China News Roundup - x-ghost cities, over 13 million unregistered ghost children, booming mobile commerce and US bungled policy

Nextbigfuture will be bundling news that relates to China or India to make articles on these topic less frequent and easier to skip for those not interested in this topic. We will still have standalone articles on China and India where appropriate. Here we hae four topic related to China.

1.

The dominant angle on China's ghost cities is that four decades of overzealous growth is starting to catch up with China. China is accused of irresponsible development. The so-called ghost cities are shown as irrefutable evidence of an imminent economic meltdown. But when a Chinese “ghost city” does fill up with people and businesses it inconspicuously falls off the radar of the dominant international media. It becomes a regular city, mashed into China’s broader urban matrix — a success story that few seem interested in hearing about. We are amused by empty streets, vacant shopping malls, and barren financial districts in China, not budding new cities steadily coming to life. Ex-ghost cities are rarely news.

Standard Chartered had 2014 report on the ghost cities.

Our travels reduced our worries about ghost cities but raised our concerns about credit supply across the sector.

We believe ‘ghost’ cities are a temporary phenomenon for a country such as China that pursues continuous urbanisation. This is because of the long development cycle of new districts – typically divided into three main stages: the initial phase, the rapid growth phase and the mature phase – which normally lasts for 10-15 years.

The occupancy rate for the first few years typically tends to be low and then gradually rises during the second phase, when infrastructure and economic activity continues to improve. The occupancy rate could reach 70-90% levels when the area is fully developed and mature.

Occupancy rates were apparently higher than media reported in the four cities we visited. For example, the occupancy rate for Zhengdong New City in Zhengzhou has improved to 50-60% currently from only 20-30% several years ago. The occupancy rate for the other three ghost cities have also improved in comparison to two to three years ago.

City               Residential occupancy 2012         2014       Inventory
Dantu, Zhenjiang      10%                              40%        18-20 months
Wujin, Changzhou      20%                              50%        18-20 months
Zhengdong, Zhengzhou  30%                              60%        15-18 months
Sky City, Hangzhou    30%                              50%        15-20 months
Pudong, Shanghai                                    70-90% 

Milton Friedman criticized Pudong in 2001, but Pudong bounced back in 2005 and now has high occupancy rates.

Even in China it takes 11-20 years to get a new city or large scale new urban development area to mature.

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