China Is Outsourcing Its Cities on Man-Made Islands in Malaysia
‘If you build it, they will come’ seems to be China's thinking as it constructs whole cities on artificial islands in Malaysia that resemble instant Chinatowns.
Forest City is a Chinese development with room for 700,000 residents being built across a string of man-made islands just off the coast of Malaysia. Since Malaysia and Singapore are separated only by a narrow strip of water—they were a single country until 1965—the $100 billion development is marketed chiefly as Singapore-adjacent. Promotional materials call it a “global cluster of commerce and culture,” as if it pledges allegiance to no country at all, and note that a new light rail system will connect it to the nearby KLSR.
In the sales showroom, the city’s sheer size was on display in its glitzy scale model, which itself was nearly big enough for a child to lumber through like a marauding Godzilla. The model’s twisty silver condo towers were strewn with hanging gardens and purple LED lights, lending it a hip moon colony vibe. Several had SOLD OUT signs hanging across their facades.
I rubbernecked my way through three- and four-bedroom model apartments at the heel of a sales associate named Fancy. Fancy was from China’s Guangdong Province and outfitted in a retro-trendy kebaya. Nothing escaped her laser pen: high-backed armchairs, bejeweled throw pillows, all-clad kitchenware. Floor to ceiling windows overlooked an electric-blue sea. On a living room’s wall-mounted TV, a promotional video featured Chinese couples saying things like, “Many ethnic Chinese live here. For us, it’s more like we’re living in our hometown than a foreign country.”
This is Forest City’s pitch in a nutshell: Live in China, but in Singapore... in Malaysia. As an American business owner working in Southeast Asia told me, “There are a lot of Chinese who don’t want to live in China, but they still want to live in ‘China.’” Forest City is “like a Chinatown,” as one retiree from the gritty factory city of Hangzhou brightly remarked to the Asia Times, explaining why she’d purchased a bungalow there.
From the start, Forest City’s target market has been residents of places thousands of miles away—congested, smoggy Chinese cities like Tianjin and Guangzhou, where Country Garden, the China-based developer building Forest City, has bought air time in local media markets and pitched its “near Singapore” condos directly to escapist Chinese buyers.
Malaysia has accommodated inflows of Chinese immigrants in the past. In the middle of the 19th century, soldiers fighting in the Crimean War and the Civil War sent demand for canned foods soaring. Malaysia had some of the world’s largest tin deposits, and the country invited Chinese laborers in to excavate its tin mines. By the late 1800s, it was the source of half the global tin supply. Over the years, thousands of these Chinese workers settled in Malaysia permanently, becoming restaurateurs, opium den proprietors, and canning tycoons. Today, Chinese is the second-largest ethnic group in the country, though the government is loathe to grant full citizenship to new arrivals.
Instead, it created the uniquely generous Malaysia My Second Home visa (MM2H), which grants nearly unlimited entry to expats with sufficient disposable income, short of providing citizenship. MM2H has made Malaysia one of the easiest nations on earth to move to. Good for 10 years and a breeze to renew, it’s effectively a pass for permanent residency. Its main requirements are a bank account with about $120,000 in liquid cash and a monthly offshore income of approximately $2,500, a low bar to clear for a lifelong stay. In 2016, 44 percent of the visa’s successful applicants were Chinese.
Forest City is one small part of Iskandar Malaysia, an economic growth corridor that hugs the Malaysian coast just across the water from Singapore. The corridor is roughly modeled on Shenzhen, the celebrated Chinese special economic zone, with a development plan that aims to make it “a strong and sustainable metropolis of international standing” by 2025.
Whether the Shenzhen comparison fits, China has taken a shine to Iskandar, lining its shores with swarms of affordable-luxury condominium towers. If Forest City didn’t suit us, Fancy said, might she suggest Danga Bay, an “integrated waterfront living” city up the road, a brisk four miles from the bridge to Singapore. There’s also Princess Cove, three times the size of Danga Bay, and a multitude of similar Chinese-built developments in various stages of completion.
It’s tempting to smirk at these crystal castles set atop artificial islands in the sea—their bedazzled throw pillows, their nouveau riche names, their brochures promising “a sanctuary of utter peace.” But watching hopeful young families poke around the model apartments at Forest City, seeing couples take selfies on the white-sand beach while their kids ran amok in the mist-machine playground, I couldn’t help but think that this was an ideal set-up for people who were, as the Cathay Pacific in-flight advertisement put it, connecting to One Belt One Road opportunities. If One Belt One Road is an effort to make national borders more permeable, places like Forest City, aided by devices like the MM2H visa, are a credible means to that end—financially feasible living arrangements for a particular brand of Asian expat.
It’s a reminder that One Belt One Road, like China’s “Go Out” strategy, is a diktat to the Chinese people to barnstorm the world with entrepreneurial ventures and speculative real estate. Ideally, all these molecular enterprises congeal into economic ecosystems, just as America’s infrastructural blitz helped in Europe 70 years ago. Of the Marshall Plan’s many ambitions, high on the list was ensuring that Europe was stable and moneyed enough to siphon off post-war America’s residual export glut. Now China has a similar glut, and a similar goal: to urbanize the listless, hazy stretches of soggy farmland that slumber between Southeast Asia’s urban cores.
It’s not hard to imagine the Forest City template cloned with overhead-shearing efficiency along the railway’s route, as those with knowledge of the project believe will happen. Asia has reverse engineered the art of urbanization, in which entire cities are constructed from scratch and sold unit by unit in air-conditioned sales showrooms.
