China's Ghost Towns

CHONGQING IS CHINA’S biggest township with a population of 31 million – larger than either Delhi or Mumbai. It is a sprawling municipality with stunning technology, from bullet trains to solar-powered towers.

But Chongqing hides a darker truth about China’s rollercoaster real estate development over the past two decades that has created several “ghost towns”. Empty buildings and empty cities are an indictment of Beijing’s policies that have led to huge over-supply even as a slowing economy squeezes demand.

Real estate prices across China have crashed since 2021. The Shanghai Composite stock market index is down 12 percent over the past year and down 22 percent since 2021. More than 70 percent of the personal wealth of average Chinese citizens is tied up in real estate or stocks. The fall in the value of both has forced the Chinese to cut down on consumption. With economic growth in 2024-25 likely to slow to 4.6 percent, according to the IMF, demand is falling behind supply across several domestic sectors.

Apart from empty buildings with no buyers, a deflationary cycle has set into the Chinese economy. Inflation is near zero. Added to its economic challenges are Beijing’s geopolitical tensions with the West.

So is the Chinese miracle over? Not by a long shot. China still has enormous strengths. It is the largest market for electric vehicles in the world. China accounts for 60 percent of EV sales globally. Its home-grown automaker BYD overtook Elon Musk’s Tesla with sales deliveries of 5,26,409 EVs in the October-December 2023 quarter compared to 4,84,507 sales deliveries of Tesla EVs.

BYD is building assembly lines for EVs across Europe (Hungary), South America (Brazil) and Asia (Thailand). BYD officially stands for “Build Your Dreams” and has been operating in India for 16 years.