Economic Development

What China's Unique Urbanization Can Teach America

Nineteen of the 20 fastest-growing cities in the world last year were in China. For more from Governing's first-ever International Issue, click here.
by | February 2013
As cities overtake farmland in China, arable land has become more scarce. In some places, rooftop farming provides a solution. (Photo: AP)

The three- and four-bedroom homes in Orange County were built with big open kitchens inside and feature yards and driveways with SUVs parked out front. It’s a typical sort of American suburban development, only this Orange County isn’t the one in California or the one in Florida. It’s part of Beijing, one of many subdivisions built on American models and given a name -- Park Avenue, Soho, Palm Springs -- meant to evoke the affluence of the United States. “The developer of Orange County basically toured the U.S., looking for models for upscale single family McMansions, and fell in love with residential architecture in Southern California,” says Thomas Campanella, a professor of urban planning and design at the University of North Carolina (UNC).

Chinese architects often study in the U.S., and China’s urban planners for decades now have read American textbooks and used U.S. and European cities as models. Chinese cities that sought to reduce carbon footprints have emulated the green roofs of Chicago, while those looking to burn LED lights for a distinctive identity have had Vegas visions dancing in their heads. “There was a local group that said, ‘You know Las Vegas?’” recalls Rich Kacenski, a landscape architect in St. Louis who has worked on numerous development projects in China.

But China’s cities don’t look like the U.S. However much China’s builders and planners have looked to the West for examples, it’s clear at this point they’re carving out their own path. It’s not just that more design work’s being done by Chinese firms. China’s cities are growing at a pace and scale that can make those in the West seem puny and outdated. Some are building transit systems at a rate that hasn’t been seen in the U.S. for decades, if ever. Others have gone far beyond the United States in incorporating technology and environmental planning into cityscapes and individual structures.

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What’s true in China is also true to a certain extent in other parts of Asia, Africa and Latin America, where new cities are being thrown up essentially from scratch and older ones are becoming megalopolises that dwarf nearly anything in North America or Europe. It’s a global shift, but China is definitely the epicenter right now. Last year, of the 20 fastest-growing cities in the world, 19 were in China.

If you want to see the future of urbanization, you have to look there, rather than Europe or the U.S. “It’s the greatest building boom in human history, by far,” Campanella says. “No society in human history has created more urban matter than China has in the last 25 or 30 years.”

The developing world is truly developing. The world’s population is fast becoming urban. Already, as of 2009, half the world’s population is living in urban areas -- an enormous change from, well, the whole of human history. The pace of urbanization is happening much more quickly than was true of the West during the Industrial Age. By 2030, two-thirds of the world’s population will be living in metropolitan areas; by century’s end, humans will be, journalist Doug Saunders writes in his book “Arrival City,” “a wholly urban species.”

This shift is going to have profound effects on the global economy and also on demographics, as urban families on the whole always end up being smaller than rural ones. Already, the 300 largest metro economies account for nearly half the global economy, according to the Brookings Institution, despite making up only 19 percent of the population. In today’s world, urbanization goes hand in hand with economic development.

Not all of this is to the good. Millions of recent migrants to cities live in squalor, with inadequate housing and often a lack of access to basic necessities such as clean water. What is called development is often really just chaos. Urbanization is happening fastest exactly in those places where regulation and planning tends to be weakest, says Shlomo “Solly” Angel, an urban planning professor at New York University (NYU). “The annual growth rate of the urban population is inversely related to the quality of governance,” he says.

In part, that’s what makes China so significant. It has things other fast-urbanizing societies do not. Its national and local governments, while imperfect, play outsized roles in planning and development. Its ability in recent years to make enormous investments in infrastructure is unparalleled. There’s plenty of slapdash construction happening in China, to be sure. But there are also gigantic housing projects and university clusters and airports being built -- just more spending on infrastructure on a per capita basis -- than other countries can match. At the very end of 2012, Beijing opened up 43.4 miles of new subway track, including a new line, making its system the longest in the world. By the end of this decade, it will stretch for more than 600 miles -- three times the length of the subway lines in New York. Intercity transit is also proceeding apace. The same week Beijing’s new subway line opened, high-speed rail service opened between the capital and the southern commercial hub of Guangzhou, 1,200 miles away. It’s the world’s longest high-speed rail route, and now makes up roughly one-fifth of the miles of high-speed rail track in the entire country.

Not everything is going right in China’s cities, by any means. There are enormous disparities of wealth within cities and between different metropolitan regions. Social services provided by the government are woefully inadequate for the challenges presented by such huge, rapid growth. There have been plenty of real-estate bubbles already during the country’s recent experimentation with capitalist-style land use, and the country may not be able to repeat its success in urbanizing its coastal East when it comes to developing the still much more rural inland West.

Still, there’s no question that the urbanization fervor in China is unrivaled anywhere else. “There’s no precedent for this kind of growth,” says Bruce Katz, who directs the Metropolitan Policy Program at Brookings. “The urbanization trends in the world are just at a pace and scale that boggles the mind.”

