China’s ghost cities, the most famous of which is Ordos in inner Mongolia, have regularly been cited as a prime example of China’s unsustainable construction-led economy.
In 2009, AlJazeera posted an explosive video showcasing Ordos’ ghost apartments and frenetic pace of construction, which exemplified the “build it and they will come” approach that has underpinned the Chinese economy. AlJazeera provided a follow-up in 2011, which was equally revealing.
Then Business Insider posted a slideshow of China’s empty cities, headlined by Ordos.
And in late 2011, a video from NTD Television showed how Ordos’ home prices were crashing, having fallen by almost one-third. Meanwhile, construction had finally ground to a halt, leaving many construction workers unemployed.
Then last year, a video from the Atlantic followed a group of skaters through Ordos, showing a city that appeared almost completely empty three years after Aljazeera’s first ground-breaking report.
And who can forget 60 Minutes’ explosive video earlier this year showcasing China’s ghost cities.
These kind of malinvestments – projects that cost billions of dollars but provide but little economic return – have the potential to become a millstone for China’s banks and economy going forward, subtracting from its growth potential.
With the real estate market accounting for around 10% of China’s GDP growth, and affecting many related industries, there also remains the concern that construction and sales could ultimately grind to a halt, crimping local government land sale receipts and dragging China into a sharp recession.
The above video, which comes from HBO’s Vice Program, shows the Chinese city of Thames Town, a new town in Songjiang District, about 30 kilometres from central Shanghai. Completed in 2006, the town is named after the River Thames in England and is modelled according to classic English market town styles, complete with cobbled streets, Victorian terraces and corner shops.
While Thames Town is small – occupying an area of 1 square kilometre and designed for a population of 10,000 – the overwhelming majority of homes sold remain unoccupied, purchased as “investments” by wealthy Chinese, with homes prices starting around 20 milllion Yuan (US$3.2 million). Most of the shops are facades with the town used primarily as a backdrop for wedding photos. Developers spent around $US300 million building Thames Town but never got close to the profits or people they dreamed of.
A similar English-themed town is planned near Beijing, whereas other theme towns planned are Holland, Spain, Italy and Germany.
