Town Planning Review

From upstart city to ‘ghost’ city: informal housing finance in Ordos, China

Town Planning Review (2021), 92, (6), 697–722.

Abstract

This paper applies the perspective of informality to examine the nexus between informal housing finance and housing markets in China. The study explores the causes, formation, influences and consequences of informal housing financing mechanisms in Ordos. It argues that informal housing finance contributes to the local property market boom and becomes an instrument of wealth building through homeownership, but classifies and reinforces social classes based on their gains from the property market. The study discusses the possibilities of institutionalizing informal housing finance and diversifying economic structures, with special consideration of resource-based frontier cities.

Access Token
£25.00
READ THIS ARTICLE
If you have private access to this content, please log in with your username and password here

References

ALLEN, F., QIAN, J. and QIAN, M. (2005), ‘Law, finance, and economic growth in China’, Journal of Financial Economics, 77, 57-116. Google Scholar

ALLEN, F., QIAN, M. and XIE, J. (2018), Understanding Informal Financing (CEPR Discussion Paper No. DP12863, April 2018), https://ssrn.com/abstract=3163496 (accessed 18 February 2021). Google Scholar

APPADURAI, A. (2002), ‘Deep democracy: urban governmentality and the horizon of politics’, Public Culture, 14, 21-47. Google Scholar

AVELINE-DUBACH, N. (2013), ‘Finance capital launches an assault on Chinese real estate’, China Perspectives, 2, 29-39. Google Scholar

AYYAGARI, M., DEMIRGÜC-KUNT, A. and MAKSIMOVIC, V. (2010), ‘Formal versus informal finance: evidence from China’, Review of Financial Studies, 23, 3048-97. Google Scholar

BAETEN, G. (2018). ‘Neoliberal planning’, in Michael Gunder, Ali Madanipour and Vanessa Watson (eds), The Routledge Handbook of Planning Theory, New York, Routledge, 105-17. Google Scholar

BANK OF CHINA ORDOS BRANCH (2013), Deciphering Ordos Non-government Loans and Suggestions for Real Estate Enterprise Debt Crisis. Google Scholar

BAYAT, A. (2000), ‘From “dangerous classes” to “quiet rebels”: politics of the urban subaltern in the global South’, International Sociology, 15, 533-57. Google Scholar

BERGER, A. N. and UDELL, G. F. (1998), ‘The economics of small business finance: the roles of private equity and debt markets in the financial growth cycle’, Journal of Banking and Finance, 22, 613-73. Google Scholar

BUCKINGHAM, W. (2017), ‘Uncorking the neoliberal bottle: neoliberal critique and urban change in China’, Eurasian Geography and Economics, 58, 297-315. Google Scholar

BULAG, U. E. (2002), ‘From Yeke-juu League to Ordos municipality: settler colonialism and alter/native urbanization in Inner Mongolia’, Provincial China, 7, 196-234. Google Scholar

CARRUTHERS, B. G. and ARIOVICH, L. (2004), ‘The sociology of property rights’, Annual Review of Sociology, 30, 23-46. Google Scholar

CASTELLS, M. and PORTES, A. (1989), ‘World underneath: the origins, dynamics, and effects of the informal economy’, in A. Portes, M. Castells and L. A. Benton (eds), The Informal Economy: Studies in Advanced and Less Developed Countries, Baltimore, Johns Hopkins University Press, 11-40. Google Scholar

CHAN, R. C. K., YAO, Y. M. and ZHAO, S. X. B. (2003), ‘Self-help housing strategy for temporary population in Guangzhou, China’, Habitat International, 27, 19-35. Google Scholar

CHIEN, S.-S. and WOODWORTH, M. D. (2018), ‘China’s urban speed machine: the politics of speed and time in a period of rapid urban growth’, International Journal of Urban and Regional Research, 42, 723-37. Google Scholar

CHUNG, Y. Y. (2009), ‘Negative real interest rate and housing bubble implosion: an empirical study in Hong Kong’, Journal of Financial Management of Property and Construction, 14, 257-70. Google Scholar

DE SOTO, H. (1989), The Other Path: The Invisible Revolution in the Third World, London, I. B. Tauris. Google Scholar

DE SOTO, H. (2000), The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, New York, Basic Books. Google Scholar

DENG, F. (2009), ‘Housing of limited property rights: a paradox inside and outside Chinese cities’, Housing Studies, 24, 825-41. Google Scholar

DING, X. (1994), ‘Institutional amphibiousness and the transition from Communism: the case of China’, British Journal of Political Science, 24, 293-318. Google Scholar