“The challenge will be, when the high-speed rail arrives in the middle of these places, how do the government planners use it to turn those areas into communities?” says Ed Baker, who led the team of architects that designed Bandar Malaysia. With red marker, he draws a slightly wavy vertical line on a grease board, punctuating it with dots. “Some of these stops on the high-speed rail, the stations are in a kampong,”—a Malaysian village with stilt-raised clapboard houses topped with roofs of corrugated tin. “It’s a village in the romantic sense. People live in little houses with little gardens.”
The high-speed rail station for the city of Seremban, for instance, won’t be in Seremban proper, but 10 miles west in sleepy Labu, a wooded enclave of country roads and palm oil mills. With a high-speed railway station looming, property developers have already reported a rise in land values, where both density and community resistance to development are likely to be low. “You’ll find a lot of private developers are interested in these kampongs,” says Baker. “One might say, ‘I’m going to take 2,000 hectares and build an office park and I’m going to call it High-Speed City.’”
Mahathir Mohamad, Malaysia’s former prime minister, has emerged as the de facto voice of the “Malaysia First” constituency, issuing frequent warnings about all this Chinese-backed development. Armed with an ornery blog, he’s been outspoken in his alarm over “tracts of land… being sold to foreigners.” The way he sees it, “much of the most valuable land will now be owned and occupied by foreigners.”
If Chinese developers are eager to dive in, so are millions of individual Chinese, who see these projects not as steroids for China’s state-run economy, but as opportunities for personal gain. Of all the tools for generating wealth, transportation infrastructure is history’s favorite. Two centuries ago the State of Georgia stuck a mile marker post in the ground. It became the eastern terminus of the Western and Atlantic Railroad. The city that sprung up around it was originally called Terminus, and is now called Atlanta. It was built by the bricklayers, gas workers, bankers, and machinists who flocked there for a piece of the transit-oriented action.
Today in Southeast Asia, the marbled hotels, dump truck dealerships, mapo tofu joints, and jade emporiums appearing along the railway’s route make up the “variety of meso- and mini-projects [that] thrive on the tailwinds of the megaprojects,” as the anthropologist Chris Lyttleton calls them. They’re the product of millions of Chinese migrants following China-built railways, highways, airports and seaports into the deserts and jungles, setting up shop as they go.
President Xi has lately been apt to quote a particular Chinese proverb when speaking to provincial leaders and state-linked CEOs: If you want to get rich, first build a road. It’s not the road itself that offers a return on investment, but the people who choose to follow and use it. The infrastructure of One Belt One Road, no matter what country it’s in, exists, in part, for the haiwai huaren—the “overseas Chinese”—syncing their personal life ambitions with Beijing’s long-term macroeconomic strategies.
In Forest City, I wondered where all the haiwai huaren were. I arrived expecting planeloads of buyers from cities like Wuxi and Nanjing. What I found instead were mostly Malaysian families, the women shielding themselves from the dry-season sun with their hijabs, and sharply dressed Singaporean investors inquiring about subletting policies.
In 2016, Chinese buyers scooped up $33 billion in offshore real estate, a 53 percent increase from the year before. But the same capital controls that may have blasted China out of Bandar Malaysia had strafed the Iskandar waterfront condominium market as well. Panicked about its currency reserves, Beijing instructed Chinese citizens buying real estate abroad to keep their money at home instead, shaking property markets from Auckland to L.A.
Suddenly, future Forest City residents who had already forked over 10-percent down payments were being sent to Hong Kong and Macau to continue paying their installments. As Forest City’s sales offices in mainland China closed “for renovations,” new ones began seeking out new clientele in Singapore, Jakarta, and Kuala Lumpur. On the Bank of Shanghai’s mobile app, a pop-up warning cautioned users not to buy foreign exchange if they planned to use it to purchase property outside of China.
Debate quickly turned to whether Forest City, which had just handed over the keys to its first 132 apartments, would become one of China’s infamous ghost cities. Meticulously planned and constructed for a million no-show buyers, these ghost cities have become irresistible metaphors, cracks in the dyke for Western audiences eager for proof of Chinese fallibility.
One of the earliest ghost cities to rise to infamy was Ordos Kangbashi, which broke ground in 2003 on the plateau of Inner Mongolia, an autonomous region of China. A visit from the BBC in 2012 cited the mostly vacant city as proof “that the great Chinese building boom... is over.” In his book Ghost Cities of China, however, Wade Shepard argues this eulogy is premature, pointing out that many of these cities are designed to fill up on 20-year timelines, and that expecting them to populate overnight is a failure to understand China’s model of urbanization—one in which the city generates population, rather than the other way around.
Shepard recently returned to Ordos Kangbashi and found “a substantial population there,” thanks to aggressive social engineering on the part of the Chinese authorities. In 2006, the administrative capital of the local government was relocated there from Dongsheng, another urban area 20 miles away. According to the New York Times, bus service between the two areas was then allegedly shut down, forcing government officials to move near their offices in Kangbashi. Desirable schools were relocated to Kangbashi. Lo and behold, a city with space for 300,000 residents had become one-third full. As Shepard points out, the Chinese government has a multitude of tools that it can use to entice citizens into new cities, “shifting the population around the country as a military commander maneuvers troops on a battlefield,” he writes.
One Belt One Road aims to replicate China’s domestic successes in urbanization and high-speed rail in other countries around the world. But in Forest City and other offshore Chinese developments, many of the countermeasures China has used to create success at home won’t be available. As we were leaving Forest City, Fancy stopped me at the door, not to deliver a final hard sell, but simply to make sure my short visit had been a pleasant one. Then she wrote her Whatsapp number on a glossy brochure and handed it to me. “Let me know you’re ready to purchase your property at Forest City,” she smiled, “or at any of our other communities.”
This is an excerpt from High-Speed Empire: Chinese Expansion and the Future of Southeast Asia, by Will Doig, published by Columbia Global Reports.