Skip to main content

The slowdown in Chinese economic growth has created new incentives for planners to continue expansion, even in smaller cities where population growth is less certain.

Nathan VanderKlippe/The Globe and Mail

The outward signs of an economic boom line the streets into this city just east of Beijing, where older buildings have been turned into piles of rubble – brick, concrete, plastic piping. Behind houses painted with the Chinese “chai” character that marks them for demolition, the windowless shells of large new apartment blocks pierce the horizon. Cement trucks have turned a road into a potholed mess.

It’s a familiar tableau of modern China, which for four decades has torn down the old in rural areas to make way for the concrete and steel of new urban centres – a rush of urbanization that has often been called the largest human migration in history.

But there are signs that the inaugural era of relentless Chinese urbanization has drawn to a close, making the country’s skyline a potent symbol of the economic changes sweeping the country.

Story continues below advertisement

The populations of roughly 28 per cent of some 3,330 urban areas in China fell between 2013 and 2016, according to an analysis released this year by Chinese researchers who used changes over time in the brightness of nighttime satellite imagery to estimate population changes. In April, the National Development and Reform Commission, the country’s powerful economic planning body, made the problem official by naming “shrinking cities” one of its key priorities. An estimated 50 million Chinese homes, a fifth of the country’s housing stock, stand empty.

For decades, it seemed, Chinese cities could only grow. Local authorities – intoxicated by the revenues springing from new construction – drafted grand plans for the thoroughfares, bullet train stations and glass-walled towers that could cloak their towns in modernity.

But in Sanhe and hundreds of other urban centres across China, it’s not clear the grandeur of those visions will materialize. In many central and northeastern cities historically dependent on coal and steel, jobs have vanished in a modernizing economy and people are leaving. In Sanhe, residents bemoan the effects of environmental policies that have cut smog in nearby Beijing – as well as local jobs.

“We are now in the second half of the urbanization journey, and the winners and losers are much more sharply defined than in the first wave,” said Jonathan Woetzel, co-chair of the Urban China Initiative at consultancy McKinsey & Company.

Population dislocations are part of any country’s development. Chinese census data show that between 2000 and 2010, the populations of more than half of the country’s counties shrank, many in central and western China, as people moved to coastal areas for work.

In China, 59 per cent of people now live in cities, following years of rapid change.

Nathan VanderKlippe/The Globe and Mail/The Globe and Mail

But the more recent indications that numbers are waning in hundreds of cities may show deeper problems in China, as economic growth slows and the population rapidly ages.

Such shrinkage “is mainly caused by a lack of employment opportunity in an economic downturn, rather than a change in economic structure from heavy industrialization to services,” said Kaiji Chen, an economist at Atlanta’s Emory University who has studied housing in China.

Story continues below advertisement

“In the past, when Chinese economic growth slowed down, migrant workers tended to return to rural areas due to a lack of employment opportunities in cities,” he said. “This might slow down the pace of urbanization for the short run.”

For some Chinese scholars, that is no cause for concern. “The shrinking city is a neutral concept. This happens in the development and transformation process, especially with big countries. There’s no need to feel horrified by it,” said Ding Changfa, a professor at the School of Economics at Xiamen University.

In China, he said, “overall urbanization is slowing down, but in areas where the economy and business are active and highly developed, the pace remains quite fast.”

After years of rapid change, 59 per cent of people now live in cities. It was only in 2011 that more than half the population became urban; in 1998, two-thirds of Chinese people still lived in rural areas. The United Nations estimates that China’s urbanization will continue at high speed, with more than 70 per cent of the population in cities by 2030.

Chinese planners, meanwhile, have pursued a strategy of mega-clusters, linked by dense networks of high-speed rail, where tens of millions of people can enjoy the productivity gains from living and working in urban settings.

“Today the nature of urbanization has become the development of the megapolis, which means using the advantage of supercities to boost the development of cities nearby,” Prof. Ding said.

Story continues below advertisement

At the same time, the slowdown in Chinese economic growth has created new incentives for planners to continue expansion, even in smaller cities where population growth is less certain.