DUMINY, J. (2011), Literature Survey: Informality and Planning (Urban Policies Programme of the Women in Informal Employment: Globalizing and Organizing (WIEGO) policy research network). Google Scholar

DURST, N. J. and WEGMANN, J. (2017), ‘Informal housing in the United States’, International Journal of Urban and Regional Research, 41, 282-97. Google Scholar

ERDENYI, C. and SHEN, B. (2002), E’erduosi moshi yanjiu (Studies on the Ordos model), Hohhot, Inner Mongolia University Publishing House. Google Scholar

FAINSTEIN, S. (1991). ‘Promoting economic development: urban planning in the United States and Great Britain’, Journal of the American Planning Association, 57, 22-33. Google Scholar

FEIGE, E. L. (1990), ‘Defining and estimating the underground and informal economies: the new institutional economics approach’, World Development, 18, 989-1002. Google Scholar

FERNANDES, E. (2011), Regularization of Informal Settlements in Latin America, Cambridge, MA, Lincoln Institute of Land Policy. Google Scholar

FRIEDMANN, J. (2005), ‘Globalization and the emerging culture of planning’, Progress in Planning, 64, 183-234. Google Scholar

GLEESON, B. and LOW, N. (2000), ‘Revaluing planning: rolling back neo-liberalism in Australia’, Progress in Planning, 53, 83-164. Google Scholar

HAASE, A., RINK, D., GROSSMANN, K., BERNT, M. and MYKHNENKO, V. (2014), ‘Conceptualizing urban shrinkage’, Environment and Planning A, 46, 1519-34. Google Scholar

HALBERT, L., HENNEBERRY, J. and MOUZAKIS, F. (2014), ‘The financialization of business property and what it means for cities and regions’, Regional Studies, 48, 547-50. Google Scholar

HALL, P. (1989), ‘The turbulent eighth decade: challenges to American city planning’, Journal of the American Planning Association, 55, 275-82. Google Scholar

HE, G., MOL, A. P. J. and LU, Y. (2016), ‘Wasted cities in urbanizing China’, Environmental Development, 18, 2-13. Google Scholar

HOLSTON, J. (1991), ‘The misrule of law: land and usurpation in Brazil’, Comparative Studies in Society and History, 33, 695-725. Google Scholar

HOLSTON, J. (2007), Insurgent Citizenship: Disjunctions of Democracy and Modernity in Brazil, Princeton, NJ, Princeton University Press. Google Scholar

HSU, S. (2012), ‘Role of informal finance in China’s continuing economic development’, Chinese Economy, 45, 28-45. Google Scholar

HUANG, Y. and YI, C. (2011), ‘Second home ownership in transitional urban China’, Housing Studies, 26, 423-47. Google Scholar

HUANG, Z. and DU, X. (2018). ‘Holding the market under the stimulus plan: local government financing vehicles’ land purchasing behavior in China’, China Economic Review, 50, 85-100. Google Scholar

INNES, J., CONNICK, S. and BOOHER, D. (2007), ‘Informality as planning strategy: collaborative water management in the CALFED Bay-Delta program’, Journal of the American Planning Association, 73, 195-210. Google Scholar

ISAKSSON, A. (2002), The Importance of Informal Finance in Kenyan Manufacturing (United Nations Industrial Development Organization (UNIDO) Working Paper 5). Google Scholar

JIANG, S. (2009), ‘The evolution of informal finance in China and its prospects’, in Li and Hsu (eds), 12-38. Google Scholar

JIANG, X. and DING, C. (2004), ‘Theoretical analysis of informal finance: conception, comparison and institutional change’, Journal of Financial Research, 8, 100-11. Google Scholar

JIANG, Y., MOHABIR, N., MA, R. and ZHU, P. (2017), ‘Sorting through neoliberal variations of ghost cities in China’, Land Use Policy, 69, 445-53. Google Scholar

LEE, M. (1996), ‘The evolution of housing finance in Indonesia: innovative responses to opportunities’, Habitat International, 20, 583-94. Google Scholar

LI, J. and CHIU, R. L. H. (2018), ‘Urban investment and development corporations, new town development and China’s local state restructuring: the case of Songjiang New Town, Shanghai’, Urban Geography, 39, 687-705. Google Scholar

LI, J. and HSU, S. (eds) (2009), Informal Finance in China: American and Chinese Perspectives, New York, Oxford University Press. Google Scholar

LI, X. (2011), ‘E’erduosi minjian jiedai: Yonggan zhe de youxi’ (Ordos informal finance: a game for the brave), First Economic Daily, 4 August 2011, http://www.yicai.com/news/2011/08/985640.html (accessed 14 February 2018). Google Scholar

