Alternative Development Paths for China’s “Cheapest” Cities

Author: Jessica Yu, Graphics: Acasia Giannakouros

BRB Bottomline: As times change and technology advances, many once prosperous cities in China have fallen victim to urban decay. However, Hegang, known online as the “cheapest city in China,” has demonstrated that it is possible to turn these cities’ weaknesses into newfound opportunities for the revitalization of their economies. The story of this Northeastern Chinese city can provide valuable insight in identifying new, alternative methods to save cities like it from dying.

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Located along the Chinese-Russian border, Hegang is a small, quiet city that most people might not have heard of. Much of its modern history and cultural impact is centered around its production of coal — Hegang doesn’t tend to make many waves and usually goes about with its head down, doing its job and fulfilling its role silently. It’s barely a blip on the radar. In a country as populated as China is, Hegang’s relatively small population of just about 1 million is significantly less than that of most other cities.

Recently, however, the city caught fire on social media for one unique attribute: its unbelievably low housing prices. In November 2019, 33-year-old sailor Li Hai spoke to an independent news outlet about his decision to settle down in Hegang, a large part of which was driven by the inexpensive cost of living there. This article soon went viral as people were shocked by the extremely low prices of housing in Hegang. In more well-known, prosperous cities in China, housing is becoming increasingly unaffordable — a resident may only be able to afford a few square meters with the same amount of money spent on rent in another, cheaper, city. 

Since the initial news article exploded, Hegang and its inhabitants have become a hot topic of discussion online. But, interestingly and perhaps counterintuitively, the appealing cost of housing in Hegang is the result of an ongoing economic crisis that the city is facing.

Decaying Cities and Their Dilemmas

In 2012, Hegang was officially listed as one of the 69 “Resource Exhausted Cities” (RECs) in China, defined as cities or districts where the mining industry is in its final stages of development and more than 70% of resources have already been extracted. These cities are heavily reliant on a few natural resources and have low levels of economic diversity and complexity, leading to severe economic downturns when their “breadwinning” resources are inevitably depleted. RECs in China also often face other problems, including environmental degradation, being situated in remote locations that make it hard for them to be self-sufficient, large sunk costs for transitioning into different market structures, and underdeveloped tertiary sectors of their economies. The issues faced by these cities are analogous to those of Rust Belt towns or Russian monotowns.

RECs are typically market economies, where the prices of goods and services are more or less determined by the interaction between supply and demand. As a result, Hegang’s housing prices are actually a typical phenomenon among RECs, 14 of which are found among the 30 Chinese cities with the lowest per-unit housing prices. Essentially, the decay of core industries in RECs has led to what is known as “working-age flight”: the process in which large numbers of younger people leave the city for better career opportunities. Between 2010 and 2020, Hegang’s urban population decreased from 1.06 million to 891,000 — and more importantly, the number of working-age people decreased from 790,000 (74.61% of the total population) to 597,000 (66.99%).

To combat these issues, the Chinese government has begun to promote cleaner and more sustainable sources of energy and introduce new industries to RECs. However, Hegang’s viral stint on the internet has introduced several alternative methods to combat urban decay and revitalize these cities.

“Popular” Method #1: Market as a Destination for Capitalist Escape?

In 2021, results yielded from search engines at first featured Hegang and its housing market in a positive light. Some trending search examples included “Millennial Couple Purchases a Home With Three Months of Wages,” “Why are Hegang’s Housing Prices So Low,” and “How Gen Z from Hegang Earned a Million In a Year Through BBQ Booths.”

Then came criticism. Comments such as “Using 2021 wages to buy living conditions like those back in 1991” were soon found as top comments responding to the seemingly positive articles. There was growing speculation that the happiness and positive experiences from living in Hegang were largely overblown on social media — possibly intentionally. 

Although there is no definitive proof on whether Hegang’s government has been purposefully spreading propaganda, it is without a doubt that digital marketing has had very positive effects on the city’s economy. It has brought Hegang into the spotlight as the perfect destination for capitalist escape. Unlike typical destinations of “urban escape,” which are largely underdeveloped and rural, in their economic prime many RECs established fully-developed urban services that continue to be functional today. Hegang, for example, has more than 20 public bus lines, a shopping mall, hospital, and a high school that has long been selected as one of China’s top 100 public schools. At the same time, people there are free from the “side effects” of capitalism and economic development — a slow-paced and stress-free life can be enjoyed, and simple happiness can be found from “traditional” leisure facilities. RECs offer the best of both worlds and are very suitable for people who consider themselves to be misfits of lively city lives but are unwilling to give up some privileges as urban residents. 

A city that has very likely chosen this strategy for development is Gejiu, a previous hub for the production of tin. With its unique culture and nice weather year-round, low housing prices have earned it the title of “the second Hegang” and “the perfect place for retirement” on social media. “Official” promotions soon came to help Gejiu gain traction online — searches on Chinese social media reveal that many verified accounts have been actively covering its cheap housing prices alongside awesome landscapes.

However, RECs do also have their own shortcomings that limit the strength of this strategy. Their main drawback is the lack of job opportunities, one of the major reasons that initially drove locals away. In mid-December 2021, negative news about Hegang became trending on Chinese TikTok — those who came to buy a house in Hegang have started to leave the city. One of the posts covered the profile of an “escapee” who cited the extreme lack of opportunities, relationships, and career prospects he could find in the city as reasons for his departure.