”New buildings and construction generate a lot of GDP on paper, and local governments are incentivized to pursue that goal despite the oversupply of apartments in many places,” said Kam Wing Chan, a specialist in Chinese migrant issues at the University of Washington, in an unpublished paper.

In many central and northeastern cities historically dependent on coal and steel, jobs have vanished in a modernizing economy and people are leaving.

Nathan VanderKlippe/The Globe and Mail/The Globe and Mail

In Sanhe, that tension between growth and contraction is evident. In 2015, it was the subject of a strikingly negative state media report. Only a few days after the inauguration of a new high-speed rail service, the People’s Daily reported that “the occupancy fell to below 30 per cent. Some of the cars were even vacant.” Last year, authorities moved a large wholesale clothing market from Beijing to Sanhe. Some vendors say sales at the new location are less than half what they were in the capital.

(Most people interviewed in Sanhe declined to provide their full names because they were being critical of official Chinese policy.)

Prices at some local property developments have also fallen by more than half, according to an October report in Beijing News. At one marbled sales office, seven staff crowded around a reception desk near a model of a dozen proposed residential towers surrounding large green spaces. But staff said they had no marketing materials because they had not received a permit to sell units there. Across the street, a large construction site for the project showed no signs of life.

Not far away, a phone number was scrawled in white paint on a dusty roll-up door, locked in place over a small storefront. Its owner, who gave his name only as Mr. Wang, has been trying to rent the shop for more than three years.

Story continues below advertisement

“It feels like the number of people in Sanhe is shrinking,” he said.

Still, the city boasts some vibrant local businesses. As workers leave, the elderly – and the dead – are moving in.

At the Lingshan Pagoda Cemetery, rows of shiny gravestones line fields of closely cropped grass. The cemetery, with space for 25,000 burials, is nestled into a mountain that, marketing director Wu Xuecheng says, once inspired an emperor to write a poem extolling its beauty.

State media have shown that the price of burial plots across China has closely tracked rocketing big-city real estate price gains.

Nathan VanderKlippe/The Globe and Mail

“My wish is that our graves will never be filled and everyone will remain healthy,” Mr. Wu said with a laugh.

But business is undeniably brisk, with the best plots selling for roughly $27,000 for 20 years of maintenance. State media have shown that the price of burial plots across China has closely tracked rocketing big-city real estate price gains. Fucheng Group, the company that owns the Lingshan cemetery, reported gross profits for its funeral business last year of almost 88 per cent.

The retirement business in Sanhe is also surging, although not as profitably. Yan Da Golden Age Health Nursing Center is the largest elderly residential and care facility in China with 12,000 beds. Fully 98 per cent of the people who live here come from Beijing, attracted by a comprehensive complex that offers a sprawling hospital, calligraphy room, research centre and even a mosque. The location has become home to retired professors and diplomats, lured in part by a unique program that allows the hospital, which is located in neighbouring Hebei province, to deliver services funded by the city of Beijing.

Story continues below advertisement

“Many old people consider our centre ‘the last station of life.’ Some have even sold their houses in Beijing to live here,” said Bi Liwei, a manager in the company’s business-development department. “So it’s quite meaningful for us to make their last stop full of joy.”

Elsewhere, though, the view of Sanhe is less sunny. “All of the non-locals are gone,” said a man that opened a piano manufacturing business in 1992, but shut it down this year. The building is now for rent. Local environmental regulations, designed to keep the skies blue over Beijing, have restricted working hours. A large quarry has been shut down and blocked off. “There’s a connection between a decrease in population and demolished shops. Because doing business is very hard now,” said the man, who declined to provide his name.

Another man, a grocery-store owner named Mr. Zheng, has spent two years trying to find tenants for a pair of houses he owns. “The current situation is that you cannot even find a job. Why? Because there’s no work to do,” he said. Sometimes, it feels like “there are no people in Sanhe.”

With reporting by Alexandra Li

Our Morning Update and Evening Update newsletters are written by Globe editors, giving you a concise summary of the day’s most important headlines. Sign up today.

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter
To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies