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Communist China facing scare of 'ghost cities'

It’s a rare government statement about “ghost” or empty cities in China and coming from a top official, it indicates that it is a scare that authorities across the country are now facing – but hoping to overcome.

world Updated: Aug 11, 2013 01:30 IST
Sutirtho Patranobis

It’s a rare government statement about “ghost” or empty cities in China and coming from a top official, it indicates that it is a scare that authorities across the country are now facing – but hoping to overcome.

Qiao Runling, a senior official with China’s top planning body, the National Development and Reform Commission (NDRC), has said that the country now has an “oversupply” of cities as result of which many have remained empty.

“China now has an oversupply of cities, given the number of new urban districts that we have,” Qiao, who is the deputy director of NDRC’s China Centre for Urban Development, said quoting the result of his own research at a forum this week.

“Nearly every big or medium-sized city across China has plans to erect a new town,” Qiao was quoted by state media as saying, and adding that new towns were usually bigger than old ones and many cities were left empty as a result.

Qiao added that the “excess of new urban districts are especially serious in medium and small-sized cities in central and western parts of the country.”

Qiao warned that China's modern urbanisation should no longer be bolstered by investment or construction projects but focus on structural reform.

Official statistics showed that land used for urban construction rose by 83.41 percent from 2000 to 2010, while the urban population saw an increase of 45.12 percent in the period.

State media quoted the example of a city in Inner Mongolia called, Ordos. A coal mining city, Ordos, according to China.org, is facing a debt of Yuan 300 billion.

“Ordos is the most extreme example of a Chinese housing bubble bursting, with unsold flats, unlet shops and empty office blocks. Most of the new buildings are empty or unfinished,” the report said.

The example of the US city of Detroit is being quoted in government circles and reports as case study.

“First of all, there is a “fake prosperity” in many China’s cities. Typically, this is a result of over-exploitation of natural resources and blind capital investment. In some cities, borrowing money and selling land to property developers are the only effective ways to raise funds. But this is not sustainable…” the report added.

Quoting Qiao, it said that many cities are expanding far too quickly. “In the latest round of China’s urbanization, it has become common to rely increasingly on large scale investments in infrastructure and real estate. As a result, we have seen excessive “city supply”, which has contributed to the empty city phenomenon, in other words a city without jobs, a market or even residents,” the report said.