SPECIAL REPORT CHINA April 19th 2014 Building the dream 20140419_SRChina.indd 1 08/04/2014 13:56 SPECIAL REPORT CHINA Building the dream By 2030 Chinese cities will be home to about 1billion people. Getting urban China to work properly is vital to the country’s economic and political future, says James Miles SOME HISTORIANS BELIEVE that Marco Polo never went to China. But even ifthe 13th-century Venetian merchant did not lay eyes on the coastal city ofHangzhou himself, he certainly reflected the awe it inspired in oth- er foreign traders when he described it as “beyond dispute the finest and the noblest in the world”. And, “incredible as it may seem”, he wrote, Hangzhou (which he called Kinsay) was but one of more than 1,200 “great and wealthy cities” in southern China. “Everything appertaining to this city is on so vast a scale…that it is not easy even to put it in writing.” In Marco Polo’s day it was the or- nate palaces, paved roads and meticu- lously planned layouts of Chinese cit- ies that impressed visitors; in today’s megacities it is some ofthe world’s tal- lest skyscrapers and largest shopping malls, interlinked by the world’s lon- gest bullet-train network. And if all CONTENTS goes according to the Communist Party’s plan, the coming two decades 3 Spreading the wealth will evoke a few more gasps. A billion shoppers By 2020 the high-speed rail net- 5 The rural-urban divide work will expand by nearly two- Ending apartheid thirds, with the addition of another 7,000km (4,300 miles). By then almost 6 Local government every city with a population of half a Emerging from the shadows million ormore will be connected to it. 8 Urban sprawl Tens of millions more migrants will People, not paving have poured in from the countryside. Between now and 2030, says the 9 The city as pastiche World Bank, the average rise in the Dreaming spire number of city-dwellers each year is 10 Greenery likely to be around 13m, roughly the Let us breathe population of Tokyo. In 2030 China’s cities will be home to close to 1 billion 11 Politics people, or about 70% of the popula- The urban voice tion, compared with 54% today. By 13 A new society some estimates the urban population Pushing the boundaries will peak around 2040, still just shy of ACKNOWLEDGMENTS the 1 billion mark but close enough. As James McGregor, an American Apart from those individuals named businessman, put it in his book, “One Billion Customers”, published in in the report, the author would like 2005, the notion of a billion Chinese spenders has come to symbolise to thank the following who also “the dream ofstaggering profits forthose who get here first, the hype and provided generous help and shared valuable insights: Cai Fang, Greg hope that has mesmerised foreign merchants and traders forcenturies”. Clark, Dai Bin, Du Yang, Feng Jin, After taking over as party chief in 2012, Xi Jinping (now also presi- Feng Yongfeng, Anna Greenspan, dent) launched his expected decade in power with a catchphrase: “The Guo Xiaoming, Guo Zhengmo, J. Chinese dream”. Itwasa strikingbreakfrom the party’stradition ofideol- Vernon Henderson, Huang Rui, Lian Si, Liu Li, Liu Zhi, Lu Ming, Xin ogy-laden slogans. Now endlessly invoked in official speeches and the Meng, Gordon Orr, Paul Procee, Klaus subject of numerous books and songs, the phrase is clearly intended to A list of sources is at Rohland, Victor Shih, Song Shinan, appeal to upwardly mobile urban residents striving for the comforts of Economist.com/specialreports Tang Jun, Jeff Wasserstrom, Yao their rich-world counterparts. Yang, Ye Xiaoyu, Yu Xiaogang, Zhao An audio interview with Jian, Zhu Liangmin and Zhu Ning. Only 15 years ago such a middle class barely existed in China. In the author is at The views expressed in this report do 2011, when the country reached 50% urbanisation, it had become obvi- Economist.com/audiovideo/ not necessarily reflect theirs. ous that the party’s fate rested with the stability ofcities and the content- 1 specialreports The Economist April 19th 2014 1 SPECIAL REPORT CHINA Number of skyscapers* NATIONAL AVERAGE HEIHEILONGJIANGLON GJIANG 72 Total, 2014 Pre-2000 Completed 35.6 2000-14 46.46.99 HEBEIHEB EI 17.517. 