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Voices Cities

China’s cities in the sky

Jonathan WoetzelDirector
McKinsey & Company

Based in Shanghai for more than 15 years, Jonathan has been instrumental in establishing and scaling McKinsey’s presence in China. He works with Chinese businesses to develop strategies, organizations, and operations for global growth, and with city, regional, and national authorities on energy, sustainability, and economic development.

China’s urbanization is unavoidable. Over a billion people will live in China’s cities by 2030, requiring construction on a scale never before seen. This gives China a unique opportunity to create and develop its cities in a way that supports economic growth, preserves the environment, delivers the highest possible quality of life for its citizens, and results in a stream of valuable new technologies. If handled correctly, these developments will not just benefit China but will also have profound implications for the rest of the 21st century world.

Growing up, not out

The question is not how big, but how tall can China’s cities get. China’s urbanization is already well-advanced with over 600 million people living in 800 cities spread across the country in a relatively dispersed pattern. Looking forward, a tidal wave of urban migration on the order of 15 to 20 million long-term residents a year will continue to surge into Chinese cities as a result of increasing perceptions of urban opportunity, as well as the slow and steady move towards larger-scale, more capital-intensive farming. At this rate, China will continue to build out its cities over the next 20 years and the country as a whole will achieve a 70% urbanization rate by 2030. China could continue to add an annual 1,500-plus buildings that are more than 30 floors tall, equivalent to a new Chicago every year, resulting in more than 950 cities by 2030.1

The costs in the current dispersed growth model, however, are unacceptably high. Arable land resources will shrink rapidly. The finances of smaller cities will be stressed, potentially to the breaking point as land and labor costs rise and expectations of environmental performance and social benefits for residents—including migrants—increase. The model is also wasteful, as much of the new investment is of low quality. The average lifespan of a building in China is closer to 20 years than to the norm of 40 or more in OECD nations. Planning is done in a cookie-cutter approach with local authorities copying one another in a lemming-like fashion, reflecting the shortage of planning skills and the pressure on cities to cope with migration as well as the state’s easy access to capital. This results in overcapacity and, often, inappropriate design that is essentially wasted. Industrial capacity in particular is added stochastically, sometimes with little reference to actual demand. Socially, cities are becoming incubators of unrest as slowing urban job creation and dependence on heavy industry for economic growth threaten to create a two-tier society.

There is a spatial alternative, given China’s capital surplus and the government’s ability to implement policy. If China were to encourage the growth of hub-and-spoke clusters, or even megacities with denser populations and more concentrated urban footprints, the average height of buildings could double but the burden on China’s resources would diminish as cities built up, not out. Vertical development would take pressure off the land, ensure that investments were closer to the market, and be significantly more resource-efficient. In the megacity scenario, by 2025 40% of China’s urban population could live in megacities with over 20 million residents. Nationally, China would construct over 4000 high-rises a year, creating a unique and vertical society. And the concentration of resources around centers of excellence in urbanization would lead to a higher quality of investment. This, combined with policies aimed at moving resources away from heavy industry and towards the services sector, would drive a healthier, more consumption-oriented and employment-friendly economy and society.

Implementing such a policy could be easier than it might seem as the current model approaches its limits. In fact, the Chinese national leadership recognizes and implicitly supports a sharp and significant course change to a new urban model; it calls for an industrial and economic rebalancing to achieve a more harmonious society in the 12th Five Year Plan.

Postcards from the vertical city

Here’s how it would look. Each of these megacity clusters would have an economic scale equivalent to a moderately sized European country. Greater Shanghai could be as big as Germany today, while the central Yangzi cluster around Wuhan might be France. Mayors of hub cities in this context would be closer to presidents in a European model of continental development, with all the authority and ambition that implies. They would be fully capable of developing their own policies, from industry priorities to health and education reform to governance, within the context of a national political framework.

While dense, these cities would not be crowded since they could each span upwards of 800 square kilometers of territory. Park environments would predominate outside dense and highly livable urban cores. Technology would enable a sustainable lifestyle for megacity residents. As the cost of delivering goods and services to a dense urban core continued to decline, vertical development would enhance the livability of the city, with residents eating, working, playing, and sleeping all in the same community. Neighborhoods of a million residents would be standard and enabled by public transit with large high-rise housing estates as core residential complexes, with 50,000 residents per estate. Passive design, sustainable building materials and renewable and smart energy management systems would revolutionize buildings. Even agriculture would be part of the megacity as urban farming takes off on the roofs and sides of buildings.

