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Comment by z92 | Hacker News Reader

The ghost towns remain empty for the first year or two. But within five years all chinese ghost towns fill up. That's what I heard. We continue to hear about ghost towns because as soon as old ghost towns are filling up, china continues to build new ghost towns for future expansion.

Please correct me if wrong.

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all chinese ghost towns fill up. That's what I heard.

Source? That's not what I've heard about China in particular. Rather, what I have read in a variety of sources is that economic statistics in China may not be reliable,

http://www.nytimes.com/2012/06/23/business/global/chinese-da...

http://www.businessweek.com/articles/2012-06-29/chinas-lates...

so that the housing market in China

http://money.cnn.com/2012/05/02/markets/chanos-china-bear/in...

http://www.ft.com/intl/indepth/global-property-market

http://bx.businessweek.com/china-real-estate/

http://www.sfgate.com/business/bloomberg/article/Wen-Eases-O...

http://online.wsj.com/article/SB1000142405274870476440457528...

http://www.businessweek.com/articles/2012-04-26/china-gamble...

http://www.kanzhongguo.com/news/12/06/17/455914.html

http://www.forbes.com/sites/kenrapoza/2012/06/03/chinas-hous...

http://articles.latimes.com/2011/dec/13/business/la-fi-china...

faces huge uncertainty, with many Chinese workers unable to afford housing at current prices, but many developers sure to lose money if prices drop.

Everywhere else in the world, when empty developments were built ahead of demand, as happened in Ireland, Spain, and some parts of the United States, that was a reliable sign that the housing market was in a bubble that later burst. I have not heard any persuasive argument that China differs from other countries in this regard.

I see loads and loads of empty ghost towns, when I drive to the factory every two weeks in China..

They're not filling up right now. Even the city where the factory is located seems very deserted (big almost empty roads) except inside the factory compound, where all the factory workers live and work..

There are cases of overbuilt areas but I think these stories are the West's insecurities on display about China's success.

In the US (Nevada) and Canada, there are areas where the developers have overbuilt, perhaps not on the scale of these Chinese development projects.

I thought it means that the Chinese are in for potentially even bigger trouble than the west.

It's unlikely, as mortgages (and debt in general) are very unpopular in China. It's currently not possible to even get a mortgage. Chinese ghost towns are, for the vast majority, bought and paid for by rich speculators in cash.

Not to say speculation isn't trouble, but theirs isn't built on debt (as was ours).

I think the problem isn't the population being in debt, because, as you mention, in China, most people pay cash as debt is anathema for most indivs. On the other hand, one or the main forces behind the construction is local government revenue. Local govt's raise funds through land leasing and selling. In order to remain solvent they enter into these real estate deals, if they are successful, they do well, if things go south, they are in debt --so there is the danger lots of local (CN) gov'ts being insolvent.

Here are details regarding how the ghost towns are funded and why China keeps building them so far from present city centers.

"It is hoped that these new towns will, in addition to alleviate urban congestion, spark further in-fill development in the expanse of farmland that sets the new town apart from the city center – a kind of pre-planned suburban sprawl. Funding for these new towns comes from the difference paid to compensate farmers to relocate (a calculation based on potential agricultural yields) and the substantially higher revenue generated from leasing the same land to developers." http://blogs.worldbank.org/transport/rise-of-the-chinese-gho...

In the comments the author also mentions that many of these buildings are offered at below cost to government employees.

I agree with you - debt is a big big no no - and having been here for some time now, I think China functions in an very very different way than the west, which is also why we see these conflicting reports telling us China is going down or up and so on. I am having a hard time understanding it often myself, but I try and sometimes, when I need to get stuff done (and I mean, just get stuff done!), it really helps to think like a Chinese..

Let me give you a simple maybe non-related example.. I tried to get a visa for China and it wasn't possible at all through official channels.. No matter what I did (embassy, visa offices and whatnot), they simply wouldn't grant me a visa which would allow me to enter and leave China as I wanted (only single/double entry, which is no good).. In the end after some help from a Chinese friend, I managed to get a visa because he knew somebody who knew somebody at the local police station, who could print a visa for me..

This is how you get stuff done in China - you know somebody - I now owe my friend a favor and as I understand it is unforgivable, if I do not pay him back some day in some way. China is driven by guanxi (http://en.wikipedia.org/wiki/Guanxi) ..

I am totally speculating here - just a laowai trying to figure out what the hell is going on. Someone Chinese please enlighten me!..

The fact that your friend can ask you for a favor in return is Guanxi, and is certainly a characteristic of Chinese culture that provides accountability and also is factor in whom one befriends.

The fact that a favor was required to get a visa that presumably you qualified for (or if it was used to get one that you didn't qualify for as well) is borderline corruption, even if no currency or goods were exchanged, since Guanxi dictates that at very least a favor is now owed. I have friends from China that talk about situations like this that include obtaining marriage licenses and dealing with fees associated with second and third children.

Do you have a citation for that fact?

According to TIME, the largest Chinese ghost town, Ordos, is still unoccupied 5 years later: http://www.time.com/time/photogallery/0,29307,1975397,00.htm...

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