Potential exemplars
In our April issue, China Economic Review argued that if Shanghai ever wants to get rid of its pollution problem and enjoy healthier growth, it cannot hope to be both a service center rooted in finance while at the same time maintaining its industrial base.
Suzhou, a major city to the west of Shanghai that has for all intents and purposes become a distant suburb of the latter, is attempting to create its own niche while also drawing on its proximity to China’s economic hub.“You have to leverage the resources in this region. I wouldn’t say [Suzhou is] trying to be different, but trying to be different in very specific segments,” said Joe Zhou, head of research for East China at real estate services firm JLL. While the city is still carving out its economic identity, Zhou says it’s already good at semiconductors and pharmaceuticals. The aim is to keep on attracting high-tech industry as low value-added industries such as textiles move away.
The planned direct linkage of Shanghai and Suzhou’s municipal subway systems will help to do the actual leveraging by making travel between the two even more convenient. The goal, Zhou says, is to use Suzhou’s cheaper land and rent prices along with its more livable environment to lure businesses and residents away from Shanghai. As part of a bid to create that more livable environment, Suzhou created the Suzhou Industrial Park, which helped it claim the Lee Kuan Yew World City Prize, an award that recognizes leadership in sustainable development. Because of the pending connection, the move is all that more attractive for people and businesses. Zhou notes that several financial services firms have opened offices in the SIP in the past year.
“We use the words ‘Greater Shanghai’ like ‘Greater London’ to describe this coming together of the two cities, said Zhou.
Further south, the “Turn the Pearl River Delta Into One” project, which is integrating Guangzhou, Shenzhen, Dongguan and six other satellite cities, has essentially the same aim. As Ma explained, a family could live in one of smaller cities and work where they can find the best jobs. Hypothetically, a husband could commute to Dongguan, the wife to Guangzhou, and both return at night to their home satellite in-between the two. They would also be shopping mostly where they live, and consuming social services there as well – meaning the burden on public services like medical care and education will be more evenly spread throughout the region. This addresses a key challenge of the “turning point” problem faced by megacities: They’ve been overwhelmed with populations growing faster than hospitals and schools can keep up with.
In the north of China, meanwhile, the Bohai Economic Rim Project is integrating Beijing, Tianjin, several surrounding cities and Hebei province – well over 100 million people. Beijing is taking an aggressive stance when comes to tackling the “turning points” and the region’s now infamous endemic pollution, and of late headlines in local newspapers can hardly go a day without yet another article on the integration of the three administrative regions popping up. Not only are the authorities looking to push industrial production out from the nation’s capital, they also want to as many as five million residents into neighboring areas to de-clutter the chronically congested metropolis. For a city that’s seen its population grow by two-thirds since the turn of the millennium, that would be a huge trend reversal.
Clusters drive innovation
Bringing lower-tier cities into the game has some unique advantages. Not least among them is having the time and space for more sensible urban planning, and even a little experimentation –often areas where the biggest improvements can be made.
One such example is Urumqi, the capital of Xinjiang and the largest city in western China. The region has been earmarked for major investment by Beijing to exploit its abundant natural resources and strategic location on the old Silk Road. Authorities in the region have been working with the “Future Megacities” scheme established by the German government in 2004 to fund research in emerging giant cities around the globe in hopes of promoting sustainable urban design.
Urumqi has a population of around 3.2 million, and 10 million square meters of construction is currently taking place, equal to half of the new construction in Germany according to Bernd Franke, an environmental planning and assessment expert who worked on the Urumqi project for the German government. