Propaganda is way too harsh a word. However, I do think the narrative was over-simplified and sensationalized — and I think this was a function of sloppy reporting and confirmation bias. Reality was more nuanced and far less sensational than it was made it out to be. It was boring … and all things being equal people tend to click on the more exciting story.
But first, pictures! Now instead of just posting photos, I’ll do you one better: Use the Google Maps and Baidu Maps links I provided to take a look at the cities yourself in semi real-time [1] with both a birds-eye view and, in some cases, on-the-ground view.
Ordos Kangbashi New District (康巴什区)
This was the “ghost city” that kicked off the entire meme. Al Jazeera first reported on Ordos in late 2009 (YouTube: China’s Empty City)
The photo was an amazing and especially memorable picture overflowing with symbolism … the symmetry and composition … scale and emptiness … white elephant art project in the foreground … massive unfinished construction projects in the background … the lack of people … the hubris …
They say “a picture is worth a thousand words” … and this one captured the “ghost cities” story perfectly.
Zhengdong New District (鄭東新區)
60 Minutes focused on Zhengdong in its “ghost cities” feature in 2013 (60 Minutes: China's real estate bubble)
Nanhui District (南汇新城)
60 Minutes Australia did a report on Chinese “ghost cities” and focused on Lingang which is now known as Nanhui district, located about an hour from downtown Shanghai on the Pudong side (Youtube: 60 Minutes Australia — China's Ghost Cities)
Tianjin Binhai Yujiapu Financial District (天津/滨海/于家堡金融区)
60 Minutes Australia also reported on commercial business districts such as Tianjin Binhai that were empty (Youtube: 60 Minutes Australia — China's Ghost Cities)
The “Smoking Gun”
The narrative of the “ghost cities” story and its backdrop — which emerged and then peaked in the 2009–2013 timeframe — was as follows:
China has been investing heavily in infrastructure and fixed assets including real estate and this has been a major driver of its economic growth “miracle”.
The Chinese Communist Party’s legitimacy rests on its ability to generate economic growth.
State officials are heavily incentivized to push economic growth for the sake of economic growth, quality be damned.
The Party is very corrupt and these infrastructure and real estate development projects involve a high degree of bad behaviour.
The Global Financial Crisis (GFC) shut down China’s previous growth engine (exports) which led officials to super-charge the one thing they could — investment-driven growth — with a stimulus program in 2009.
This resulted in massive building activity including entire cities that are empty and possibly going to remain empty forever.
This is not sustainable.
This is not going to end well for China and/or the Chinese Communist Party.
Variants of the narrative often weaved in allusions to the Soviet Union (note reference “it’s all Potemkin” in the 60 Minutes piece) or Japan with a strong implication of some sort of “day of reckoning”. That put it in terms that most people could really relate to because recent history includes both the collapse and break-up of the Soviet Union and the last two plus decades of economic stagnation in Japan. Further, in the wake of the GFC this narrative was compelling because “bubbles and collapse” were fresh on everyone’s minds.
So when you started to see these massive residential and commercial projects that were empty for as far as the eye could see, it did very much feel like you had found your “smoking gun”. After China had had its “day of reckoning” historians would look back on the moment we discovered “ghost cities” as the pivotal moment in the story, similar to the time Jeff Skilling muttered “asshole” during an Enron conference call, a few months before the company collapsed [3]. This was the Enron “aha” moment and “Chinese Ghost Cities” was going to be the Story of the Century.
The Vagabond
While there was certainly some truth to elements of the narrative, things were not nearly that simple. And what was reported on in the news did not tell the whole story.
Wade Shephard was the first person I came across who reported on this. He was a blogger who liked to travel and had started visiting a lot of these “ghost cities” in China out of curiosity. He regularly reported what he came across on his blog Vagabond Journey.
For example, in Zhengdong, contrary to the 60 Minutes report he found a thriving city. He went to many of the same spots that the reporters had filmed but found plenty of people there and was somewhat puzzled why all we had seen in the video montages were empty buildings and empty streets. Imagine if filmmakers went to Paris in August, took pictures of empty restaurants and streets, and concluded that the city had been abandoned.
In Ordos, he learned that the new city district was still under construction and not scheduled to be completed until the 2020s. So there were of course vast areas that were still under construction and it was easy to find places to film that were devoid of people. If reporters had bothered to head over to the completed sections and film, they would have found plenty of people. What he found most disturbing was that the reporters never bothered to ask local government officials or anyone involved in building the new district for their opinion. They clearly already had a story in mind before they came to gather evidence.
In Nanhui, he took some reporters that were clearly angling to build on the “ghost cities” story. He tried to take them to a spot that he knew was pretty empty so they could get some good “shots” but when he got there, it was as if “Shanghai had flipped the switch” and turned on that part of the city.
