China’s revelation that it cannot bailout the eurozone countries from their current fiscal quagmire might be due in part to its own bubbling financial crisis in the form of large, uninhabited real estate developments scattered throughout the country and into which billions in stimulus money were poured. One such place is a city in Inner Mongolia by the name of Ordos.
The construction of monstrosities like Ordos is attributed to the 2008- 2009 economic stimulus plan implemented by the PRC (扩大内需十项措施: Kuòdà Nèixū Shíxiàng Cuòshī) which was enacted to ameliorate the effects of the 2008 financial crisis on the Chinese economy. The $586 billion apportioned by the State Council for the stimulus plan was to be invested in areas such as housing, rural infrastructure, transportation, health and education, environment, industry, disaster rebuilding, tax cuts, and finance – all in an effort to stimulate the economy and achieve projected GDP growth rates.
According to MSNBC, this massive lending program has contributed the creation of a Chinese real estate bubble and a nonperforming loans problem. A nationwide audit found that local goverments in China collectively carry $1.6 trillion in loans, 20% of which may have to be written off as bad debts. Infrastructure projects aimed at connecting the coastline with the inner cities have become bogged down in delays and debt, while those roads and trainlines that have been completed are often empty. The income gaps between rural and urban Chinese and, further, the gaps between those who dwell in the coastal cities like Shanghai versus the inner cities, are immense. The need to integrate the regions of China while also lessening income disparity contributed to the investment plan which has led to projects like Ordos. The need for growth, at any cost, has come at the price of debt laden banks and empty developments.
According to Weburbanist: “Built for 1 million people and currently inhabited by just a few thousand (despite a government claim of 28,000 residents, who are more likely just commuting workers), Kangbashi is filled with brand new buildings. One apartment building after another perches on the edge of streets that rarely see traffic, skyscrapers stand empty and over $5 billion worth of public buildings are unused and unstaffed.” According to reports, real estate investors have scooped up many of the new apartment buildings, which has led to concerns of a real estate bubble within the city that inevitably will burst. The ‘new area’ is filled with rows upon rows of gleaming white, brand new housing districts, futuristic but empty museums, public buildings and hotels and vast stretches of empty, wide black roads devoid of traffic in the second richest per capita city in one of the world’s most populous countries. It is almost a scene out of a survival horror film.
Ordos, according to Wikipedia, has the second highest per capita GDP in all of China, surpassed only by the city of Shanghai. Ordos has blossomed along with Inner Mongolia’s resource extraction driven economy, a boom which has contributed to a real estate bubble of immense proportions. The Kangbashi ‘new area’ of Ordos City is largely uninhabited and is unlikely to be so for some time because there is nothing in the way of a local economy.