China’s urbanization has happened nearly overnight. The country’s population became half-urban just in 2011. It’s staggering to think how fast hundreds of millions of people have moved to the cities.

Some numbers: As recently as 1970, only 101 million Chinese lived in cities, representing 12 percent of the country’s population. By the end of 2011, 691 million lived in China’s cities -- not just half the country, but 10 percent of the population of the entire world.

This incredible pace will slow but by no means stop. An additional 350 million Chinese -- more people than the present population of the U.S. -- will be living in cities by 2025, according to the consulting firm McKinsey & Company. “There is little doubt that this is the largest tide of migration in human history,” Weiping Wu and Piper Gaubatz write in their new book, “The Chinese City.”

During the Maoist era in the mid-20th century, migration by peasants and farmers to the city was actively discouraged, the authors point out, through food rationing and a household registration system, known as hukou, which meant that only official urban residents could gain access to basics such as education for their children and health care. After Mao’s death in 1976, his successors, led by Deng Xiaoping, began experimenting with a more open economy and foreign trade. Shenzhen, which borders on Hong Kong, was designated as the country’s first “special economic zone” in 1979.

Proximity was Shenzhen’s virtue. Ideas and inspiration -- and investments -- came pouring across from Hong Kong, which then still belonged to Great Britain. The Chinese took things from there, creating an industrial powerhouse out of practically nothing. “It’s amazing,” says UNC's Campanella, author of “The Concrete Dragon: China’s Urban Revolution and What It Means for the World." “Shenzhen exploded from a fishing village of 68,000 or 70,000 people. Now, it’s 10 million people.”

Numerous other cities along China’s East Coast have played a big role in the nation’s transformation into the factory floor for the world. Some were traditional trading centers with the West, dating back to the “treaty ports” opened up as a result of the Opium Wars of the 19th century. Others were more like Shenzhen -- former villages that today are denser than Manhattan. There are all kinds of cities in China you’ve never heard of that are bigger than Chicago.

China has gone from seeing urbanization as a symptom of success to a driver of success. “Chairman Mao reviled cities as symbols of unbridled consumption,” Wu and Gaubatz write. “Today, cities are perceived as the primary mechanism for new economic growth.”

People are flocking to China’s cities for the same reasons urban populations are increasing all over the world. There’s just more money to be made in cities, even at the low end of the income scale. In China, post-Maoist agricultural reforms have meant fewer farm workers are needed, which is one of the reasons enormous numbers of rural migrants are flocking to the nation’s booming cities “like free-floating molecules,” as Campanella says.

But something else is happening in China. There, urban development is very much a product of local governments. The structure of sub-national governments in China doesn’t exactly align with the city-county-state hierarchy in the U.S., but it’s analogous in many respects. One of the things that looks entirely different there is the revenue structure. There is still technically no private ownership of property in much of China. Thus, no property taxes. China’s cities have other sources of revenue, but increasingly in recent years, they have relied directly on land deals. China changed its laws in 1988 to allow urban land rights to be leased at a profit for a fixed period of time, according to You-tien Hsing, author of “The Great Urban Transformation.” A decade later, the land management law was revised again so that only local governments can officially convert agricultural land for urban uses. That has naturally made real estate into big business for cities. “They auction the land to developers,” says Angel, the NYU professor. “That’s the way municipalities in China earn their income.”

It’s not just that municipalities make land deals as middlemen with developers. Local governments function both as planners and investors directly involved in projects. The line between government and private enterprise can be difficult for an outsider to discern, says Kacenski, the St. Louis architect. Often, a local government official will be the main impresario behind an enormous development, overseeing the construction of office towers, university campuses (control of many universities has shifted to local governments) and, say, 25,000 housing units.

There’s been a competitive edge to all this. Cities want either to outdo one another, or get in on the action. Many projects have a “Field of Dreams” quality: Construction happens in the belief that, if they build it, people will come. This has resulted in the appearance of “ghost cities,” enormous speculative projects standing mostly or entirely empty, despite the pressing demand for commercial real estate and housing elsewhere.

In dozens of cities, however, growth is feeding on itself. Today, many Chinese cities are being reshaped along lines familiar to Americans. The center city is made up less of factories and more of high-rent facilities such as top-end hotels, condos and banks. Not only is manufacturing shifting to the urban periphery, but so is housing. In what is known as a strategy of “demolition and relocation,” according to Hsing, older housing stock is bulldozed at the center, driving up demand at the outskirts. “Every square meter of housing that I demolish will create a demand of 2.5 to 3 square meters of new commodity housing,” Chengdu Mayor Sun Ping has said.

Land, of course, is cheaper on the outskirts of a city than at the center -- 10 times cheaper in Shenyang, for instance, according to one study. And despite the desire among the burgeoning upper middle class for Orange County-style tracts of single-family homes, Chinese suburbanization tends to be made up of dense pockets of high rises. Often, housing is unimaginably cramped by American standards. A couple may live in a two-by-three meter room with just a handful of possessions.