5 J I L I N 43 XINJIANGX I N J I A N G I N N E R LIAONINGLIAONILIA ONING GANSUGAN SU BeijingBeijinBei g BEIBEIJINGJIN G MONGOLIAMONGOL I A DalDalianian SHANXISHA TiaTianjinTianjin TIANJINTIA NJI N QINGHAI NINGXIAGXIA SHANDONGNG T I B E T ZhengzhouZhengzngzhoungz hou China United States HENANHEN AN JIANGSJIANGSUNGSUNGS SHAANXISHA ANX I ANHUIANH ShanghaiShanghShanghaiai Nominal GDP at current exchange rates, $trn SICHUAN SHANGHAI 50 CheChengdungd u HUBEI NinNingbogbo FORECAST ZHEJIANGZHE JIAJIANGNG CHONGQINGCHONGQCHO ING JIANGXI 40 China GDP per person, 2012, $’000$’ 000 HUNAN FUJIANFUJ IAN 30 1-4 4-7 7-10 YUNNAN GUIZHOUGUI ZHO U 10-1310-1 3 13-1613-1 6 GUAGUANGXINGX I Xiamen 20 NATIONAL AVERAGEAVERAG E = 6.1 KunmingKunminminmingg GUANGDONGGUA NGD ONG † ZhongsZhoZhongshanhan United States India Population, 2012, % Macau HongHon g 10 Rural,Rura l, Registered MaominMaoMaomingmingmin g KongKon g living where urban Japan registered *250+*250 + metresme tres talltal l 0 † Urban, with rural status ‡ HAINANHAI NAN Guangdong data exclude 199095 2000 05 10 15 20 25 30 Hong Kong and Macau Sources: Council on Tall Buildings and Urban Habitat; Economist Intelligence Unit; Haver Analytics; The Economist estimates ‡RegisteredRegi stered as rural, livingliv ing elsewhere 2 edness of their middle-class residents. The largely rural country nese are looking for boltholes abroad for themselves, their fam- that Deng Xiaoping (himself of peasant stock) set out to “reform ilies and their assets. Scandals involving senior officials have re- and open up” in the late 1970s had become overwhelmingly ur- vealed corruption on a gargantuan scale. Censors generally ban in its economic and political focus. Thanks mainly to a tide succeed in preventing anti-party messages from spreading wide- ofmigration, China’surban population had grown bymore than ly, but microbloggers with thousands of followers still boldly re- 500m since Deng launched his reforms: the equivalent of all the lay damning critiques. people in the United States plus three Britains. MrXi describesthe country’sproblemsand hisapproach to Li Keqiang, who took over as prime minister in 2013, sees solvingthem in colourful terms. Reforms, he says, have entered a further urbanisation as critical to China’s economic success. He “deep-water area”. China must “venture along dangerous paths has called it a “gigantic engine” for growth. Mr Li and other offi- to breakthrough barriers to reform”. In tacklingcorruption it will cials are fond of quoting Joseph Stiglitz, a Nobel prize-winning need the resolve of a man who must “cut off his own snake-bit- American economist, who said that technological innovation in ten hand to save his life”. At a plenum of the Central Committee America and urbanisation in China would be “two keys” to in November the party declared that market forces must play a mankind’s development in the 21st century. “decisive role”, the strongest support it has ever expressed for the A new grand plan for China’s cities, overseen by the prime market. This seems all the more stirring after years of vacillation minister and published last month, admits to a number of pro- under Mr Xi’s predecessor, Hu Jintao, who retreated from reform blems, such as worsening pollution, urban sprawl and conges- in the face ofpowerful resistance byvested interests, above all lo- tion as well as growingsocial tensions. It also points out that Chi- cal governments, huge state-owned enterprises and, ironically, na’s urbanisation lags behind that of other countries at similar the new middle class, which would rather not share the fruits of levels of development (typically around 60%), and that there re- growth with rural migrants. mains “quite a lot ofroom” for furtherurban growth. Getting cities right will help China to keep growing fast for Why cities matter years to come. Getting them wrong would be disastrous, bring- All the most important reforms that Mr Xi needs to tackle ing worsening inequality (which the World Bank says has ap- involve the movementto China’scities. He mustgive farmers the proached “Latin American levels”, although Chinese officials in- same property rights as urban residents so they can sell their sist it has recently been improving), the spread of slums, the homes (which is currently all but impossible) and leave the land acceleration ofglobal climate change (citiesconsume three-quar- with cash in hand. He must sort out the mess of local-govern- ters of China’s energy, which comes mainly from coal) and in- ment finances, which depend heavily on grabbing land from creasing social unrest. farmers and selling it to developers. He must loosen the grip of After more than a decade of spectacular growth in China, state-owned enterprises on the commanding heights of the much of it in double digits, doubts are setting in both at home economy and make them hand over more of their profits to the and abroad about the sustainability of the “Chinese model”. government. He must move fasterto clean up the urban environ- Growth is slowing. Lavish spending by local governments has ment, especially its noxious air, and prevent the growth of Chi- piled up huge debts. Increasing numbers of middle-class Chi- na’s cities from exacerbating climate change. And he must start 1 2 The Economist April 19th 2014 SPECIAL REPORT CHINA 2 giving urban residents a say in how their cities are run. Spreading the wealth This list is both daunting and urgent.