ABSTRACT
The ghost cities are the by-products of the Great Leap-style of urbanization in China. In China, the overemphasis on urban infrastructure investment comes at the expense of basic social services provision job opportunities and decent living conditions. China's urbanization literally became an inter-regional competition and campaign for city and town building. This flawed approach to urban planning resulted in an excessive supply of infrastructure and housing and the consequent ghost city phenomenon. Local government debt has risen sharply since 2008. Under the 1994 fiscal law, the local governments are not allowed to directly borrow money from banks or issue bonds. Many local governments circumvent this restriction by setting up local government-run financing vehicles (LGFVs) to fund local infrastructure projects, including roads, bridges, power plants, railways, and government-subsidized and low rental housing construction. In July 2013, the central government instructed the National Audit Office (NAO) to start a nationwide audit on local government debt.
