Ziyu Cui
Research Paper
Professor Richard Fahey
12/10 2014

Dead City To Be Brought Back to Life

In Ordos, Inner Mongolia in China, Kangbashi district is filled with skyscrapers, government buildings, museums and theatres. Kangbashi looks just like another rising urban center of prosperity, except that there is hardly anyone living there even though it was originally designed to house and entertain one million people. It has been infamous for being the largest ‘ghost city’ in China and unfortunately, it is not the only one. China’s economy has been growing rapidly over the past decades and so is realty business, but problems follow. As a result of a real estate bubble, ‘ghost cities’ sprang up all over the country. The media portrays the deserted plazas and dead stillness in daytime as the excessive Chinese infrastructure investment, and although the media shows cause great concerns, the Chinese government rarely has open discussions on this problem. In my point of view, ‘Ghost Cities’ in China is an important issue since it affects the urbanization, utilization of resources, lives of Chinese citizens and ultimately the development of the entire country.
In this paper, I will use Ordos as a typical case study in order to look into some of the contributing factors to this issue such as politics, the economy, social structure and traditional culture, and I will present further thoughts in a broader context. First, I will try to answer the following questions: What are the causes of ghost cities? What are the policies in response? How did the policies work? What problems have ghost cities caused and in what degree? After having a clear understanding of ghost city issue I will move on to the solutions. In the existing conversation there are a lot of professional suggestions from economists and jurists, but very few have talked about how cultures, social values and different attitudes I mentioned previously can affect this issue. Thus, other than looking into economical and political solutions I will also provide viewpoints from cultural and social aspects.
The direct cause of ghost cities is the excessiveness of housing and cities’ inability to attract and keep enough residents. But why are there so many houses and so few people? The answer to this question is complicated. Economic growth has been the priority ever since the Chinese economic reform in 1978. And in recent decades, property development has gradually become the most popular way to promote economic development because property industry can promote many other industries such as steel manufacture, and engineering machinery that create huge profits. More importantly, realty business is a rather independent industry. The economic aggregate generated by real estate business is far more dependable than that of others like agriculture, retail industry and finance that can be easily affected by variables like climate, financial crisis and exchange rate of currency. This seems beneficial to the economy but when the economy gets overly dependent on land development, it no longer is. In 2013, the share of land income in cities’ governmental earnings reached 86% and property investment accounted for 16% of China’s GDP (gross domestic product). In fact, it is extremely dangerous for percentage of property investment to exceed 9%.
This abnormal phenomenon in property development leads to the next question: why is the economy so dependent on realty business? Take Ordos for example, Ordos is one of the richest regions of China with extremely abundant natural resources. With a nominal per-capita GDP of US$14,500 in 2008, it is ranked ahead of Beijing. However, just like most other ghost cities, it is referred to as a typical ‘new money’ city that builds up its economy at a striking speed but lack solid foundation. A series of energy development policy including the West East Gas Pipeline Project launched in 2002 turned Ordos from a lagging town into an emerging modern city. Unfortunately, the urbanization of Ordos did not follow the normal urbanizing pattern. Urbanization is a process that involves population shifts from rural to city, the continuous expansion of urban area and industrial transformation. Factors like population, education and lifestyle are all crucial in urbanizations. Real estate plays an important role but cannot be separated from the whole process, nor can it be sustainably promoted without those other crucial factors in place. Unlike other metropolises such as Beijing (capital of China) that has been prosperous for over two thousands years, Ordos lack experience in city management since it was merely a desert before 2000. As property investment can create huge profits, city government strongly encouraged land business in Ordos while overlooking other important aspects such as education and community culture. As a result, massive amount of properties were built but are still left vacant because Ordos failed to provide people with necessary resources other than houses.