Outside the urban core of the megacity, satellite “villages” linked by mass transit would house up to another 25 percent of the population, forming clusters, each with more than 40 million people, and, in total, accounting for more than 70 percent of the economic activity of the country. Satellite towns may struggle to define their own economic proposition; the most successful ones having made investments in productive infrastructure, universities, and marketing to the urban core—their largest likely market. Meanwhile, industrial complexes would move outside both the urban core and the satellites, the land they previously occupied repurposed for commercial and social uses

Megacities and their surrounding clusters will not depend on China’s traditional investment-driven growth model. Rather, they will be driven by and dependent upon the growth and consumption of services. Just as New York, with its scale and talent, made Wall Street possible, China’s megacities will create unprecedented opportunities to develop service industries by enhancing the scale and frequency of interactions. Cities in China will become models for the rest of the world, achieving a large scale of industry and financial-market depth. Spending on culture, recreation, health care, and education will grow by orders of magnitude from their current languishing state.

As it builds these cities, China’s quest for resources will have global implications. While mechanization of farming done on the shrinking amounts of arable land may be sufficient to provide food for the cities, China’s demand for energy will double over the next two decades even as energy efficiency also doubles. The sheer amount of incremental activity that urbanization creates makes it impossible to envision a scenario in which energy demand declines in China. Rather, both existing and new sources of energy will be required. China will become a major coal importer even as it turns away from fossil fuels to become the world’s largest nuclear and renewable energy producer. This demand in turn will transform global communities as resource basins are pushed to double in size, whole new terrains are dug up, and massive investments in rail and ports are made. Africa will see the development of its resources as a way to feed China’s demand. Agricultural equipment manufacturers in Peoria will see a boom in sales to Brazil as China’s soybean imports take off.

Reinventing City Systems

China’s cities will encourage a high level of environmental investment, with waste and water recycling becoming a way of life for both industry and consumers. Water will become a more valuable commodity and encourage investment in water efficiency as well as the world’s largest water treatment projects. Large, integrated recycling projects will minimize the impact of industrial and energy production.

Transport will be another key area for redesign. Electric vehicles will dominate the fleet in the megacities, reflecting government’s will to support the technology by building charging infrastructure. But mass transit and transit-oriented development will be even more powerful levers to minimize the requirements for long distance commuting. China will build over 170 mass transit systems in the next 20 years, compared to 50 in all of Europe. Across cities, the advent of national high-speed rail will link together the megacities even more, resulting in the development of a uniquely Chinese megacity culture and the rapid dissemination of best practices in urban development and management.

These innovations will also have global implications. The solutions that China develops in its megacities will have scale, and ultimately, global rollouts. Chinese solar water heaters already dot the rooftops of Johannesburg townships. Chinese high-voltage grid technology could transmit electricity across the Midwestern plains in the United States. In China and abroad, global corporations, some of them Chinese, will partner with local governments to develop and deploy the new urban solutions of tomorrow.

Urbanization will also drive a massive investment in and renaissance of Chinese education and health care. Almost 40 percent of China’s urban populations will be migrants by 2030, as people from rural areas pour in looking for greater opportunity. School and hospital systems set up to meet the needs of local residents will have to cope with a bigger population demanding higher-quality services. Investment in teachers, community clinics, and hospitals will require new ways of doing things. More practical and innovative approaches will, in turn, challenge today’s educational and health care bureaucracies to be more responsive and to invest more in the quality and capability of teachers and medical staff.

Megacities will require alternative governance given their greater complexity and heterogeneity of demand. Robust debate will continue, especially over quality-of-life-issues, as urban governance grows more complex and multi-faceted. And while it is unlikely that a country with regions that are over a hundred years apart in their level of economic development could have a uniform system of local governance, the advent of megacities will make questions of transparency and accountability much more immediate and relevant. The good news is that China’s political system devolves accountability to localities, making it more likely that, over time, locally appropriate solutions will be found.

China now has a historic chance to reinvent not only its cities but the very idea of a city. The choices that its city leaders make will shape not only its buildings but also its society, and indeed the world.

1Preparing for China’s Urban Billion,” McKinsey Global Institute, Februrary 2009.