The hukou system and the resulting lack of provision of social services for the unofficial urban population has kept China’s labor costs at the low end of the global scale, but threatens to create a permanent underclass made up of the elderly poor and uneducated children of migrants. Unrest is real, with protests numbering in the tens of thousands triggered by the land-use decisions that have allowed and promoted development on the urban periphery. Changing hukou, though, has been slow. “Particularly for large cities, the concern about opening up the floodgates is very serious for local governments,” says Weiping Wu, the urban scholar. “With a third of the total population migrant, migration is a national issue, but the consequences for providing services are local.”

Aside from housing and human services -- and despite China’s enormous infrastructure investments -- other services are lacking. The Ministry of Environmental Protection’s own estimates are that 74 percent of urban well water isn’t fit for drinking. Even in Beijing, 24 percent of the water is considered unfit for human consumption. And urban air quality can be astoundingly bad. One Saturday last month, the Air Quality Index in Beijing spiked to a staggering level of 755; the index, created by the U.S. Environmental Protection Agency, is only designed to go up to 500. (On the same day in New York, the index reading was 19.)

China’s national leaders recognize the need for growth to become more sustainable and more green. Self-sufficient new “eco-cities” are being built with hopes of providing models for using more renewable energy and shifting more trips to transit and foot in a country that already has more than 170 million cars. “Eco-economic zones” have been established in Shandong, Jiangxi province and other regions, modeled on the hyper-successful special economic zones in Shenzhen and elsewhere that helped sparked China’s historic boom.

At this point, China’s experiments with smarter development offer more promise than success stories that can be imitated elsewhere. But they are a sign that cities being built today can and often must take a different approach than the urban areas built up by accretion over centuries. They also point to the ways in which China plans for development on a national scale that seems completely foreign for Americans -- but might be worth thinking about.

Growing so rapidly, China’s cities are still very much works in progress. Westerners still come home with stories about how they were struck by juxtapositions such as horse-drawn carts alongside new, eight-lane freeways. But cities there, as they have evolved thus far, hold lessons in development and economic planning for officials in the U.S., or at least food for thought.

Certain things are obvious. China’s booming economy -- and the paucity of funds it devotes to social services, as compared to the U.S. -- allows it to devote enormous sums to infrastructure. It’s not just transit, but that has been a key focus in places like Shanghai. Both the public and private sectors are engaged in trying to counter the tendency toward sprawl by investing heavily in central business districts to keep them attractive and productive.

In order to relieve the pressure on housing, China devoted $152 billion, through its local governments, to construction of affordable housing units. Nationwide, nearly 5 million units were completed by the end of September, toward the annual goal of 7 million. It’s almost inconceivable that, say, the Obama administration could lead a nationwide push toward housing construction on that scale. But the federal government could encourage metropolitan areas to focus more on increasing housing stock in growth areas or using rental assistance to help families afford units that are lying vacant.

Perhaps the most transferable lesson -- even if it’s one that may not take root anytime soon -- is China’s devotion to long-range planning. Clearly, the U.S. will never have “five-year plans” on the old Maoist model. But China today thinks in terms of not just five- but 10- and 20-year time horizons, compared to the American way of quarterly reports, two-year election cycles and short-term economic gains. You can’t plan for everything, but China’s growth has shown that the future does arrive and it’s worth trying to equip yourself for it.

In general, although China’s cities definitely compete among themselves, there’s a greater emphasis there than here on pushing different areas to specialize in certain industries, so that not everyone is trying to build the same malls or become the next Silicon Valley. Top-down planning, of course, doesn’t always work. And much of China’s development has proceeded along the lines U.S. cities have long since rejected. China is doing “good and bad in equal measure,” says UNC's Campanella. They’ve cracked the infrastructure nut beautifully and are able to complete in a year or two projects that in the U.S. might take a generation or two. But that comes at a cost, both in terms of environmental impact and the huge numbers of people who have been displaced by highway projects and other construction. “We went from Robert Moses and slum clearance,” Campanella says, “from the top-down authoritarian model of urban planning, and swung all the way to the other side.”

In finding the right balance between tough controls that make building difficult versus the Chinese model of doing whatever it takes, there’s some kind of happy medium. And that creates an opportunity for U.S. firms. With urban growth exploding around the globe, conferences about international cities are plentiful and constant. Many consultants and companies involved in development and spreading ideas between cities are American, or have American ties. This has the potential to create a whole new export market for the U.S., says Katz of Brookings. “American companies, small, medium or large, can play in these areas, particularly in sustainable development,” he says. “Urbanization is creating large markets for new kinds of goods and services.”

But many of the most influential ideas are not coming from the U.S. Bus rapid transit, for instance, was a hit in Latin America before being tried out in Boston and Seattle. As the human race becomes wholly urban, it may be that innovation will grow less out of the United States and more from places like China. “What you’re seeing in Asia, in particular, may have huge lessons for the U.S.,” Katz says.

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