# Why don't the Chinese give away living space in their ghost cities? **URL:** \ **Category:** Factual Questions\ **Created:** [August 15, 2015, 12:32am UTC](https://boards.straightdope.com/t/why-dont-the-chinese-give-away-living-space-in-their-ghost-cities/727887 "2015-08-15T00:32:11Z")\ **Posts on this page:** 10\ **Page:** 2
**Author:** ![BrightNShiny](https://avatars.discourse-cdn.com/v4/letter/b/7bcc69/32.png) [@BrightNShiny](https://boards.straightdope.com/u/BrightNShiny)\ **Post date:** [August 16, 2015, 4:09am UTC](https://boards.straightdope.com/t/why-dont-the-chinese-give-away-living-space-in-their-ghost-cities/727887/21 "2015-08-16T04:09:29Z")
> [@even\_sven](#): > > 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. No worries. I was excessively cranky in my reply, so my apologies as well. But, the reason I phrased my response as a WAG is (a) because Chinese leadership decisions are a bit opaque, so it’s hard to say with any certainty what they’re thinking and (b) I wasn’t quite sure exactly what the OP was proposing. ---
**Author:** ![even\_sven](https://avatars.discourse-cdn.com/v4/letter/e/dfb087/32.png) [@even\_sven](https://boards.straightdope.com/u/even_sven)\ **Post date:** [August 16, 2015, 4:40am UTC](https://boards.straightdope.com/t/why-dont-the-chinese-give-away-living-space-in-their-ghost-cities/727887/22 "2015-08-16T04:40:45Z")
> [@XT](#): > > 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. It’s developers that build the cities, fueled by cheap loans (this has changed since) and low barriers to entry. Private citizens then buy individual units, like buying a condo or commercial property. The issue is that private citizens have been buying them with the intention of selling them rather than living in them. This isn’t as crazy as it looks like from a distance. China has seen massive new cities pop up out of nowhere, fueled by both rapid migration from the countryside as well as economic growth in general. People who got in on the ground floor of those have become spectacularly rich extremely quickly. Buying a condo in a hot new area can make you rich is a matter of years, and it’s happened to countless ordinary people in every city. Think about how people who bought cheap Manhattan real estate in the 70s are now millionaires, but speed up the timelines exponentially and expand it to every town. But when there are no primary residents and just speculators, you end up with the ghost cities. And nobody wants to sell at a loss, so they just hold on and hope that as more people come in from the countryside, demand will eventually rise. It definitely does happen in the U.S. We have failed developments, in our case largely commercial, all over the place. You’ve never seen a new mall that’s failed to fill up, or a downtown revitalization project that never became vital? ---
**Author:** ![Aspidistra](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/aspidistra/32/3894_2.png) [@Aspidistra](https://boards.straightdope.com/u/Aspidistra)\ **Post date:** [August 16, 2015, 5:30am UTC](https://boards.straightdope.com/t/why-dont-the-chinese-give-away-living-space-in-their-ghost-cities/727887/23 "2015-08-16T05:30:34Z")
Even with the one-child policy, China’s population is still expected to be rising for the next ten or fifteen years, isn’t it? So it might still happen for them. ---
**Author:** ![Mijin](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mijin/32/9369_2.png) [@Mijin](https://boards.straightdope.com/u/Mijin)\ **Post date:** [August 16, 2015, 8:55am UTC](https://boards.straightdope.com/t/why-dont-the-chinese-give-away-living-space-in-their-ghost-cities/727887/24 "2015-08-16T08:55:07Z")
> [@XT](#): > > Literally, the Chinese built whole cities filled with towering apartment buildings > […] > This was a way for China to show an ever growing GDP fueled mainly by their own command economy. I thought I’d comment on this, as it seems to allude to one of the standard memes (that china’s economic growth is somehow a fraud). The number of ghost towns vs the number of apartments built _and then lived in_, is tiny. It could only ever be a footnote. They are indeed incredibly wasteful, but need to be seen in context. When you take a train between major cities in China, you will spot many residential developments that are awesome in scale: as many as 20 identical tower blocks, each with approx 30 floors and 8-10 apartments per floor. So it’s surprising in a way that the ghost towns aren’t more common, but given China’s population and movement to the cities (and therefore urban sprawl), these developments generally get filled. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [August 16, 2015, 4:29pm UTC](https://boards.straightdope.com/t/why-dont-the-chinese-give-away-living-space-in-their-ghost-cities/727887/25 "2015-08-16T16:29:17Z")
