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China’s growth breathes new life into old ghost towns

CHINA

China's growth breathes new life into old ghost towns

Tianducheng was once one of China's many ruinous reminders of unconstrained urban sprawl – but now that people are filling those places up, they're looking more like real places to live, Nathan VanderKlippe reports

On the outskirts of Hangzhou, Tianducheng was once a Chinese ghost town with a faux French design. Today, its population is rising as China seeks to fill its empty houses.


When director Romain Gavras went looking for a surreal landscape as the backdrop to a music video, he found the perfect place in a ghost town in southern China – built to look like a French city but empty.

In the video, set to the pulsing Jamie xx song Gosh and released last summer, hundreds of bleached-blond young Chinese men swarm the muddy construction grounds and gather beneath a one-third scale Eiffel Tower. They are alone, surrounded by the unoccupied buildings of a town called Tianducheng, just outside Hangzhou.

"It was supposed to be an upper-middle class heaven, but it never really took off," Mr. Gavras said in a recent interview. Being there, he said, "most of the time I felt like I was on acid."

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Watch the music video for Jamie xx’s Gosh

Come back now, however, and Tianducheng gives a very different impression. It feels normal.

Beneath the metal girders of the faux Eiffel, elderly couples stroll hand in hand, young couples push strollers and workers ride home on electric bikes. Nearby, the air is fragrant with fried pancakes, baked goods and local delicacies. Most of the street-side parking spots along the roundabout that circles the tower are occupied. The surrounding apartment buildings are pricked with lights.

Paris this is not. But it's far from empty – this place, and many others like it, are casting off the ghost-town ambience of the past with a rush of people moving to fill spaces that once served as the most striking images of China's years of irrational growth.

"There are hardly any apartments left for sale here," says Jamie Jin, 38, who bought his place last year. Prices are up 60 per cent in the last three years and the population has more than tripled to 30,000.

Tianducheng has seen an influx of new homeowners as the nearby city of Hangzhou prepares to build a new subway line.

A half-decade ago, China counted perhaps three dozen ghost towns like Tianducheng, places author Wade Shepard called "the stillborn carcasses of cities that never knew life" in his book, Ghost Cities of China.

Littered across the landscape, they were warning signs pointing to the excesses in China's building boom, an era of unconstrained growth that was the biggest the world has ever seen. But today, they are looking less like epic mistakes and more like temporary disasters.

"There's not a single one in the country that isn't in the process of filling up," said Mr. Shepard.

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Take Zhengdong New District, dubbed "China's largest ghost town," and featured in a 60 Minutes report from 2013, which offered this bleak observation: "The assumption is 'If you build it, they'll come.' But no one's coming."

In 2016, Zhengdong is home to more than a million people. "It's like the financial heart of Henan province. The place is absolutely booming," Mr. Shepard said.

Or look at Ordos Kangbashi, the Inner Mongolia city built in the desert and so famous for its desolation that tourists flocked to the bizarre site of its Genghis Khan sculpture soaring over emptiness. Now, its population is nearing 100,000, about a third of what it was built to accommodate, and the local government is handing out housing exchange certificates to nearby residents to encourage them to move in.

Slowly, the empty spaces are filling up. They "are developing and populating at a pace where they will be pretty close to their projected levels of occupancy," Mr. Shepard said.

It's a piece of seeming good news for China, whose President Xi Jinping in 2015 specifically pointed out housing inventory as a problem that needed fixing. Since then, China has made "destocking" one of its central objectives, in an effort to beat back a supply of unsold houses that HSBC last year estimated at 1,800 square kilometres worth of floor space – nearly triple the size of the city of Toronto.

In the months since, Chinese officials have successfully reinvigorated a moribund housing market, transforming some of the country's worst-off markets into its most ebullient. A year ago, Nantong, a Yangtze River salt-making centre, "was dead as dead could be. And now it's a star performer," said Michael Cole, founder of real estate and investment website mingtiandi.com. "So in a way, the government has achieved some of its goals regarding reviving housing markets in smaller cities and reducing inventories of unsold homes."

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But that success has been limited. Empty homes still plague the landscape. Chinese statistics actually show a slight increase in unsold real estate over the past 12 months.

Ghost towns, it turns out, are easier to fix than the masses of empty apartment towers wedged into the corners of urban centres across the country.

Those buildings may not have the cachet of a replica Eiffel Tower, but they are arguably more important as symbols and symptoms of China's modern economy, which retains plenty of room for growth but is slowing in part because of impediments Chinese leadership has been unable to remove.

Most unsold houses are clustered in third-tier and fourth-tier cities, smaller centres where wages tend to be lower and companies less innovative. In that lies opportunity. "Policies which narrow the regional differences in productivity and wealth can result in huge aggregate wealth gains," said Julia Wang, greater China economist for HSBC. Improve those cities, by relaxing outdated restrictions on the sale of rural land and movement of rural residents, and apartments are also likely to fill up.

"The issue nationally is not with prices or with inventory. The issue is with imbalances in the urbanization process," she said. "The housing market problem for me is something it's not impossible to solve if China can do the right things."

But the persistence of excess housing is an obvious sign of how badly China has struggled to do that, "which is why, when we look at this data, it seems these issues are getting bigger," Ms. Wang said.

‘It’s definitely not a ghost town,’ Jiang Qiuyan, vice-president of Tonghe Real Estate Investment Co., says of Tianducheng. ‘It’s like Las Vegas, which was built in the desert. Except here, we built Sky City.’

A place like Tianducheng nonetheless showcases what government influence can accomplish. New sales here were spurred in part by the nearby city of Hangzhou's plans to build a subway line – construction is expected to begin this year.

New thinking also helped. Last August, the original property developer bowed out and Tonghe Real Estate Investment Co., a firm with property marketing experience, took over instead. It is trying to nurture a more viable community, bringing in schools, a supermarket and fresh-flower shops.

"In the past, developers just built the houses and sold them," said Tonghe vice-president Jiang Qiuyan. "But we have to think what problems people need us to solve." It's all been successful enough that they're now building new apartments, too, with hopes of attracting 50,000 people to Tianducheng, whose name means Sky City.

"It's definitely not a ghost town," Ms. Jiang said.

"It's like Las Vegas, which was built in the desert. Except here, we built Sky City."


Nathan VanderKlippe is the Asia correspondent for The Globe and Mail. Follow him on Twitter: @nvanderklippe


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