When my mom realized that I was learning about GDP, she told me a story that her best friend who lived in Hong Kong shared with her about China. One of the key strategies for China to improve their GDP was to increase government spending in developing land and building infrastructures around the country. But some of these infrastructures are uninhabited today and some became officially ghost towns. Some of these infrastructures are villages, airports with at most 3 flights departing and arriving, and factories. So that leads into a bigger question as to why would ghost towns correlate to a high GDP?
Gross Domestic Product or GDP measures the total value of all goods and services produced in an economy. In a broader sense, it illustrates how much one country spends. Ghost towns are merely abandoned towns with little to few occupants. Building a town requires laborers and government spending. One of the four expenditure methods that add into the total sum of GDP is government spending. Government spending includes development of infrastructures, welfare, social security, and giving subsidies to firms. GDP correlates to the building of ghost towns because if a country has a lot of money to spend on creating new towns, then it portrays their wealth and power. “Local officials across China have green-lighted lots of infrastructure projects not because they make economic sense, but just to boost GDP” (Stevenson-Yang). As China builds more infrastructures like villages and airports through government spending, their GDP will increase due to government spending.
Could China go into a rapid downfall that could detrimentally affect their economy all because they wanted a high GDP? With all of the unused infrastructures throughout the country, the economy could quickly decrease because of the amount of money spend into making these infrastructures without revenue. China seems put all this hard-work just to make their GDP rise and seem powerful and wealthy to they world. Charles Wheelan conveys “any measure of economic progress depends on how you define progress. GDP just adds up the numbers.” The issue with GDP is that it measures the total value of our economy, but not how well we use our resources. In China’s situation, they are putting most of their resources into building huge and expensive infrastructures with no usage and no revenue. China’s idea of creating ghost cities is bold move in boosting their GDP. These ghost towns are a waste of time, resources, and labor because people are putting work into infrastructures and towns that will have little to no effect on the Chinese economy and long-term growth.
In the short run, China’s GDP will be high and thriving, but in the long run, their economy will soon decline due to the massive amounts of unused infrastructure that costs millions of dollars. In general, GDP growth rate measures how fast a country is growing. China’s annual GBP growth rate averaged 9.74 percent from 1989 to 2017 with an all time high of 15.4 percent. But some of these growth were driven by inflated and non-sustainable growth as proven by the ghost city infrastructure. It was plainly just spending without any return on investments. But despite this, China is still a growing country with strong economy. We just hope that they invest their precious government money to projects that will help the people and the economy over all.
Langfitt, Frank. “China’s White Elephants: Ghost Cities, Lonely Airports, Desolate Factories.” NPR. October 15, 2015. Accessed June 19, 2017. http://www.npr.org/sections/parallels/2015/10/15/446297838/chinas-white-elephants-ghost-cities-lonely-airports-desolate-factories.
Wheelan, Charles, and Burton G. Malkiel. Naked Economics: Entdecken Sie Ihre Liebe zur Ökonomie. Weinheim, Bergstr: Wiley-VCH, 2012.