This Time photo of one of China’s most infamous ghost towns, Ordos, shows finished apartments on the left side of the street and apartments still under construction on the right.
China’s vast, empty towns, shopping malls and theme parks have weighed heavily on the minds of many economists, analysts and investors as they ponder the outlook for the Chinese economy.
At the heart of concerns is a view that massive investment in infrastructure that sits idle for years on end has propped up the country’s economy but is fast becoming unsustainable.
But former Morgan Stanley chief economist and now senior fellow at Yale University’s Jackson Institute of Global Affairs Stephen Roach breaks with that view in an analysis posted to commentary website Project Syndicate.
The crux of his argument: China’s stunningly rapid urbanisation means the country is not able to wait for there to be demand for infrastructure before it builds new cities, roads and shopping centres.
“The pessimists’ hype overlooks one of the most important drivers of China’s modernisation: the greatest urbanisation story the world has ever seen. In 2011, the urban share of the Chinese population surpassed 50 per cent for the first time, reaching 51.3 per cent, compared to less than 20 per cent in 1980. Moreover, according to OECD projections, China’s already burgeoning urban population should expand by more than 300 million by 2030 – an increment almost equal to the current population of the United States. With rural-to-urban migration averaging 15 to 20 million people per year, today’s so-called ghost cities quickly become tomorrow’s thriving metropolitan areas,” Roach writes.
“Shanghai Pudong is the classic example of how an ‘empty’ urban construction project in the late 1990’s quickly became a fully occupied urban centre, with a population today of roughly 5.5 million. A McKinsey study estimates that by 2025 China will have more than 220 cities with populations in excess of one million, versus 125 in 2010, and that 23 mega-cities will have a population of at least five million.
”China cannot afford to wait to build its new cities. Instead, investment and construction must be aligned with the future influx of urban dwellers. The ‘ghost city’ critique misses this point entirely.”
Stephen Roach’s full analysis of China’s ghost cities is available on Project Syndicate.
Houses await residents in Ordos.Source: Time
Empty streets in Zhengzhou.Source: WND
Apartment buildings under construction in Ordos.Source: newsrealblog.com