For the past few decades, China has undergone significant economic development. Indeed, China’s recent achievement in becoming the world’s second largest economy is no small feat. With an increasing GDP of almost 10% per year, China has succeeded in lifting over 500 million people out of poverty1. Despite these significant accomplishments, however, such rapid development has prompted some problems as well. At the fourth annual China Summit Conference hosted by Emory Global China Connection, students from Emory University and the University of South Carolina discussed the pressing issue of “Ghost Towns,” which have been brought on by rapid urbanization and income inequality.

As their name suggests, ghost towns are cities that have been developed with malls, high rise apartments, and office buildings, but appear to be abandoned. Kangbashi, a city located in the northern Chinese province of Inner Mongolia, is a prime example of a ghost town. In 2010, city officials made a $161 billion investment to develop the “Dubai of Northern China,” a city that now has a 300,000 person capacity. Presently, however, Kangbashi is only home to less than 30,000 residents, leaving a large portion of the city devoid of people2. Other examples of ghost towns include Chenggong and Erenhot3.

University of South Carolina team USC JAG reports that the root of the ghost town problem lies in the lack of regulation of loans, taxes, and mortgages that allows the middle class to invest heavily in the housing market. 42% of those who purchase real estate in these cities already own primary homes, purchasing additional homes with the intention of profiting when people move in and real estate prices rise. Statistics presented by team USC JAG revealed that property prices had risen almost 10% since 2012, with the average price of a home being $45,000 and the income of the lower class as low as $2 per day. Emory University team Returnees described how the combination of an absence of high-skilled labor force with lack of access to larger cities has failed to attract new businesses and upper class residents to Kangbashi. Lower class residents are unable to move in due to inflated housing prices. As a result, the high rise apartments and shopping malls are left abandoned and, in many cases, unfinished.

Chinese officials have proposed and implemented many solutions to the Chinese ghost town problem. Team USC JAG reported that China put its own money into the housing market and tried raising minimum down payments on second homes. But developers would stop building mid-project, rendering the unfinished properties worthless to be bought or sold. A one apartment policy implemented in 2011 was additionally only effective short term, as individuals found holes in the new policy that allowed them to continue investing in new homes.

In light of the persisting ghost town problems, teams USC JAG and Returnees offered potential solutions to China’s deserted cities. Team USC JAG presented a solution emphasizing the classification of China’s cities into three main groups based on specific criteria. These criteria included the presence of a nearby metropolitan area, population size, status as a special economic zone, and the level of industry presence in regards to each city.

Class 1

Class 2

Class 3

Metropolitan area nearby?

YES

YES

NO

Population size

> 1,000,000

300,000-1,000,000

< 3,000,000,000

Special economic zone (SEZ) status

YES

NO

NO

Presence of industry

HIGH

MEDIUM

LOW

 

Based on these classifications, officials can then implement the best policies for each class. For example, Class 1 policies include tax breaks and local government partnerships with local industries, as well as work relocation contracts to provide incentives for the economization of ghost towns. Solutions for Class 2 cities include subsidies to encourage local industry development, institute building codes as disincentives to rapidly building new developments, and working to establish the city as an SEZ to attract foreign investments. Class 3 ghost city solutions include economic expansion to attract more job opportunities, withdrawal of government funds to minimize losses, and providing stipends for existing residents relocating to larger cities. With these specific and specially designed long term solutions, ghost towns should observe stabilization of the housing market. Increase in economic incentives would also encourage people to relocate to ghost towns.

Team Returnees recommended a three-phase solution to the ghost city problem. The first phase addresses the housing problem by providing housing to lower class and migrant citizens through government loans and lower interest rates. The initial phase additionally moves to improve accessibility to larger cities and abolish the Hukou system to reduce the income gap between migrant and local workers. The second phase involves the creation of a large, high-skilled labor force to attract more businesses to ghost towns. This phase includes enforcement of a mandatory education system to train a larger labor force. The implementation of the first and second phases would create positive results, such as, but not limited to, better accessibility to the city, higher education levels, a skilled labor force, and a more independent economy with added financial and social benefits. This increased economic activity and population would allow the town to transition into a self-sustainable city in the final phase of the solution plan.

The collaborations at this year’s China Summit and the innovative solutions proposed by teams USC JAG and Returnees definitely appear to take a step in the right direction. The proposals presented received high praise from this year’s panel of China Summit judges, earning USC JAG and Returnees first and second prize respectively in the China Summit 2014 case competition. With such innovative minds and creative solutions, it is possible that a solution to China’s ghost town issue is well within reach.

1. “China Overview.” The World Bank. The World Bank, 01 Apr. 2014. Web. 03 Apr. 2014.

2. “China’s Desert Ghost City Shows Property `Madness’ Persists.” Bloomberg.com. Bloomberg, 23 June 2010. Web. 06 Apr. 2014.

3. Badkar, Gus Lubin and Mamta. “Scary New Satellite Pictures Of China’s Ghost Cities.” Business Insider. Business Insider, Inc, 05 Mar. 2013. Web. 06 Apr. 2014.