However, ghost city is not simply a result of immature economy. Another crucial cause is China’s political structure. In China, Central government supervises provincial government that is in charge of city and town government. Each supervising department elects the officials of their subordinate department by evaluating officials’ performance. The evaluating process is called the ‘official performance assessment system’. The major criteria are governmental income, economic growth and GDP. As I indicated previously, property investment has been the most popular way to promote economic development because of the huge economic aggregate it generates and its dependability. For possible promotion, city officials encourage land business regardless of the consequences and eventually create piles of deserted properties.
Immature economy and the election system in China are the major causes of ghost towns and are the two aspects that are most frequently mentioned by newspapers and commentators. However, regarding the ongoing conversation, there are other important causes such as culture and tradition are often overlooked. For thousands of years, having a home and a house always comes before having a career for Chinese people. Having a house of one’s own is important when people seek for marriage, too. Even those with rather low income would try to purchase an apartment instead of renting one. People tend to prefer property investment to other forms of investment and will buy more than one house even when they don’t need it at all. Such buying behavior is an important reason why there are many ghost cities with properties sold but not used.
There are many methods to improve the current status as follows: to strictly control the scale of city expansion, to modify Household registration system and to encourage real economic growth in the areas. In recent years central government has realized this issue and established corresponding policies to ease the situation. The latest one was established on September 26, 2014. Ministry of Land and Resources issued the Regulations on Administration of Geological Exploration Qualifications to restrict land development. It is very similar to those issued in the past but this kind of restricting policies merely prevented more vacant properties from emerging and did not managed to bring the deserted cities back to life, which still left the problem unsolved. To improve current situation, merely restricting land business is not enough. Other industries also need to be promoted in order to be support the urbanization. More job opportunities and economic diversity need to be created to attract more residents. Also, building a unique city culture can create a sense of belonging for residents that help prevent the loss of population. These requires more than a few years to accomplish and people may not see the result in the short-term, but unlike political reform, social reform is more practical and there are a lot of successful experience to borrow. For example, Shenzhen: a true metropolis turned from a deserted village to an international city in thirty years.
Moreover, as I mentioned, political structure and assessment system both are responsible for this issue. But in the current socio-political environment, it is not easy to change that. Communist Party of China being the dominating and ruling party, the political climate in China is rather conservative and doesn’t really welcome huge political changes. However, even though it is not possible to replace the election and assessment system, it is feasible to make adjustment in order to reduce local government’s dependency on property investment. Tax policy is a good place to start. In current fiscal and taxation systems, county and city-level governments face a situation where they have too much administrative powers and limited financial powers that confined their ability to modify local economy. By balancing those powers, local governments would possess more financial autonomy to ease the dependence on land business. Possible ways to modify the taxation system includes enhancing existing policies such as replacing the business tax with a value-added tax, launching and expanding property taxes, and carrying forward resource tax reform.
Considering Chinese people’s view of houses, it seems hard to alter a tradition rooted in people’s mind. However, it is not necessary to do so. As a developing country China does not yet have a well functioning social welfare system. People tend to save money, buy more houses than needed not only because of traditional values but also because of the imperfection of social welfare. Since the government doesn’t have the full ability to take care of the poor, the homeless and the elderly，people would rather put their money into property investment that provides them with shelter and stable asset. Through perfecting of social welfare，overall improvement of life quality will lead to a more mature real estate market and better condition of ill functioning ghost cities. Also, by controlling population growth and encouraging other forms of household investment, the government can still manage to change the current buying behavior.
Looking from a broader view, China is not the only country that bears ghost town problems. Empire, Nevada, a company town built by drywall manufacture USG was completely abandoned when the drywall plant shut down. Government tried to revived the economy and bring life back into the town but failed and it still stays deserted nowadays. Different from that in Ordos, ghost town in Nevada was once prosperous and was cause by sudden evacuation of investors. As ghost towns in China are mainly caused by discordant between excessive urbanization and population flow, these two cases seems irrelevant. However, Empire, Nevada reveals the potentially cruel fact that it is nearly impossible to recover a town once deserted. Luckily, resource industry in Ordos can still keeps people and city builders interested—it is not yet a ‘dead’ city. But Anting German Town in Shanghai, the most flourishing city in China, is in much worse condition. Built as a duplicate of German style residence buildings, it was described as a ‘management disaster’ (Xifan Yang) and is now indeed an empty, out-of-the-market community that’s just like Empire, Nevada. I wonder if Ordos and other ghost towns that are not yet completely abandoned by people and constructors might end up in the same situation.
