In China, the real estate sector functions as the primary dynamo for GDP growth. Unlike Western models where construction follows demand, China’s approach is inverted:

• Local governments rely on leasing land-use rights to fund public services and budgets.
• For citizens, real estate serves as a ‘safe vault’ for life savings due to limited investment alternatives.
• This creates a cycle where continuous construction is essential for economic stability.

The Chinese state employs a proactive vision that anticipates demand years in advance. By laying down infrastructure—subways, schools, and hospitals—in undeveloped areas, the government acts as a ‘market maker.’ This strategy is reminiscent of how ancient civilizations planned their expansion, much like the Derinkuyu underground city, though on a modern, massive scale.

Once the poster child for real estate failure, Ordos Kangbashi has defied its ‘ghost city’ label. Strategic patience was the key to its success:

• The government relocated administrative offices to the new city.
• Prestigious schools and universities were moved to the area to attract families.
• Today, the city boasts over 150,000 residents and a thriving service sector.

While some cities have flourished, the model is not without significant risks. The reliance on massive loans and financial obligations has created a fragile environment. The financial stakes are high, as seen in the Evergrande crisis, where excessive borrowing threatened the stability of a sector accounting for nearly a quarter of China’s GDP.