Four years ago, China - the world's second largest economy - started building a replica of the New York City. Located south of the capital city Beijing, construction on what was planned as a bustling financial district took off.
But today, as the economy is in serious crisis, the peninsula that has an uncanny resemblance to Manhattan is in a lull. The mini-city is deserted with no sign of a bustle. Though the skyline of the Yujiapu development in Tianjin City boasts of tall, swanky skyscrapers - they all lie, sadly, empty.
And it's not just the "Manhattan." China has earned a reputation for making developments that look just like several famous cities around the world. An Austrian village, a Parisian city (complete with the Eiffel Tower) - you name it, they have it. But, there is hardly any life in them.
Investor confidence in the Chinese market is low and slowly depleting. Figures revealed by the government echo the lack of investor faith. According to Bloomberg, Tianjin's economic growth fell to 10.6 percent on a year over year basis, reaching its lowest since 2010.
"Both the central and local governments clearly know that a big slump in the property market will significantly magnify financial system risks, and they know it's a delicate balance," Liu Li-Gang, chief economist at China's Australia & New Zealand Banking Group Ltd., told the agency.
According to The Wall Street Journal, the problem here lies in oversupply. Vacancy rates for new constructions built over the last five years are now 15 percent and experts predict the figure to go up 5 percent by 2016-2017. The "serious excess" in "third-tier cities" is due to too much spending on property. Apparently, the government spent 12 percent of the GDP on building these cities.
More recently, Bill Gates, the founder of Microsoft tweeted an interesting statistic:
The most staggering statistic in @VaclavSmil’s new book: https://t.co/2N6cpXQsJ5 pic.twitter.com/QPcBscSLXj
— Bill Gates (@BillGates) June 13, 2014
Gates explains in his blog that all the building activity may have got China out of poverty, but has in turn dragged its economy into a dangerous asset bubble. Indeed, every two months of the past decade, the country has built infrastructure equivalent to the size of Rome!
But, some Chinese developers have argued that the abandonment is just a phase and the cities are a part of an urban revolution which will take flight soon.
More recently, Rob Schmitz - a China correspondent for Marketplace (American Public Media) - visited these ghost cities and found that many people who initially had faith in these third-tier cities have returned home to the main areas. In an e-mailed interview with Business Insider, Schmitz said:
"I think each ghost city/ghost suburb should be treated differently - each of them has its own unique background and circumstances. Some of them will survive - we've already seen that happen in places like Zhengzhou and even in some of the exurbs of Shanghai that have filled out - but many won't."
"I think whether we see more ghost cities popping up depends on whether the central government is serious about promises to overhaul the GDP-based local official evaluation system and the way that local governments finance themselves," he adds.
Take a tour of the deserted Manhattan replica in a video below:
