Fact Sheet

The ghost city of China

The Chinese government has spent millions developing "the Chinese version of Dubai" outside the existing city of Ordos. One problem — nobody lives there

A new city in inner Mongolia was supposed to be a "Chinese version of Dubai," reports The New York Times, and accommodate 300,000 people. But almost five years after the government began intensive construction, only 28,000 citizens (if that) have moved to Kangbashi New Area, 15 miles from the metropolis of Ordos — the buildings are empty, the boulevards are free of cars, and "weeds are beginning to sprout up in luxury villa developments that are devoid of residents." Yet building continues at China's usual frenetic pace. How did this happen and what does it mean for the future of China? (Watch an al Jazeera report about the empty town)

What's the backstory? China's economy has been growing at a spectacular rate in recent years, and construction has been the main engine of that growth. "The Ordos county government built Kangbashi because frankly, it is rich enough to afford it," says Teoh Kok Lin at The Malaysia Star. The county (population 1.6 million people) is "home to one of China’s major coal mining and natural gas producers," so there's no shortage of wealth in the area.

Why are the Chinese still building?Because they remain confident that the real-estate boom will continue long enough to populate Kangbashi. Despite appearances, the Times notes that housing sales in the city of Ordos proper reached $2.4 billion in 2009, up dramatically from $100 million in 2004. A local official sums up the unapologetic government stance: "This is a city of the future. We are going to build this into a center of politics, culture and technology. That is our dream." (A video promoting Kangbashi would seem to confirm that the government is pitching it as a reflection of Chinese ideals.)

Is this a sign that China's bubble is bursting?Critics, including the state-run newspaper, argue that the empty town is proof that China's impossibly hot real-estate market can't possibly last. Investor Vitaliy Katsenelson, speaking to Forbes, calls such speculative development "the equivalent of building bridges to nowhere, but on a very large – Chinese – scale," and believes that at some point, "the piper will have to be paid." And the global consequences of a Chinese collapse could be dire, says Bill Powell at Time: "Since a huge real estate bust in the U.S. in 2008 was the catalyst for the still lingering global recession, many analysts fear a replay in China could prove disastrous."

Sources: The New York Times, Forbes, Time, Malaysia Star

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