To mitigate the potential risk of limited job opportunities, the power of the internet can be leveraged to broaden the reach of RECs as it enables inhabitants to work remotely. According to a real estate agent interviewed by the South China Morning Post, his clients who settled down in Hegang mainly make a living through online businesses, stock trading, or gaming. These experiences show how technology and its applications can change the lives of people in places far away from innovation hubs. Northeastern China, where many cities have experienced industrial decay, is witnessing a rise in influencer and live-streaming industries.

“Popular” Method #2: Create Spaces for “Nostalgic” Experience?

The word huaijiu can be directly translated as “nostalgia.” In recent decades, the “economics of huaijiu” in China mainly refers to the mesmerization and romanticization of collective memories of popular culture from childhood. 

One common, almost universal memory that could serve as the key to an unconventional development strategy is the mutual experience of those in former industrial cities during the late 1990s to early 2000s. As part of a series of government experimentation on economic policies, Chinese politicians manufactured controlled, experiment-like settings for heavy industries and their workers in the 1980s and 90s. However, with the rise of Chairman Deng Xiaoping and the movement towards privatization, many formerly state-owned enterprises (SOEs) found their business models poorly managed and inefficiently run compared to their new private competitors. They eventually became bankrupt in the late 90s and early 2000s, succumbed to the wave of privatization and became privately owned, leading to the temporary unemployment of many workers as they had to look for new jobs.

This period of mass layoffs is a time period frequently portrayed in popular culture. Some of the most well-known depictions include the folk-rock song “To Kill That One From Shijiazhuang,” movies such as The Piano in a Factory and Black Coal, Thin Ice, the documentary Tie Xi Qu: West of the Tracks, and books Rouge Street by Shuang Xuetao and Winter Swimming by Ban Yu.

Previously, media depicting the stories of the birth and death of industrial districts have mostly chosen a more artistic portrayal for the sake of creative expression. In recent years, however, there has been a growing trend for all huaijiu stories, be it tragic or about the “good old days,” to achieve more business-oriented objectives. These “commercialized” memories range from the savoring of food such as popsicles to the use of “obsolete” machinery — such as old sewing machines — as aesthetics.

A recent example of a successful attempt to profit from huaijiu is the comedy movie Hi, Mom (2021), one of China’s highest-grossing films. The movie features a girl who time-travels back to 1981 and attempts to give advice to her mom. The movie actively promotes experiences unique to the time period, such as the ways of life in factory dorms and the wide use of stamps under what used to be the command economy. According to some movie reviews, the sense of “realness” and “authenticity” is one of the reasons why the movie is enjoyable. Additionally, the economic benefits of the movie stretched further than simply “product placement” and brought valid profit-motivated incentives for businesses to invest in huaijiu — since its release, tourists have frequented the movie’s filming locations. RECs might consider this path by turning their closed factory plants and surrounding communities into theme parks and movie studios. 

Popular culture has also helped spread the voice of individuals who have experienced urban decay. In his 2019 rap song “Wild Wolf Disco,” rapper Bao Shi Gem expresses the experiences and feelings of a grown man who was forced to find new ways of living after the decline of older industries and institutions; it soon became the third most popular hip-hop song of the quarter, and the most well-known of all songs debuted on the same rap contest show. Its lyrics were initially criticized, but many people went on to learn about the historical and social background behind the seemingly “meaningless” lyrics. Another example is a viral 2021 indie rock song titled “Mohe Ballroom”; Mohe is the northernmost city in China, and its economy was once reliant on forest products. Singer Liu Shuang wrote the song after watching and drawing inspiration from the lonely dance of an old man who lost his wife in a forest fire in 1987. The song’s popularity has not only informed people about the tragic memories of the city’s past, but also boosted the business of retro disco ballrooms that were previously at risk of completely disappearing due to a lack of customers.

Conclusion

The Chinese government has been largely fixated on using “conventional” kinds of social policy to save cities from urban decay, and has been met with mixed results and limited success. While some of their methods have proved effective, more unorthodox strategies derived from popular culture and the psychology of the Chinese population can also be useful in conjunction. While the development paths of RECs remain uncertain, the city of Hegang will likely serve as a defining example of the revival of China’s industrial cities — and a model to be followed in suit by other cities like it. 

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Take-Home Points

• Due to shifting economic trends, cities such as Hegang who were once rich have suffered from urban decay and as a result become poor.
• Hegang is an example of a Resource Exhausted City (REC), of which there are 69 in total in China. 
• RECs typically have extremely low housing prices as inhabitants are streaming out in droves. 
• The Chinese government has attempted to implement “conventional” policies to revive these cities, such as promoting cleaner energy.
• However, the Internet and social media have provided new, alternative strategies to allow for the revitalization of RECs facing urban decay.
• Dying cities can consider marketing themselves as capitalist escapes to people who need a getaway from tough urban jungles.
• Inhabitants of these remote cities face the tradeoff of sacrificing career opportunities, but that tradeoff can be mitigated by leveraging the power of the Internet to work remotely or in careers that don’t require in-person presence.
• Dying cities can also leverage collective feelings of nostalgia and popular media stemming from those feelings by converting themselves into the immersive, nostalgic experiences of theme parks and movie studios.
• The future of RECs is unclear, but the development of Hegang and how successful it is will likely set a precedent for other cities like it.