President Xi Jinping begins an official visit to the United States tomorrow. At a time when so much seems in flux, we often hear that China represents long-term governance and planning, while Western economies embody the opposite.
But is that really true?
The state of China’s property market tells a different story. Conservative estimates suggest that at least 50–60 million completed housing units stand empty. If unfinished units are included, the surplus may amount to 90 million or more. Demolishing residential blocks could therefore become a large and growing industry, Chinese economists predict.
Over the next 25 years, China could lose around 160 million people. Looking even further ahead, to the year 2100, the population could, according to the United Nations’ medium projection, be more than halved—from today’s 1.4 billion to 633 million. The figures are almost impossible to comprehend. China is moving towards a demographic future so momentous that it is without precedent, says David Coleman, professor of demography at the University of Oxford.
Demolition has already begun, albeit on a modest scale. The party-controlled media are reluctant to write about what is happening, referring to it instead as “structural adjustment”. But the reality is that thousands of residential blocks and millions of apartments will have to go.
For decades, China hummed with the din of an immense construction boom: cranes dancing in the air, cement mixers rumbling back and forth, and residential towers rising at a pace the world had never seen before. The forest of high-rises became the very symbol of China’s progress, and everyone was impressed. Now the pace has slowed noticeably, at least in parts of the country. In city after city, half-finished apartment blocks stand waiting for residents who will never come.
In Inner Mongolia lies the city of Kangbashi. When it was built in the early 2000s, it was intended to accommodate around one million people. Last year, its population was reported to be approximately 130,000. The city is located in the so-called coal belt of northern China, where local leaders predicted strong economic growth. But around 2012, coal prices fell sharply and growth slowed. Thousands of coal miners lost their jobs, while the government in Beijing began giving priority to green energy. As a result, it became impossible to fill the new apartment blocks in Kangbashi and several other cities.
Some distance east of Beijing, on the coast, developers built the city of Caofeidian. It, too, was planned for one million inhabitants, but today has fewer than 100,000. As one Chinese economist observed: “Caofeidian was built for a future that never came.”
The demolitions are being driven by economic realities. Empty residential blocks cost money. They must be secured, maintained and connected to infrastructure that nobody uses. In cities with poor prospects, preserving them costs more than removing them.
China already has the world’s largest construction sector. The labour and expertise that built its cities will now be used to tear down entire neighbourhoods—or what remains of them. Steel can be recycled, while concrete can be crushed and reused in roads and foundations. The sites can be converted into green spaces or put to other uses.
Historically, what is now taking place marks the beginning of a shift in the role of the state. After Mao’s death and the introduction of reform policies, the task was to build homes, infrastructure and new industries. Increasingly, it will be about stabilising a society facing demographic headwinds. Demolition is the most tangible expression of this transition. And it will not affect only the “coal belt”: the projected population decline will affect the entire country, although to varying degrees.
In 1980, fewer than 20 per cent of Chinese people lived in cities and urban areas. Today, the proportion is around 65 per cent. Hundreds of millions of people have left their farms and plots of land behind and moved into grey apartment blocks of up to thirty storeys. But urban growth is now slowing, even as the population shrinks.
For several years, state-owned and private developers nevertheless continued to build as before. Many Chinese people bought apartments as investments. This worked well as long as prices kept rising and everyone believed that urbanisation would continue unabated. When both assumptions collapsed, the country was left with millions of housing units without occupants—along with a vast and unnecessary volume of greenhouse-gas emissions.
Buyers are now saddled with worthless homes, and public confidence in the property market has sunk like a stone. Many paid for their homes before they had been completed. When developers ran out of money, construction stopped. Yet the cheated buyers must still pay the interest and instalments on the bank loans they took out.
Developers, banks and local authorities have also suffered heavy losses. For several years, China Evergrande Group was the world’s most indebted property developer, with liabilities exceeding $300 billion—until it collapsed in 2024. On the southern island of Hainan, one monument to that collapse is slowly decaying: an almost empty hotel with 5,100 rooms. At least fifty other major companies are said to have suffered the same fate as Evergrande.
According to the authorities, China’s population fell by 3.4 million last year. The country is now entering a phase of accelerating decline. Under the UN’s medium projection, the annual decrease will exceed ten million around 2070. But the uncertainties are numerous, and demographers say they are peering into a rather dense fog. The greatest uncertainty concerns women’s future fertility. Today, the average woman gives birth to 1.0 children, but the rate would have to rise to 2.1 to stabilise the population over time.
Since the one-child policy was abolished ten years ago, the authorities have tried to entice young couples with cash payments, tax deductions and subsidised childcare. But the measures have had little effect, largely because the modern way of life—with small apartments in high-rise blocks—is ill-suited to large families. Nor is the prospect any more appealing when both parents must work from morning until night to make ends meet.
China is, in any event, facing a dramatic transition. A halving of the population does not automatically mean a halving of the economy, but it does mean fewer workers, weaker domestic demand and a far smaller need for housing. The decline can be offset only through higher productivity and the automation of key tasks. China is already the world leader in the use of industrial robots.
Robots can also do an excellent job of demolishing surplus housing. Remotely operated machines are already hard at work across the country. Instead of blowing up entire buildings, they can dismantle them systematically and sort the materials for recycling. They can also work inside buildings and be programmed to crush concrete, cut through structures and carry out dismantling work—in fact, almost anything.
“It is impossible to manage an economy without learning from practical experience,” the late Vladimir Lenin once said in a moment of candour. China’s economic planners are now learning the same lesson.
