking about both…or Chinese billionaires aligned with one or the other of the CCP factions)? Because if you think about the implications of this, and that this is all ‘privately owned’ then China is so outside of the norm of other countries that operate on private ownership and a free market (neither of which China has, by and large) that there seems to be a complete disconnect. If, however, this is as I suspect, then the it’s really the Chinese government who ‘owns’ all of this stuff, with, perhaps, front companies having the ownership on paper. But I’m willing to learn, so let’s see some cites for some of this stuff.