The Economist
April 19, 2014
For the world’s sake, and its own, China needs to change the way it builds and runs its cities.
“A great city”, said Benjamin Disraeli, “…is the type of some great idea. Rome represents conquest; faith hovers over the towers of Jerusalem; and Athens embodies the pre-eminent quality of the antique world, art.” In building its cities, China’s officials have had only one great idea in mind: growth. That has brought huge benefits, and problems too.
In the three decades since economic liberalisation began, China’s urban population has risen by more than 500m, the equivalent of America plus three Britains. China’s cities, already home to more than half the country’s people, are growing by roughly the population of Pennsylvania every year. By 2030 they will contain around a billion people—about 70% of China’s population, and perhaps an eighth of humanity. China’s fate, and that of the Communist Party, will be determined by the stability of its cities.
Much of what has happened is breathtakingly exciting. Shanghai, a drab communist-era sprawl with a few 19th-century relics until the 1990s, has been used as the cosmopolitan backdrop for a James Bond film. Chengdu, whose population has grown by 50% since 2000, boasts the world’s largest building: the New Century Global Centre, which includes a shopping mall and a 300-metre-long indoor artificial beach. Zhengzhou now claims the largest bullet-train station in the world: the $2.4 billion edifice and surrounding area covers the equivalent of 340 football pitches. China’s urbanites whizz from city to city at 300kph (186mph) on a bullet-train network that did not exist six years ago yet now is longer than all of Europe’s. By 2020 it will expand by another two-thirds, or 7,000km (4,300 miles), and every city with a population of 500,000 or more will be connected to it.
Cracks in the façade
Yet the model of pell-mell urbanisation is breaking down. Even the government recognises this. In March the prime minister, Li Keqiang, described the noxious smog that shrouds China’s cities as a “red-light warning against the model of inefficient and blind development”. The World Bank and a Chinese government think-tank have just produced a 544-page report on urban China. It praises China for avoiding ills common in the developing world such as urban poverty, squalor and unemployment. But it says that “strains are starting to show” and that the model is “running out of steam”.
Two flaws in the Chinese model of urbanisation are causing these strains. The first is economic. Farmers in China have no property rights, so officials are able to grab agricultural land on the peripheries of urban areas and make money for themselves and their cities by selling it to developers. This is not only unjust; it has also led to a relentless pouring of concrete that has given rise to “ghost cities”—half-empty forests of high-rise office and residential buildings that have sprung up around many cities. The vast debts local governments have incurred as a result of this over-hasty development are the focus of foreign worries about the country’s economic stability.
This urban sprawl is also exacerbating China’s environmental problems. People need cars to get around the country’s American-style cities. Beijing now has more cars than Houston, as well as some of the dirtiest air on the planet. And it is not just affecting the Chinese. The nation passed America in 2006 as the biggest emitter of carbon dioxide from energy, and is now pumping out nearly twice America’s level.
The second flaw in the urbanisation model is a social one. China’s cities are now largely made up of two classes, each with a population roughly the size of America’s: a property-owning middle class which enjoys new social freedoms, takes holidays in Europe and spends like its Western counterparts; and a migrant underclass which toils in factories and menial jobs but is denied public services because its hukou (household registration) is still in the countryside. Both groups have fared well in the boom years; but discontent is growing, and they distrust each other, as well as the party.
On March 16th the government unveiled a long-awaited plan for managing urbanisation. Under the new approach, some 100m migrants will be given urban hukou, and thus full access to urban services by the end of the decade. But that will still leave 200m unregistered, and the issue of who should pay the bill unresolved. Reformers want a new tax on property—the soaring value of which is enriching the middle classes—to provide local governments with a steady revenue stream. The central government fears that this could spur demands by homeowners for more say in how cities are run.
House of cards
The challenge for Xi Jinping, China’s president, and his team is as immense as the cities themselves. But there are two obvious steps for them to take. The first is to give farmers property rights and thus the ability to sell their land. If the market were allowed to operate, prices would be high. Overall, China has less habitable space than America but four times as many people. Much of the country is mountain or desert, unusable for development. High prices, reflecting this shortage, would force urban planners to regard land as a scarce resource and to use it efficiently. That would discourage them from allowing American-style sprawl and encourage them to build dense, energy-efficient European-style cities in which people walk, cycle or take public transport to work.
The second necessary step is to open up decision-making. One reason why so many Chinese cities are grim is that residents have so little say in how they are planned, built and run. If people had the right to elect their mayors and legislators, they would—assuming they behaved like city-dwellers elsewhere in the world—insist on planning controls to constrain development and improve the environment.
The document unveiled in March called the government’s urbanisation plan “people-centred”. If the next stage of China’s phenomenal urban transformation is to bring prosperity and stability rather than conflict and chaos, the party needs to live up to the phrase.
