What Happened to China's 'Ghost Cities?'

The construction boom that accompanied China's rapid economic rise sparked a wave of large-scale residential and commercial projects across the country.

This gave rise to vast, under-inhabited developments—including entire pre-built metropolises that never filled up—earning them the now-famous nickname: "ghost cities."

"Ponzi Scheme"

A major factor was the widespread practice in China of purchasing additional homes, widely considered safe investments in the country of 1.4 billion. An estimated 70 percent of household wealth in the country is tied up in real estate.

The market froze around 2020 as China's yearslong speculative property bubble began to deflate under regulatory crackdowns, leaving tens of millions of homes unoccupied and millions more unfinished—adding to anxieties amid an economic slowdown.

Chinese developers continued to develop housing well past the "saturation point" when supply exceeded demand, Sarah Williams, associate professor of technology and urban planning at the Massachusetts Institute of Technology, observed.

At this point the Chinese government had encouraged too much supply but they were a bit stuck, as the banks had already given out loans for more developments, she told Newsweek.

"They needed a return on their investment, so they opened up new land and new loans for overleveraged real estate developers, so those developers could use these loans to pay back previous loans. The easy way to describe it is that it is a bit of a Ponzi scheme."

Flickers of Life

Over the past decade, some of these areas have slowly attracted enough residents to cast doubt on the "ghost city" label. But the scale of the vacancy problem remains staggering: From 65 million to 80 million housing units across China are estimated to be empty.

One of the most notorious examples is the Kangbashi District in Ordos, Inner Mongolia. While the district was built to house around 300,000 people—less than 10 percent of those units were occupied.

Meanwhile, people who might have purchased homes to actually live in were discouraged by the dearth of jobs, healthcare resources, education, and amenities.

"There was the belief that while people might not move there for work, they might invest in the properties—like you invest in the stock market—and that might create the potential to make it a city with jobs, but that's simply not enough to inhabit a place. You need jobs to thrive," Williams said.

Now, more than 120,000 people live there, with thousands of students enrolled in local schools.

Even so, the city's future growth prospects are limited. China's population is declining, with falling birth rates failing to offset the aging population. Inner Mongolia's population shrank by 0.3 percent in 2023—more than twice the national decline, according to official data.

Tianducheng, a luxury real estate development constructed in Zhejiang Province's Hangzhou, was designed to resemble a European city—replete with a 1:3 scale replica of the Eiffel Tower.

Originally built to accommodate 10,000 residents, this "Paris of the East" drew widespread attention for its empty plazas and vacant apartments. Residents eventually trickled in, however, and by 2017 the population had grown to approximately threefold its initial planned capacity.

Newsweek reached out to China's Foreign Ministry via email with a request for comment.

Failed Ambitions

Many high-profile projects have fared far worse. The Yujiapu Financial District in Tianjin, once touted as China's answer to Manhattan, is one such failure.

Constructed in the early 2010s, the district boasts a full skyline of office towers, wide boulevards its own subway station, but never drew residents and businesses. Years after its debut, Yujiapu remains eerily vacant.

While some developments like Yujiapu stalled after completion, others have yet to fully begin.

One is Xiong'an New Area, a state-designated special economic zone about 60 miles south of Beijing. The project is meant to ease non-essential development pressure on the capital while showcasing green infrastructure and smart city technologies. For now, though, its empty streets reflect delays and slow rollout rather than outright abandonment.

Risks Remain

While the grandiose cityscape of developments like Tianducheng grabs attention, it's the smaller "ghost" zones scattered across China that pose the biggest threat to the world's second-largest economy, according to Williams.

"They represent pockets of overinvestment that lie vacant and threaten the livelihoods of the people who purchased apartments within them because they likely will not get a return on their investment," she pointed out, comparing the situation to the 2007-2008 housing crash in the U.S.

This will have "huge" ripple effect on the world's second-largest economy over time, she warned.

Update 3/21/25 3:01 p.m. ET: This article has been updated with additional information.