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Hey guys; I have exciting news: I’m throwing a party, and it starts right now!
I contacted all my friends, and I told them to meet me at my house.
I have to imagine it’s getting pretty crowded, so let’s take a look.
Hey everybody!
How’s it--- Where… where is everyone?
Guys?
Brian from Real Engineering?
Joseph from Real Life Lore?
Thomas Frank from…whatever his channel’s called?
Oh, now I remember: I didn’t invite anyone to a party, I don’t have any friends, and
this isn’t my house; this is the Kangbashi District of Ordos City, the $161 billion ghost
city China built for 1 million people that nobody showed up to.
This is Inner Mongolia—named such because it is not an inner part of Mongolia, but instead
an outer part of China—and this is Ordos City, named such because it is not a city,
but instead an administrative district.
And this is Ordos’ main urban area, the Dongsheng District, named such for a reason
I didn’t want to bother looking up.
Ordos is one of China’s wealthiest areas, with its economic prosperity mainly fueled
by…well, fuel—specifically the massive reserves of coal and natural gas on which
it sits.
And its Dongsheng District was a thriving, well-populated area—but around 2003, China
thought to themselves, “what if we made this same thing, except more expensive and
16 miles away in the middle of the Gobi Desert?”
And so, they did, beginning work on a massive new urban area called the Kangbashi District,
and it’s beautiful—built for a million residents, and complete with a museum that
looks like Samuel L Jackson’s hat, an opera house that looks like Muammar Gadaffi’s
hat, and tons and tons of luxury apartment buildings that look like…well, apartment
buildings; not everything can look like a hat.
The only problem with all these beautiful hat-like and non hat-like buildings was, nobody
showed up to them.
To understand how China ended up with a massive, gleaming, elaborate, empty supercity, there
are three main things you need to understand.
The first is the Chinese government’s ongoing push to urbanize.
That’s right, China has been spending decades trying to become more like Karl Urban.
I mean it makes sense, he was Judge Dredd, but also, they’ve been trying to move away
from their agrarian past, and to have more people living in cities.
Now China is run by a Communist government, which is easy to forget sometimes given all
the capitalism there—but nonetheless, to a certain extent, the economy is still planned
by the Chinese Communist Party.
That means that unlike in the US, where real estate trends are governed almost exclusively
by the free market, in China, real estate is more planned out—so the government can
plan to build a massive city, and then direct its resources towards making that happen.
The second things is that the Chinese government really really really really wants to see high
GDP growth year over year.
They view GDP sort of like people view the Fast and Furious franchise: They just want
things to get bigger and bigger and bigger until they reach something crazy, like the
world’s largest economy or skydiving in cars.
Now, China has shown enormous success in growing GDP, but also like the Fast and Furious movies,
sometimes they sort of have to force things forward in an unnatural and contrived way,
and one way that China turbo-boosts its economy is by maintaining an extremely active real
estate industry.
In fact, some estimates put real estate development as 20-30% of the entire economy.
One often cited statistic is that in a period of three years, from 2011-2013, China poured
more cement than the United States did during the entire 20th century.
Another interesting statistic is in that same three years, the United States produced more
episodes of the TV show Game of Thrones than anyone in the world did in the 20th century.
Really makes you think, huh?
The third thing you need to understand is that the emerging Chinese middle class doesn’t
have a lot of investment opportunities.
Unlike in the US, where nearly anyone can go ahead and throw their life savings into
whatever risky and predatory investment system they want—personally, my strategy is to
send bitcoin to benevolent billionaires on Twitter—it’s actually very difficult for
Chinese nationals to invest in foreign markets—plus, the Chinese stock market is extremely volatile;
like, about as volatile as the level of quality in seasons of Game of Thrones.
So, when China began to allow private home ownership in 1998, property became the main
way middle-class Chinese people could invest—and that’s what’s lead to one of the most
remarkable things about this ghost city: all of these empty apartment buildings you see
aren’t really failures, at least not for the developers, because nearly all of them
have been sold to Chinese people looking not to live there, but to invest in real estate.
What happened, then, is pretty simple: the Chinese government wanted real estate to be
built, so they were willing to encourage that building through easily obtainable loans for
developers, developers were willing to build cities because the loans were easy to get
and they expected to be able to sell apartments easily to middle class Chinese, and middle
class Chinese were willing to buy those apartments, as investments, because it’s their only
real way to invest, and the Chinese real estate market has historically always increased in
value.
So you had a source of capital, a builder, and a buyer: all that was missing were people
to actually live there…and political freedom, that was missing too, but that’s sort of
the deal in all of China.
As of 2010, when the city was completed, there were between 20-30,000 people in an area built
for a million.
Since then, the numbers have grown a bit, and there are about 200,000 residents; still
1/5 of its capacity, but then again, these days, 1/5 capacity is sort of a good thing.
The Chinese Communist Government has a lot of things on its plate—planning the world’s
second largest economy, getting ready for the 2022 Winter Olympics, jailing political
prisoners; they don’t have time to do things like remember passwords to all their different
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