  • http://detallesdebuenosaires.blogspot.com/ Andres Paolantonio

    Great article. Nowadays development takes place so rapidly that people can almost see it from day to day. Highways get more crowded, open space fills up, and sleepy towns around the urban fringes quickly become urban centers as new homes, offices, and shopping malls sprawl across the countryside.

    I invite you to my blog with photos of buildings and monuments in Buenos Aires.

    http://detallesdebuenosaires.blogspot.com

    Saludos, Andrés

  • Dilip Wate

    I am not at all in agreement to the entire article. This is self defeating and would like to propose different model, be it China or India. Vertical growth of cities will make residents unaware of environment; take them away from natural recuperating resources,make their behavior almost mechanical. The reason why European creativity is still live and kicking is their exposure to nature. Let us not suggest some thing which takes man away from NATURE. You need other model which ensure growth but still is lively, I can suggest.

  • Sarah Hayward

    It’s an interesting concept though not particularly novel as this approach is being taken in other cities, though more in the Central Business District than in the urban suburbs where citizens live, support the centre and are educated and cared for…so how do you solve the movement of these highly dense populations between work place, school, hospital and home? If it is all done a ground level then this will be a recipe for disaster as they will be unable to move if they are too densely packed. In addition this approach is highly resource intensive in an age of increasing awareness of potentially finite resources: high rise requires much energy to raise individuals and goods into the air, and down again…you would certainly need to ensure the design was not motor-car wedded – which is something the west is struggling to wean itself from, and sadly it seems the addiction to personal motor transport is spreading…on the other hand a densely packed population will need less transportation of goods as a whole…high rise living, however, has not worked well in many western cities in terms of individual human mental well-being. As ever there is no simple solution.

  • Raghav Wate

    This is an unavoidable growth model. Access to employment and better standard of living due to higher resource availabilty has always eventually led to concentrations. Far higher rate of depleting resources over the previous centuries makes the vertical growth scenario all the more plausible. Efficient water and energy management are the key not only to developement but to sustenance. SOlar and Wind energy harnessing are the only viable non-oil solutions. Urban transportation needs to heavily develop as well with far higher utilization rates than now. Personal transport should be limited to highly fuel efficient vehicles and bicyles.

  • Jack Haynes

    Your assumption, possibly valid, is urbanization or flight from farm to city is the norm.
    With advances in telecommuncations, especially 4g wireless, why can’t people stay where they are at, become educated virtually and participate in what are typically urban jobs without ever leaving their current home?
    I work for a major bank where almost 15% of the work force work from home and can work anywhere they want when they want; which we love.
    Cities have appeal but give me the countryside any day.

  • http://www.urbancincy.com/ Randy A. Simes

    I am no fortune teller, but I do not see these tremendous growth in China as being sustainable long-term. Not in terms of the environment or economics, but in terms of how people operate as human beings. At some point I believe people in these Chinese mega-cities will feel too crowded, and feel the need to go somewhere else.

    For those moving in from the rural reaches of China, they will probably seek other places to live globally that are more affordable. For those who desire the mega-city feel, they may stay or go somewhere with greater social capital.

    At some point, something will change. Our history tells us this. Surging populations in Europe made way for those in the Americas. The Americas have made way for China and Asia as a whole. In the end it will level out and I believe that people will increasingly become global citizens looking for the best quality of life as they define it. While many of these people living in China will stay there, a percentage will not, and given the scale we are discussing that is no insignificant number.

  • zhanwei

    China’s city and communities will follow shenzhen’s development model;and that derives from the guidance of the leading enterprise e.g. Wanke headquaters in shenzhen; while where did wanke learn from? answer is Newyork or Chicago in USA;So your title “China’s cities in the sky” equals USA Big cityes in the sky” decades before!
    the uniqueness of China’s city is the wide intellectual stratification of its components and citizens…

  • Giovanni Zangrande

    The vertical model was born in Hong Kong due to restrictions in land sales (land is owned by the Government). It has some advantages: – mass transit requires fewer lines/stations to serve the same number of residents

    – digital technology (cable / fiber to the home)is easier to deploy – HK is possibly a leader in interenet bandwidth, internet TV etc.

    – large parklands can be embedded in the city itself.

