By Candy Tang
Ordos has quietly become China’s luxury good capital. Located in once the most impoverished area of Inner Mongolia, Ordos has about one sixth of China’s coal reserves and one third of the natural gas reserves. With a population of 1.6 million people, its GDP per capital reached $20K, twice as much as that of Beijing and Shanghai. The affluent local government began a public-works project, building a district called Kangbashi in the city. The area is filled with office towers, museums, theaters and sports fields—not to mention acre on acre of subdivisions overflowing with middle-class duplexes and bungalows. The only problem: the district was originally designed to house, support and entertain 1 million people, yet hardly anyone lives there. The city is empty.
The rising of these ghost cities brings up a broader issue. The urban area of China triples since 1980, while urban population only grows by 120%. The urbanization of land significantly outpaced that of population.
A series of public policies contributes to this problem. Arguably the most critical one is the financial reform in 1994, since then central government claims a bigger share of budgetary revenue but a smaller share of expenditures in providing public goods. Local government, eager to expand revenue source, acquired rural land at low price and resell it to real estate developers. City expansions are therefore not driven by careful planning but the need to fill in local government fiscal gap. Furthermore, thousands of “economic development zones” and “industrial parks” are established to attract corporates with an expectation of expanding the tax base. The turnout is low utilization rate. It all could be best summarized in one comment of a municipal officer from Fujian Province: you should think about cities here are built for whom? Not for the citizens, but for officials who want to look good in front of their superiors.
Policy advisors therefore suggest, besides GDP growth, performance metrics on sustainability should also be included in the scorecard of local government officials to correct such behavior. However, problems in undesirable environmental impact, poor quality of construction and weak transportation system take years to surface and an even longer period to be acknowledged, analyzed and, if fortunately enough, addressed by the government.
Pessimists argue that China is building all these ghost cities which in no way are sustainable. The bust will come. However, several journalists who constantly revisit those cities tell a more tricky “reality”. They are attracting new residents, though very slowly. It brings up an even bigger concern: the city, lack of a real growth driver, could not provide a decent life quality for them and will eventually break the promise it gave and lead to a divided society.