LI, Y. (2014), ‘Guicheng E’erduosi Weihe “Sierbujiang.” Zhengjuan Shibao’ (Why is ghost city Ordos not completely dead), http://sz.house.qq.com/a/20140227/010924_all.htm#page1 (accessed 26 February 2018). Google Scholar

LIN, G. C. S. (2009), Development China: Land, Politics and Social Conditions, New York, Routledge. Google Scholar

LIN, L. and YANG, K. (2017), ‘The price of informality: how informal finance schemes defaulted in China, 1989-2015’, China: An International Journal, 15, 111-35. Google Scholar

LUO, S. (2011), ‘E’erduosi renjun you liangtao fang, jiajia fangdichan, huhu diandanghang’ (In Ordos, 2.7 houses per capita: every family is in real estate, each person is a pawnbroker), Renminwang, 28 September 2011, http://house.people.com.cn/GB/15770889.html (accessed 26 October 2017). Google Scholar

McMAHON, D. (2018), China’s Great Wall of Debt: Shadow Banks, Ghost Cities, Massive Loans, and the End of the Chinese Miracle, Boston, MA, Houghton Mifflin Harcourt. Google Scholar

MOORE, J. (2003), ‘The modern world-system as environmental history? Ecology and the rise of capitalism’, Theory and Society, 32, 307-77. Google Scholar

NATIONAL BUREAU OF STATISTICS (2017), National Statistical Year Book, Beijing, China Statistics Press. Google Scholar

NONINI, D. M. (2008), ‘Is China becoming neoliberal?’, Critique of Anthropology, 28, 145-76. Google Scholar

ONG, L. (2012), ‘Between developmental and clientelist states: local state-business relationships in China’, Comparative Politics, 44, 191-209. Google Scholar

ORDOS MUNICIPAL GOVERNMENT (2017), ‘Zoujin Ordos, ziran ziyuan’ (Get to know Ordos city: the natural resources), http://www.ordos.gov.cn/zjordos/zrzy/ (accessed 21 September 2017). Google Scholar

ORDOS STATISTICAL BUREAU (2001-2017), Ordos Statistical Year Books, Beijing, China Statistics Press. Google Scholar

PAIK, W. (2014), ‘Land developers, states, and collusive clientelism in marketizing China’, Pacific Focus, 29, 68-91. Google Scholar

PAIRAULT, F. (2012), ‘Pratiques microfinancieres: les nouveaux habits du gouvernement Chinois’ (Microfinance practices: the Chinese government’s new clothes), in F. Leloup, J. Brot and H. Gerardin (eds), L’état: Acteur du développement (The State: Development Actor), Paris, Karthala Editions, 103-22. Google Scholar

PALLEY, T. (2008), Financialization: What It Is and Why It Matters (IDEAS Working Paper Series from RePEc). Google Scholar

PAN, Z. (2008), ‘E’erduosi moshi’ yu xibu da kaifa’ (The Ordos model and the Great Western Development Program), Beifang jingji (Northern Economy), 5, 12-15. Google Scholar

PASSAS, N., HSU, S. and LI, J. (2012), ‘Development and legitimacy of Chinese informal finance’, Pacific Rview, 25, 495-511. Google Scholar

QIN, H. (2011), Zhongguo minjian ziben touzi diaoyan baogao E’erduosi pian (Investigation Report on China’s Informal Capital Investment, Ordos Edition), Beijing, Ministry of Housing and Urban-Rural Development. Google Scholar

ROY, A. (2005), ‘Urban informality: toward an epistemology of planning’, Journal of the American Planning Association, 71, 147-58. Google Scholar

ROY, A. (2009), ‘Why India cannot plan its cities: informality, insurgence and the idiom of urbanization’, Planning Theory, 8, 76-87. Google Scholar

ROY, A. and ALSAYYAD, N. (2004), Urban Informality: Transnational Perspectives from the Middle East, Latin America, and South Asia, Lanham, MD, Lexington Books. Google Scholar

SHENG, Y. (2012), ‘Jiemi E’erduosi zhi “guai” xianxiang’ (Uncovering the secret of Ordos’s ‘strange’ phenomena), Chengshi Zhongguo (Urban China), 53, 69-71. Google Scholar

SHEPARD, W. (2015), Ghost Cities of China: The Story of Cities without People in the World’s Most Populated Country, London, Zed Books. Google Scholar

SMART, A. and TANG, W. (2005), ‘Irregular trajectories: illegal building in mainland China and Hong Kong’, in L. J. C. Ma and F. Wu (eds), Restructuring the Chinese City: Changing Society, Economy and Space, London and New York, Routledge, 80-97. Google Scholar