    This model was copied in Shenzhen mostly because the key develelopers were from Hong Kong and most of the customers for new buildings were from Hong Kong.
    Soomething similar has been done in high-value areas of Shanghai and Beijing bust most second-tier cities like Dongguang, Canton and (ouside the Pearl River Delta) Chongqin atre “horizontal” – which by Chinese standards means that the new buildings average only 10-15 floors.

    German and European cities have been developed over centuries and present all the benefits and defects deriving from older development. Most of China countryside does not have proper drinkable water or electricity supply, so the idea of a distributed population would require infrastructure investments that in Europe have been effected (and amortized) over centuries.
    Further distribution (the German or English “countryside” or “middle America”) depends heavily on distributed transporttion systems – railroads or highways. Again the infrastructure cost – not to mention the environmental cost – is too high and too fast.

    Quickly put, the luxury of living in the “green” while commuting in a comfortsable Suburban or Mercedes to the city can not be afforded in developing countries and increasingly in “developed” economies as well – in terms of either infrastructure cost, family budget or carbon footprint.
    Telecommuting might ease the carbon footprint, but still is not as efficient as actual personal interaction. And telecommuters still need to physically access the city for shopping, entertainment, higher education etc. etc.

    I would like to refer to an old (maybe 20 years old) special issue of Scientific American on urbanization. Cities create opportunitis for social, business and personal interactions, and an exposure to “stimuli” (from culture to restaurants to job fairs) that is simply not available to distributed communities.
    While modern communication methods appear to “connect” the countryside better, economic logic dictats that bandwidth and service will start in larger concentrations, guaranteeing to cities a permanent “bandwdth advantage”. How many American rural households can TODAY claim access to 3G/4G services or fiber optics data connections?
    And people in larger communities still will have a larger opportunity of mixing off and on-line social and business interactions when compared to dispersed population.

  • Dinesh Gopalan

    The City

    The city is crushing, crowded.
    There is no place even to walk.
    Of all but people denuded,
    It is bare. But I can’t walk out.

    The city is too suffocating.
    I don’t have enough air to breathe.
    The mix on which I’m existing
    Every day eats up my insides.

    The city is too shorn of space.
    Every inch of ground and air is gone.
    Somewhere, suspended, is my cage;
    The small room that I call my home.

    The city is just too noisy.
    It assaults all my senses.
    I have trained myself to block it,
    Shut off to city’s influences.

    The city is too demanding.
    It’s taken away all I own;
    No dignity left, to call my own.
    Though free, I can’t even cry out.

    I have the choice to leave and go,
    But stuck in the web I struggle.
    Each strand pulls me, it won’t let go.
    This prison exerts a strange hold.

    Those who bought into the illusion
    And think this is life; they are lucky.
    At least happy in their prisons,
    They don’t struggle daily, like me.

  • http://www.sungura.co.uk/ Simon Jennings

    Why will arable land resources shrink if everyone is leaving the sticks to live in the city?

    Elsewhere you say that “fifty-five times more rainforest is growing back as second growth in the newly empty rural areas than is being cut down from primary forest”, implying that a huge amount of formerly cultivated land is being left fallow…..

    So it seems that absolute area of arable land will be stable or increase; and per capita arable land will rise after population peaks at 9billion.

    Moreover I think China, with something in the order of 21% of world population and 9% of world arable land, is now producing a food surplus for export despite recent flooding and drought events.

    So it would appear there is really nothing to worry about!

  • Anton Espira

    China is a great model for future urban development, as accelerated growth and overcrowding, coupled to its large capital base, make vertical development a possibility.

    In Africa, we face a different problem. Cities continue to grow, but there simply aren’t the resources available – in terms of public and private investment – to build vertical futuristic urban agglomerations. The result is a rapid expansion of slums and shanty town and a greater gap between the ideal and the existing (in ideal I do not necessarily mean vertical buildings – I have more infrastructure like water, sanitation, transport, etc, in mind). The eventual investment necessary to bring the quality of life of many African residents to 21st century standards may become so large as to make it attainable in the visible future.

    What we may require is an altogether different model for urban growth. The idea of decentralised, small scale (and hence small investment) and fairly independent zones within mega-cities may be the way to go. Energy, sanitation, other infrastructure and general government functions (like law-enforcement) can be developed on a micro-grid platform with a strong reliance on natural, renewable and sustainable but enhanced ecosystem functions, and reachable and manageable targets that will not necessitate large inflows of aid and expertise to develop and maintain.

  • Guest

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