[QUOTE=Mijin] I thought I’d comment on this, as it seems to allude to one of the standard memes (that china’s economic growth is somehow a fraud). [/QUOTE] Oh, their economic growth is real enough, since it’s driven by an almost manic export industry, optimized at all levels, including manipulation of their currency, to be that way. What I was saying is that their GDP has been inflated by a huge real estate bubble created by the CCP to build all these ghost cities, buildings, housing, malls and so on when there was no market reason to do so. It inflates their GDP because China is borrowing heavily and using the money it gets from export to fuel that real estate bubble. Of course, the Chinese had tried to cool down that bubble last year…by encouraging their citizens to instead invest heavily in China’s two stock markets. Since there was a perception that the stock market was a sure thing, being backed by the party (who were the ones, through their state run media, encouraging people to invest in the stock markets). This bubble has been about as bad as the real estate bubble, that still hasn’t burst, since the government is propping it up with large infusions of capital. There are tons of videos on this, but [here](https://www.youtube.com/watch?v=cpAD0gYZ2eI) are [two](https://www.youtube.com/watch?v=6HKaR52ciG8) from Bloomberg if you like…the first one talks about the real estate bubble, the second about China’s debt verse Europe’s debt. > [@](#): > > The number of ghost towns vs the number of apartments built and then lived in, is tiny. It could only ever be a footnote. They are indeed incredibly wasteful, but need to be seen in context. I suppose it’s going to vary. I know in Beijing and Shanghai it’s the opposite problem…they have housing and building shortages there. And I think the term ‘ghost town’ is probably a bit of a misnomer…in almost all of these cases, someone lives in these things. Usually, from what I’ve read, we are talking about 10%-25% occupation in many cases. Also, sometimes things get re-purposed or get occupied down the road. I seem to recall that the huge, sprawling South China Mall has had a sort of second life after nearly a decade of being pretty much idle. > [@](#): > > When you take a train between major cities in China, you will spot many residential developments that are awesome in scale: as many as 20 identical tower blocks, each with approx 30 floors and 8-10 apartments per floor. So it’s surprising in a way that the ghost towns aren’t more common, but given China’s population and movement to the cities (and therefore urban sprawl), these developments generally get filled. So, what you are saying is that things like the [Paris of China](http://www.huffingtonpost.com/2013/08/07/paris-china-tianducheng_n_3714385.html) are more anomalies compared to the norm? ---
**Author:** ![even\_sven](https://avatars.discourse-cdn.com/v4/letter/e/dfb087/32.png) [@even\_sven](https://boards.straightdope.com/u/even_sven)\ **Post date:** [August 16, 2015, 6:00pm UTC](https://boards.straightdope.com/t/why-dont-the-chinese-give-away-living-space-in-their-ghost-cities/727887/26 "2015-08-16T18:00:14Z")
> [@XT](#): > > So, what you are saying is that things like the [Paris of China](http://www.huffingtonpost.com/2013/08/07/paris-china-tianducheng_n_3714385.html) are more anomalies compared to the norm? Absolutely. My own small city had a large brand-new faux European mixed use development on previously undeveloped land, and the shops were full and most of the condos sold before grand opening. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [August 16, 2015, 6:14pm UTC](https://boards.straightdope.com/t/why-dont-the-chinese-give-away-living-space-in-their-ghost-cities/727887/27 "2015-08-16T18:14:24Z")
Presumably, the people that might move into a ghost city are paying rent somewhere else. Why would the government want to piss off the owners of those properties? ---
**Author:** ![Kenm](https://avatars.discourse-cdn.com/v4/letter/k/bc79bd/32.png) [@Kenm](https://boards.straightdope.com/u/Kenm)\ **Post date:** [August 16, 2015, 6:23pm UTC](https://boards.straightdope.com/t/why-dont-the-chinese-give-away-living-space-in-their-ghost-cities/727887/28 "2015-08-16T18:23:48Z")
China’s ghost-city planners were cargo culters in previous incarnations. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [August 17, 2015, 2:23am UTC](https://boards.straightdope.com/t/why-dont-the-chinese-give-away-living-space-in-their-ghost-cities/727887/29 "2015-08-17T02:23:14Z")
