August 31st 2013

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Articles from this issue:

NATIONAL AFFAIRS: Building infrastructure for Australia's future prosperity

ECONOMIC AFFAIRS: Funding the expansion of Australia's infrastructure

CANBERRA OBSERVED: Rudd's campaign strategy 'full of sound and fury...'

QUEENSLAND: How Labor's Queensland strategy has backfired

FEDERAL ELECTION 2013: Same-sex marriage now a priority for Rudd

EDITORIAL: Federal election: Australia's stark choice

NATIONAL AFFAIRS: 'Same-sex marriage' would require change to Constitution

SOCIETY: Five flawed ideas inflicting untold damage on Australia

SCHOOLS: The sly assault on faith-based schools

ENVIRONMENT: Germany's coal-fired energy revolution

CHINA: China builds 'ghost cities' to transform the nation

POLITICAL IDEAS: On revolutions and competing worldviews

OBITUARY: Compassionate defender of life: Kathleen Harrigan (1921-2013)


CULTURE: Introducing the gentleman-adventurer

BOOK REVIEW Polemical fireworks from India's C.S. Lewis

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China builds 'ghost cities' to transform the nation

by Jeffry Babb

News Weekly, August 31, 2013

For 5,000 years, almost all China’s people have lived in the country. Up until recently, the 10 per cent of sophisticates living in the cities were surrounded by an ocean of peasant-farmers.

Deserted street in Ordos.

But China’s new premier (we would call him prime minister), Li Keqiang, announced in his first media conference in his new post that, in the next 20 years, 300 million people would move from the country to the cities.

So far, the result has been the construction of dozens of “ghost cities” — cities built, often in the middle of nowhere, housing virtually no inhabitants.

The most notorious example is Ordos, in Inner Mongolia. Built with the intention of housing in excess of 250,000 people, it lay empty for years. Now it has an estimated population of 50,000 people. The big problem for Ordos is that it is a one-industry town. As China’s economy slows, industries and power stations no longer want to buy the dirty, polluting coal it produces.

The Wall Street Journal reported this August on the case of Tieling New City in Liaoning — a province of what we would call Manchuria — in China’s frigid northeast. So far, it has been constructed to house 60,000. The local authorities aim to triple the size of Tieling New City in the next few years. The only trouble is — no-one wants to live there. It’s in the middle of nowhere and, most importantly, there are no jobs.

Manchuria has some bright spots. Dalian, on the coast, is a centre for heavy industry and information technology. Its shipyards converted the second-hand Soviet aircraft-carrier, Varyag, for use by China’s navy. The ship was renamed Liaoning and commissioned in September last year.

Dalian has been voted China’s most liveable city. Much of Manchuria, however, is under snow for six months of the year. In other words, it’s not a very attractive place to live.

These “ghost cities” are based on the “if you build it, they will come” theory. Movie fans may remember the 1989 American fantasy-drama film, Field of Dreams, in which an Iowa farmer, played by Kevin Costner, carves a baseball diamond out of his cornfield to tempt long-departed baseball legends to play on his ground. The legends arrive and he is saved from bankruptcy. But will China be saved by a massive population shift? Will hundreds of millions come — from somewhere — to fill these ghost cities?

It is well known that China must change the orientation of its economy. Previously, it flooded the international market with its manufactured goods. As the lowest-cost producer, China drove its competitors out of business.

That model won’t work anymore. Wages in the coastal regions, where most manufacturing plants are located, have risen eight-fold in the last decade. Garment manufacturing is going to Bangladesh.

American manufacturers are “reshoring” — bringing their plants back home from China. American workers are diligent, intelligent and productive. Once all the costs are factored in, it makes sense to manufacture in the United States. Wages have remained steady, improving America’s competitiveness. Though few Australians realise it, while Europe has stagnated, America has been growing — the only major economy to do so. It’s not the strong growth characteristic of emergence from previous recessions; but housing prices are rising, and people are getting jobs and buying cars.

China, on the other hand, is hitting the wall. Steelmaking, shipbuilding and solar cells are massively oversupplied. China must turn to domestic demand to revive its economy and, what’s often overlooked, to spread the wealth.

The idea is that Chinese urban-dwellers earn more, spend more and consume more. But putting a farmer in an apartment doesn’t make him a productive industrial worker. In fact, he probably won’t even know how to turn on a water tap.

The Chinese will say, “Look at Pudong”, a new area of Shanghai. Shanghai has traditionally been on the west side of the Huangpu River, buttressed by the famous Bund on the riverfront. The government decided it would develop the eastern side of the river, Pudong, which was a swamp (dong means east).

When I saw Pudong in the year 2000, there was not much more there than the Jin Mao Tower, which, at 88 storeys, is one of the world’s tallest buildings. Much to my astonishment, when I returned to Pudong a decade later to visit the Shanghai World’s Fair, the entire area was built up, looking as if it had been there forever.

Shanghai is not China. It rivals Hong Kong as one of China’s financial powerhouses. Shanghai’s birthrate is amongst the world’s lowest. The Shanghainese say Shanghai girls have x-ray vision for a man’s wallet.

Most Chinese would love to live in Shanghai, but there is the problem of the hukou. The hukou is the local residence permit that all Chinese must have. Without a hukou you are a non-person. You have no rights. Workers from the central province of Henan living in Beijing are called “migrants”. However, migrants in Australia are far better treated.

Most rural Chinese would love to live in a city, but not a ghost town.

Jeffry Babb is a Melbourne-based writer, who spent several years in China and has visited most of the country’s provinces and major cities. 

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