China’s (Urban) Rise

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Urbanization has already had a huge impact on China, but a new McKinsey report (h/t All Roads Lead to China) entitled “Preparing for China’s Urban Billion” brings it into focus:

    “The scale and pace of China’s urbanization promises to continue at an unprecedented rate. If current trends hold, China’s urban population will expand from 572 million in 2005 to 926 million in 2025 and hit the one billion mark by 2030. In 20 years, China’s cities will have added 350 million people—more than the entire population of the United States today. By 2025, China will have 219 cities with more than one million inhabitants—compared with 35 in Europe today—and 24 cities with more than five million people.

    For companies—in China and around the world—the scale of China’s urbanization promises substantial new markets and investment opportunities. At the same time the expansion of China’s cities will represent a huge challenge for local and national leaders. Of the slightly more than 350 million people that China will add to its urban population by 2025, more than 240 million will be migrants. This growth will imply major pressure points for many cities including the challenge of managing these expanding populations, securing sufficient public funding for the provision of social services, and dealing with demand and supply pressures on land, energy, water, and the environment.

    …MGI’s analysis suggests that China should tailor policies that would shift urbanization toward a more “concentrated” shape of urbanization. This pattern of urbanization could produce 15 supercities with average populations of 25 million people or spur the further development of 11 urban “clusters” of cities, each with strong economic networks and combined populations of 60-plus million.”

It is clear that China is going to have to move mountains (perhaps literally) to achieve this sort of urban growth. It is certain that both the challenges and the opportunities will be enormous, but the outcome is perhaps too early to call.

While 2025 is still some way off, the here-and-now already provides some interesting anecdotes on Chinese urbanization. China Law Blog ran a post on “China Suburbanization Writ Large”, based on a Time article about the author’s family moving to the suburbs (urban sprawl?) of Shanghai. It notes:

    “For the past decade and a half, the frantic pace of urbanization has been the transformative engine driving this country’s economy, as some 300-400 million people from dirt-poor farming regions made their way to relative prosperity in cities. Within the contours of that great migration, however, there is another one now about to take place — less visible, but arguably no less powerful. As China’s major cities — there are now 49 with populations of one million or more, compared with nine in the U.S. in 2000 — become more crowded and more expensive, a phenomenon similar to the one that reshaped the U.S. in the aftermath of World War II has begun to take hold. That is the inevitable desire among a rapidly expanding middle class for a little bit more room to live, at a reasonable price; maybe a little patch of grass for children to play on, or a whiff of cleaner air as the country’s cities become ever more polluted.

    This is China’s Short March. A wave of those who are newly affluent and firm in the belief that their best days, economically speaking, are ahead of them, is headed for the suburbs. In Shanghai alone, urban planners believe some 5 million people will move to what are called “satellite cities” in the next 10 years. To varying degrees, the same thing is happening all across China. This process — China’s own suburban flight — is at the core of the next phase of this country’s development, and will be for years to come.”

Move over industrial, export-driven China – urban China and the domestic consumer are in need or more space (and attention from international businesses).

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