SMITH, N., CARIS, P. and WYLY, E. (2001), ‘The Camden syndrome and the menace of suburban decline: residential disinvestment and the discontents in Camden County, New Jersey’, Urban Affairs Review, 36, 497-531. Google Scholar

SORACE, C. and HURST, W. (2016), ‘China’s phantom urbanization and the pathology of ghost cities’, Journal of Contemporary Asia, 46, 304-22. Google Scholar

SU, X. and QIAN, Z. (2018), ‘The impact of housing market fluctuation and housing supply on the housing opportunities of moderate- and low-income households in 21st-century urban China: a case study of Ordos city’, China Review, 18, 107-35. Google Scholar

SULLIVAN, E. and OLMEDO, C. (2015), ‘Informality on the urban periphery: housing conditions and self-help strategies in Texas informal subdivisions’, Urban Studies, 52, 1037-53. Google Scholar

THEURILLAT, T. (2017), ‘The role of money in China’s urban production: the local property industry in Qujing, a fourth-tier city’, Urban Geography, 38, 834-60. Google Scholar

TSAI, K. S. (2009), ‘Beyond banks: the local logic of informal finance and private sector development in China’, in Li and Hsu (eds), 80-103. Google Scholar

TURNER, J. F. C. (1976), Housing by People: Towards Autonomy in Building Environments, London, Marison Boyars. Google Scholar

VAN BALLEGOOIJEN, J. and ROCCO, R. (2013), ‘The ideologies of informality: informal urbanization in the architectural and planning discourses’, Third World Quarterly, 34, 1794-810. Google Scholar

WANG, L., SUN, T. and LI, S. (2014), ‘Legal title, tenure security, and investment: an empirical study in Beijing’, Housing Studies, 29, 1117-38. Google Scholar

WANG, Y. (2011), ‘Financial sector and development of private capital’, in Q. Ma (ed.), Private Capital and the Road to Developed Economy, Beijing, Economic Science Press, 60-78. Google Scholar

WANG, Y. P., WANG, Y. and WU, J. (2009), ‘Urbanization and informal development in China: urban villages in Shenzhen’, International Journal of Urban and Regional Research, 33, 957-73. Google Scholar

WEBER, R. (2016), From Boom to Bubble: How Finance Built the New Chicago, Chicago, The University of Chicago Press. Google Scholar

WOODWORTH, M. D. (2015), ‘Ordos Municipality: a market-era resource boomtown’, Cities, 43, 115-32. Google Scholar

WOODWORTH, M. D. and ULFSTJERNE, M. (2016), ‘Taking part: the social experience of informal finance in Ordos, Inner Mongolia’, Journal of Asian Studies, 75, 649-72. Google Scholar

WU, F. (2018), ‘Planning centrality, market instruments: governing Chinese urban transformation under state entrepreneurism’, Urban Studies, 55, 1383-99. Google Scholar

WU, F., XU, J. and YEH, A. (2007), Urban Development in Post-reform China: State, Market, and Space, New York, Routledge. Google Scholar

XIE, L. (2009), ‘E’erduosi baofu chuanshuo: Neimenggu de xianggang’ (Rumors of sudden wealth from Ordos: Inner Mongolia’s Hong Kong), Jingji guancha bao (Economic Observer), 24 December 2009, http://style.sina.com.cn/news/2009-12-24/095053437.shtml (accessed 25 March 2018). Google Scholar

YIN, G. and LIU, Y. (2017), ‘Administrative urbanization and city-making in post-reform China: a case study of Ordos City, Inner Mongolia’, Chinese Geographical Science, 27, 891-903. Google Scholar

YIN, G., LIU, Y. and WANG, F. (2018), ‘Emerging Chinese new towns: local government-directed capital switching in inland China’, Cities, 79, 102-12. Google Scholar

YUAN, S. (2008), ‘Maojin de chengshihua zhongde tudi wenti’ (Land problems due to impetuous urbanisation), Reform and Policy-Making Internal Reference, 16. Google Scholar

ZHANG, L. (2011), ‘The political economy of informal settlements in post-socialist China: the case of chengzhongcun(s)’, Geoforum, 42, 473-83. Google Scholar

ZHANG, X. and SUN, T. (2006), ‘China’s current real estate cycle and potential financial risks’, China & World Economy, 14, 57-74. Google Scholar

ZHAO, Y. and WEBSTER, C. (2011), ‘Land dispossession and enrichment in China’s suburban villages’, Urban Studies, 48, 529-51. Google Scholar

If you have private access to this content, please log in with your username and password here

Details

Author details

Qian, Zhu