So, I was watching [this](https://www.youtube.com/watch?v=_AvNT3vyzr0) video today talking about their theory on how China will not be the dominant economic and military power in Asia, and one of the speakers, John Lee, said that the Chinese debt has skyrocketed due to this building craze, and is over 200% of GDP. I don’t expect anyone to slog through the video, but he starts talking about this around 13:00 through around 16:00 or so, and he says that not only was this the most expensive building program by any government in history, it was by far the most wasteful such program in history as well. He mentions that the Chinese government basically forced Chinese state owned banks to loan massive amounts of money to Chinese state owned construction companies to build these projects, and that they weren’t driven by economic necessity but instead by political motives. This seems in contrast to the assertions of many in this thread that it’s Chinese private investors and companies that own the majority of these structures, though the guy talking does say that in many cases the ghost cities, malls, buildings, whatever aren’t in very optimal places for real urban growth or need, so I guess that goes along with what a number of posters were saying about a good reason why you can’t just give the things away…they aren’t in the right places for peoples actual needs. He makes a really interesting comparison, saying that basically China doubled down on Japan’s own real estate mistakes (ironic if true :p), and that China’s capital output ratio is something like 3 times worse than it was 10 years ago…and, again according to John Lee, it’s 50 times worse than the current Indian economy. He goes on to talk about China ‘escaping the middle income trap’ and how they could do that (short answer…they can’t as long as the CCP wants to stay on top), then the discussion starts to talk about military issues and why China is not optimally positioned militarily to become the dominant military power in Asia, displacing the US, but that’s a bit beyond this discussion. ---
**Author:** ![Balthisar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/balthisar/32/2825_2.png) [@Balthisar](https://boards.straightdope.com/u/Balthisar)\ **Post date:** [August 17, 2015, 9:33am UTC](https://boards.straightdope.com/t/why-dont-the-chinese-give-away-living-space-in-their-ghost-cities/727887/30 "2015-08-17T09:33:25Z")
A lot of this distills and clarifies some of the back and forth potentially lost in the above. In China most of the housing is not built by “the government.” The land belongs to the national government nominally, but it ceded to the local governments in practice. The local governments are highly motivated to “sell” this land to private developers. Note that this isn’t a sale as we would view it in the west; it’s really only a 70 year monopoly right to use the land, and only as the local government specifies (e.g., multistory housing). These land sales make local governments rich and pay for things like awesome subway systems, trains, highways, and stuff that governments pay for. Local governments borrow from the national government and its banks to pay for a lot of this, too. This makes the national government rich. Private developers own the buildings (rather, the 70 year exclusive right to use), and sell these to private individuals. Eminent domain in China is kind of a thing, too, but in practice it’s hard to be forcefully ejected. Supposing the local government wants to redevelop a prime section. It and the developer will negotiate with all of the current homeowners and other legal adults living in each residence, as determined by their household registration (hukou). The hukou isn’t a frivolous thing, so it’s very hard to fraudulent claim you are a resident. Usually the offers are a lot of cash, or cash plus a new apartment (in a different part of town) for each adult resident. There are ghost sections of my own neighborhood, but luckily some of the homeowners have the sense to recoup some of their investment by renting, lest I be homeless. I live in a villa that rents for about $3000 per month, and it’s on the very low end for the neighborhood. The house is nothing special (after all, “villa” is code for “duplex” or “semi”), but the land it sits on is very precious indeed. My crappy house has one thing billions of Chinese will never have, though: a strip of grass that’s all mine (mine enough, as long as my company continues to pay the rent). And, yeah, buying an apartment is the number one way that Chinese “invest.” I hope my neighbors don’t decide to eat me if the bubble ever bursts. [Previous page](https://boards.straightdope.com/t/why-dont-the-chinese-give-away-living-space-in-their-ghost-cities/727887.md?page=1)