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The obvious appeal of China’s cheapest cities

Ccentral planner Years have shaped Hegang, a city in the far north of China. Once, coal and other minerals made Hegang the pillar of socialist industry. Just over a decade ago, when the richest deposits were declared exhausted, the central government closed many mines and pinned its hopes on green infrastructure. Sooty miners’ cabin shantytowns were torn down and replaced by brightly colored apartment blocks that stretched toward the horizon next to a new city park. A high-speed rail line opened last December. There is a proud statement that a graphite mine will provide raw materials for factories producing new energy vehicle batteries. Sadly, technocrats were unable to prevent more than one in six locals from leaving Hegang after 2010, fleeing low wages, limited job prospects (especially for graduates) and a long, dark, harsh winter.

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Recently, a combination of housing construction and population decline has given Hegang an unexpected edge. By some standards, it is the cheapest city in China at prefecture level or above. In 2019, young out-of-towners gained notoriety online when they made viral videos and blog posts bragging about buying large apartments there for as little as 46,000 yuan ($6,700). That claim was backed up by a more formal survey. The average selling price of second-hand housing in Hegang is 2,152 yuan per square meter, 40 times cheaper than Shenzhen, a high-tech metropolis in the south.

This backwater of 790,000 people near the Russian border has become synonymous online, where strivers — and the poor and misfits — can turn their meager savings into a home. Indeed, many give up and leave within a few months, often when winter temperatures plummet to -20°C. Others make short visits to renovate apartments bought online, then return to life in factory dormitories in big eastern cities as migrant workers. But even this remote form of ownership is “an emotional comfort” for migrant workers who may live in Shanghai or Guangzhou for years but have no hope of buying a house there, said Liang Yunpeng, a Hegang real estate agent. He sells about 80 cheap apartments a year to outsiders, usually on the upper floors of older buildings with no elevators. His clients usually spend less than 30,000 yuan.

It would be rash for outsiders to predict Hegang’s revival. Some successful new residents have supplemented local efforts by making short online videos and posts showing the novelty of their move to China’s far north, earning millions for movies about the cold or cheap eating out Times watched. Only a limited number of people can become internet celebrities in Hegang.

Still, this small city is a great place to observe big trends. China faces a cost of living crisis. From 1998 to 2021, the affordability of urban housing in China, as judged by the ratio of average housing prices to median disposable income, has dropped fourfold. Today, a 100-square-meter apartment in Beijing costs an average of 6.3 million yuan, or about $1 million. This is 34 times the average annual salary in the Chinese capital. Not being able to buy a home is especially painful because property is seen as a safe, government-backed form of savings, and men who don’t own apartments often struggle to find wives. It also exposed deep inequalities in modern society. Some involve severe income inequality. But others reflect the privileges of the socialist era, especially after urban housing was privatized in the 1990s and sold at steep discounts to state employees and officials.

When he came to Hegang, the inspector met the owner of a small hamburger shop, surnamed Hou. He was born locally and returned from Beijing in 2020 when the covid-19 pandemic stopped his work as a guide taking Chinese tourists to Russia. Such vacations don’t come cheap: A family trip to Moscow can cost as much as 30,000 yuan. Still, many of his clients appear to be regular pensioners. The explanation is that people who have lived in Beijing for a long time may have two or three apartments that they bought at a low price many years ago. Now even a small apartment can generate a rental income of 60,000 yuan a year. In contrast, Mr. Hou noticed more of Hegang’s friends returning home because they realized—as migrant workers in big cities—that they would never have enough money to buy a house or start a business. He’s also happy to hear more customers or delivery van riders speaking with non-native accents. On the one hand, these newcomers supported the housing prices in Hegang.

Some locals, resentful of Chinese bloggers, have called the city a safe haven for those eager to “lay flat” or drop out of school and give up material ambitions. Wang Dakai, who returned to China to open a barber shop after ten years in a big city, was worried that He Gang would be called lazy. “None of us are lying flat, everyone is busy,” he said. To prove his point, in exchange for answering questions, he demanded an online video of him pretending to cut the hair of a British visitor to post on his social media channels.

Individual dreams in an old collectivist bastion

Some new beginnings are life changing. Last summer, he spent 70,000 yuan to buy and furnish an apartment, allowing 25-year-old Internet celebrity “Huahua” to make a home for himself and his 10-year-old sister. Every month she sends money to pay for caring for her mentally disabled mother at home 3,000 kilometers away in Jiangxi province. She supports herself by selling pancakes and soy milk from a street cart, watching cats, working as an online customer service assistant and writing. She said Hegang was quiet and friendly and had some good schools in its days as a mining centre. Plus, she likes snow. On a recent morning, a new friend, a divorced single mother, arrived at her tiny, cat-filled home. The friend noticed that many of the newcomers had strained relationships with their families, as she did.

Central planners did not intend Hegang to be a city where young women could enjoy rare autonomy from the control of their husbands or relatives. This cheap former mining town is best understood as an accidental safety valve. Its astonishing reputation shows that Chinese society is a system under terrible pressure.

Read more from our China columnist Chaguan:
Why Chairman Mao’s Victims Don’t Get Justice (March 16)
What Party Control Means in China (March 9)
Why aren’t China and the US more afraid of war? (March 2)

Another: How did the teahouse column get its name

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