Little did we know that most of that iron ore being shipped to Guangzhou from Rio de Janeiro and Port Hedland, Australia was going to build Chinese cities; cities that would remain vacant for years. China single-handedly topped the phrase "bridge to nowhere" and made ghost cities a euphemism for lousy development planning in the world's No. 2 economy. Anyone can build a useless overpass, but it takes China to build a city for a million people with no buyers in sight.
The naysayers loved the Western media's discovery of China's ghost cities. It was evidence that China's growth of the last 20 years was based on building things nobody needed or wanted. This was planned obsolescence on a grand scale. And now that the economy is slowing, what will become of those cities? Many of them are debt burdens carried by the developers who haven't sold a single unit.
From shopping malls to soccer stadiums, hundreds of new cities in China are largely empty. And yet more cities are still being built deep in the heart of the country. All in hopes that its rural population will one day move to a flat in a city without a mayor. It's plausible, of course. That's because over the next 15 years, the country's urban population will be 1 billion; three times that of the United States.
What will become of these cities going forward? Here's a quick answer: a handful might be shuttered. Most will be filled. New ones will undoubtedly be built.
China's developing its urban architecture three ways: new cities (xinshi), new districts (xinqu) and the so-called townification (chengzhenhua). Townification is quite a departure from the way Chinese cities have developed to date. This is the transformation of small rural centers and even tribal villages and building a small urban center around them. The Communist Party planners in Beijing want to urbanize over 100 million rural Chinese over the next five years alone. That would require the construction of 50 Bostons, or six Shanghais, by 2020. Townification is lower intensity than that. These are small cities rather than sky scraper zones designed to house suits and high heels. It's more widespread than traditional urbanization, and will define the way China develops socio-economically over the coming years.
Roughly 40% of the 300 million Chinese expected to move into a city by 2030 will mostly be moving to smaller cities in the "chengzhenhua" system. Rather than migrating to cities, the cities will be built around them instead.
Tattoed hipster and Silk Road traveling journalist Wade Shepard calls this the largest social experiment that has played out in human history. Shepard is the author of "Ghost Cities of China," a readable explanation of what's going down in China's new downtowns.
Creative Destruction Then & Now
In 2010, the governments of Shanghai and Beijing invested nearly $60 billion to bring the World Expo to Shanghai. They kicked people off their land. All told, 18,452 households got eviction notices. Some 270 factories had to move. China's "stroke-of-a-pen" economy can change fortunes just like that. Those who complained about the relocation program were arrested in typical Chinese fashion. The focus of the Expo was "Better City, Better Life", but ironically, what it left behind was a ghost town. When it was over, Shanghai was left with a swathe of land the size of Monaco with absolutely nothing going on. Many of the buildings were demolished. In the words of Dutch architect Harry de Hartog, "It is still a big empty wound in the city of Shanghai."
There is a blip of activity there, near the Expo museum. Getting to it requires walking for 20 minutes through a desolate, post-urban landscape. It's taken five years before change has come to town. The area is now one of four key development zones in the city's current five year plan, and a $483 million project is in the works to turn it into a mixed-use district, with shopping, restaurants, entertainment, and Shanghai's third business center. Office towers and apartment buildings are already under construction.
"It's going to become a high-end destination," says Pierluca Maffey, a project manager for U.S. based John Portman & Associates, one of the firms of architects working on the site.
China's ghost cities are, and were, a harbinger of the country's real estate bubble. It's also part of the narrative that says Chinese municipalities are spending money on projects with no possible return on investment. But seeing how many of these loans are from the state, and the state is mainly concerned about job creation, building for the sake of the future and for present jobs actually worked. For a while. It might not work going forward and so there will be less creative destruction, and more creation.
When Shepard set out to investigate China's ghost towns he was a student at Zhejiang University. When he brought the issue up with his professors, they told him "those places are everywhere."
"There was something about that phrase -- those places are everywhere -- that kept me locked on the topic," he says. "Later that year I drove off a highway into a deserted portion of Erenhot on the Mongolian border, a place that would later become infamous as the ghost city reports in the Western media. I walked through sand strewn empty streets out in the Gobi desert. It became clear to me that something big was happening here."
Happening is the operative word. Because it is still happening.
The Phantoms of China
There are megacities inside of megacities with sprawling poverty in between. The government wants to do away with this. Instead, if one can envision a megacity with tentacles reaching out and ending in circles of much smaller cities, then this is the future of China. This is what the late 21st century will look like. China is building for this.
Meanwhile, what's already been built remains vacant, or under-populated. Some people don't mind.
Along the outskirts of Shanghai there is a town built near a Volkswagen plant. It had everything: housing, parks, canal-side promenades, benches, shops, roads, statues and office buildings. The only thing it lacked was a population. Shepard recalls visiting Anting German Town, a Bauhaus-style town that looks like it belongs in Hamburg. There was a bartender there. And his wife. And the VW factory workers that came to his bar after work to drink.
"When I asked the bartender's wife (left unnamed in the book, so we can trust his account or not) if she thought more people would come to Anting, she replied with certainty that they would." Others interviewed in the book didn't seem too worried about the lack of population. They seemed to revel in it. Clean, orderly, no shanty towns towering over you. Not as expensive as Shanghai. What's not to love?
China's continued urbanization push can be viewed as a full-on effort to develop an insulated economy that's based on domestic production delivering goods and services to domestic consumers. Past crises in Europe and the U.S. have taken their toll on the Chinese economy. During the U.S. Great Recession, China had to bail out the economy to the tune of nearly a trillion dollars. Its GDP fell below 7%. It was, alas, the hard landing the popular pundits had been waiting for. To curb the impact that foreign financial meltdowns can have, China has performed a U-turn and is now looking inward. In 2013, the service economy topped manufacturing for the first time. City building goes along with this.
Not every new city or urban expansion project will succeed. Some will fail and become true ghost towns, the kind that remind us Westerners of cowboy lore, complete with Gobi desert tumbleweeds. But to measure the vitality of this ambitious project, one needs to counterbalance failures with successes, Shepard reminds us. By focusing on the extreme and often confusing aspects of China's urbanization movement, the real China story gets lost in the noise. Although the past is not indicative of the future, let us not forget that this country pulled more people out of dollar-a-day poverty than any other country. Many of those riches came from building new cities. In the last two decades, China has built an entirely new country, one that matters to Apple as much as the U.S.; a country whose businesses own American brands like AMC Theaters, and are building high rises in Los Angeles.
Shepard's work here is ultimately a solid journalist's diary, complete with reference index and source interviews. His work is based on years spent wandering the city streets of China with the locals, not a foreign camera crew of first-timers. If you want opinion from pundits, or first-take thoughts from a reporter parachuting in for a stint in Kangbashi, the Mongolian border town that became the poster child of China's jacked-up bridges-to-nowhere, then "Ghost Cities" is not your thing. But for readers looking for a more reasonable, honest broker on the topic, then Shepard is your guy.