Here are a sampling of his reports through the years:
Forbes: An Update On China's Largest Ghost City - What Ordos Kangbashi Is Like Today
Forbes: China's Most Infamous 'Ghost City' Is Rising From The Desert
My personal “Ghost City” story
I myself had some direct experience with this “ghost cities” phenomenon. My dad had purchased a new pre-construction apartment in Zhongshan, a Tier III city about two hours from Hong Kong, in 2007. Many retired expatriates from Australia, Hong Kong, Canada and China purchased here, often through word-of-mouth. The development was located alongside a golf course on the outskirts of town but still featured dozens of 20 to 30-story buildings all lined up in a row. For example, my dad’s building was something like the sixth building out of a total of around twenty in just this one development.
Building construction finished and then my dad had to spend more money converting it from an empty concrete shell (maopei 毛胚) into livable space — this is very common in Asia. That took a few months and then he was finally ready to move in. When I first visited Zhongshan in 2008 or 2009, I remember that the whole development seemed pretty empty. There were very few cars parked on the road, very few lights on at night and still a lot of construction activity. There was one grocery store and one restaurant in the complex and a lot of empty, half-completed storefronts (many also with “fake” branded storefronts as reported on in the 60 Minutes piece).
The next couple times I visited him, it continued to look pretty empty. At times I seriously wondered whether my dad lived in yet another Chinese “ghost city”.
But it was around 2014 when things seemed to really change. The storefronts had filled in, there were lots of people walking around the residential development and there was lots of traffic at night when people went out to dinner. Apparently what had happened was that prices had gotten so high in Shenzhen (about two hours away) that many older residents had sold their apartments and moved to Zhongshan where prices were significantly cheaper and quality of life generally better — especially for older, retired folks like my dad.
The retail and commercial had followed and I remember especially enjoying this family restaurant that served some really great rice rolls (changfen 腸粉) for breakfast in what used to be an empty storefront. Here we are in front of the restaurant when I visited last month:
Reality is sometimes boring
It turns out that the story was a lot more mundane and boring (depending on your perspective) than portrayed in the standard “ghost cities” meme. China is urbanizing fast and building a lot of new city districts. Tens of millions of people are still moving in every year from the villages. And there also hundreds of millions of urban residents that are looking to upgrade their fast-moving lives. Those new city districts are at various points of development. Some are further along than others. Some are more successful than others.
But it is all contributing to a massive building boom. There are tons of places to film if you want to find big projects with no people around. But this isn’t smoking gun evidence for the eventual collapse of the improbable China “miracle”, it could just be a boring construction site or a housing development that hasn’t yet received its certificate of occupancy.
I think what happened here is that some reporters had a story in mind — or were “seeded” with it — and then specifically went out to look for evidence to “prove” the narrative. They weren’t manufacturing fake evidence, but they weren’t being completely objective about it either.
This is classic confirmation bias. Confirmation bias leads to picking and choosing evidence you want to show with a tendency to choose things that confirm your narrative (while throwing away or de-emphasizing things that do not). It reduces your desire to actively search for counter-factuals that might disprove your story or consider alternate explanations.
And because the alternate explanation was boring, reporters tended to go in a more exciting albeit less accurate direction. And that has continued to this day — I have yet to see any of the reporters who “broke” the story actually go back and visit some of these former “ghost cities” and report about how they now seem to be doing quite well.
Check it out for yourself
The cool thing is that you don’t need to believe some random blogger or some random Quora post — you can go see for yourself how these cities are doing and whether they are truly the “ghost cities” that they were portrayed as.
Click on the the handy Google Maps and Baidu Maps links above and they will take you to satellite images of these cities. You can zoom and pan to your heart’s delight. For example, I just clicked on the Google Maps link and went to downtown Zhengdong:
Now go figure it out for yourself whether this is an empty city. (Hint: look at the cars piled up along the bottom left of the picture). Also keep in mind that these satellite photos may be from 1–3 years ago.
You can also dive down to street level through Baidu. Just click on the street view icon in the bottom right corner. You can crawl along the streets just like in Google Street View. Here is a sample from Zhengdong:
Notes
[1] “Semi” because it depends on the last time the satellite photos were updated by Google/Baidu and their underlying data providers. According to this article (Techwalla: How Often Does Google Maps Update Satellite Images?), satellite images are updated every one to three years.
[2] Youtube: Ask why, Asshole … Transcript:
Grubman: Good morning. Can you tell us what the assets and liabilities from price risk management were at quarter-end, what those balances were?
Skilling: We do not have the balance sheet completed. We will have that done shortly when we file the Q. But until we put all of that together, we just cannot give you that.
Grubman: I’m trying to understand why that would appear to be an unreasonable request, in light of your comments about daily control of all your credits. I mean, you have a trading desk with a $21 million matched book that’s two times your book value, and you cannot tell us what the balances are?
Skilling: I’m not saying we can’t tell you what the balances are. We clearly have all of those positions on a daily basis, but at this point, we will wait to disclose those until all of the netting and the right accounting is put together.
Grubman: You’re the only financial institution that cannot produce a balance sheet or cash flow statement with their earnings.
Skilling: Thank you very much, we appreciate that.
Grubman: We appreciate that.
Skilling: Ass-hole.
This was originally published on Quora in December 2017.