Ghost city, is those cities die due to the exhaustion of resources, normally a ghost city is a old city, but in the background of crazy and twisted real estate development and investment, a few brand new ghost cities were built, mostly in the secondary and tertiary cities in China.
The property bubble that burst-Ordos
It was the China richest city, it has the biggest square in the world, and it is the most well-known ghost city in China.
How rich was Ordos? There is a billionaire in every 217 people. But all the economy is based on the coal mine industry. It’s coal mine reserve is one sixth of the whole country and it should be able to keep supply coal for anther 500 years.
And it is the heaven for the real estate developments. People buying the houses as pure investing. Normally the money that real estate developers got is the credit from the bank, but in Ordos most of the people became the usurer and they loan money to the developers. People use money to buy properties and mortgage them to the bank for cash and use the cash in usury, after they earn money from usury interest they buy more properties and continue the circle. But since when the price of coal dropped it brought a series of chain effect and eventually burst the bubble and it left 34000 million dollar debt from the usurer.
The projects that has been stop for years
There are few reason why the ghost city keep occurring in China. The first one is that urbanization lost the balance between the people and industries and becomes just “real estatelization” the new cities only have houses but lack of industries which cannot draw population into the city. Such as Ordos, which fully rely on its coal mine industries, when the coal price dropped the whole city just die. The second one is the government selling the land for GDP, the land are sold the new city was built but as I said before, it can’t bring career opportunity to people.
And the problem seems not just because the local government because they are controlled by an upper level government so simply criticize them won’t really help unless to find a deeper reason why this happen or this phenomenon will never disappear.