Here in the United Kingdom, one of the biggest issues facing the British people and the British economy is the perennial high cost of housing, particularly in London and other large cities. However, on the other side of the world, China faces quite the opposite problem: too much housing and not enough people. Sixty-five million apartments, one in five, lie empty in China’s cities.
On the face of it, it seems a bit absurd, that a country of well over a billion people could have a glut of housing, especially in a rapidly industrialising and urbanising society like modern China. In the historical context, rapid urbanisation is usually characterised by the development of slums and overcrowded conditions as construction fails to keep up; the existence of a massive housing glut in China is historically unprecedented.
This odd situation can in large part be explained by China’s response to the late 2000s’ economic crisis. In order to keep economic growth up during a global recession, the Chinese government poured massive amounts of money into infrastructure and housing development. This helped Chinese farmers and rural inhabitants move into the cities, where they purchased apartments whose value over the past ten years has risen steadily due to the development of a speculative housing market in China’s largest cities. In 2018, housing, depending on whether ancillary industries like furniture and construction are included, counts for between one fifth and one third of China’s economic activity. For the average Chinese citizen, their home represents their largest economic asset.
The development of a housing glut, driven by a slowdown in speculative purchasing, a slowdown in rural-to-urban transition, and the continuing construction of massive apartment complexes therefore has serious practical implications for the Chinese people and the general Chinese economy. The stagnation and in many cases decline of property values has devastated consumer confidence in China, as the previous expectation that a home would serve as a stable and eventually profitable investment proves inaccurate. In cities like Jurong where massive apartment complexes like empty, property owners are trapped; unable to sell their apartment except at a massive loss, and stuck in a ghost city lacking the economic opportunities promised to prospective urbanites by the government.
On the government’s part, the housing glut represents both a short-term and a long-term problem. In the short-term, the housing glut weighs on a government attempting to curb its debts; housing construction before now was deemed an economic multiplier, as the cost of construction would be covered by the increased productivity of newly urban versus previous rural workers. Instead, the glut is weakening economic performance, upturning Beijing’s accepted economic projections.
In the long-term, the decrease in property values, combined with a general slowdown in the Chinese economy, presents a possible challenge for the Chinese government. The Communist Party of China (CPC) maintains political legitimacy by promising and delivering economic growth and broad-based prosperity. An inability to keep its promises would lend strength to both long-standing pro-democracy activists and to an emergent Young Communist movement seeking an end to China’s capitalist turn. Whether the CPC is able to handle large-scale dissident movements during an economic crisis remains to be seen, as the last mass-movement in the Chinese heartland took place thirty years ago in a vastly different political, economic, and technological context.