Also, looking into the ongoing discussion surrounding ghost towns in media, I noticed an interesting phenomenon: while there were harsh criticisms towards ghost towns, some commentators and most residents in so-called ‘ghost towns’ strongly disagree with those statements. On November 26th, 2011, user ‘susan_1017’ on Baidutieba—China’s largest online forum—argued that ‘ghost city’ situation in Ordos is in fact not an issue at all. She pointed out that the media dramatize the level of emptiness in the city and believed that the natural progress of urbanization takes more than just a few years. Such attitude from people can be another reason why the modification of ghost towns has been tough. Improvement of this situation requires not only effort from government and investors but also the general public. Not realizing the problem and being satisfied with current status resulted in lack of cooperation from people. While the conversations on social issues focused mainly on corruption, diplomacy and education, ghost town themselves seem to be overlooked. Encouraging public education on this situation can help make people more aware of this problem and public awareness combined with wise and revised policy decisions will be far more effective than relying on changes in policies alone.
As China suffers from severe overpopulation, ghost town is a massive waste that takes up considerable amount of human and natural resources. Just because it isn’t pervasive does not mean it is any less meaningful than other social issues. Ghost town cases are reflections of deeper problems in economic and political systems that can harm the entire society in both the short term and the long term. It should have more exposure than it has now and both the officials and the public should put effort into it. With active response, situations can still be improved and dead cities can be brought back to life.

Work Cited
Badkar, Mamta. "China's Most Famous Ghost City Got Even Worse In The Last 4 Years." Business Insider. Business Insider, Inc, 09 June 2014. Web. 02 Nov. 2014.
Lester, Holt Don. "Ghost Town a Haunting Reminder of Housing Crisis." NBCNews.com. NBCUniversal Media, LLC, 26 June 2011. Web. 03 Nov. 2014.
Li, Zhou. ""鬼城"蔓延沉思(contemplation on the Spreading of Ghost Towns )." _中国论文网. Www.xzbu.com, 11 July 2013. Web. 03 Nov. 2014.
National Ministry of Finance. "煤炭资源税改革破题.". Xinhua Net, 12 Nov. 2014. Web. 16 Nov. 2014.
Reporter, Daily Mail. "The Ghost Towns of China: Amazing Satellite Images Show Cities Meant to Be Home to Millions Lying Deserted." Mail Online. Associated Newspapers, 18 Dec. 2010. Web. 03 Nov. 2014.
Scott, A. O. "Fleshing Out Life in Remote China." Review. n.d.: n. pag. The New York Times. The New York Times, 14 Mar. 2010. Web. 03 Nov. 2014.
Tian Wei, "Most Viewed." VAT Reform Set to Go Nationwide in August|Economy|chinadaily.com.cn. Chinadaily, 11 Apr. 2013. Web. 16 Nov. 2014.
Wu, Songjin. "谁说鄂尔多斯市的康巴什新区是“鬼城”？(Who said Kangbashi is a ghost town?) Www.kvkvk.com, 2 Apr. 2010. Web. 16 Nov. 2014.
Yang, Yifan. "'Management Disaster': A German Ghost Town in the Heart of China - SPIEGEL ONLINE." SPIEGEL ONLINE. Www.Spiegel.de, 12 Oct. 2011. Web. 16 Nov. 2014.
Yi, Peng. "易鹏：“鬼城”式的城镇化要不得." Business.sohu.com. Sohu, 18 Feb. 2014. Web. 16 Nov. 2014.
Zhou, Xin. "China Builds Its Own Manhattan -- Except It's a Ghost Town." Bloomberg.com. Bloomberg, 27 June 2014. Web. 03 Nov. 2014.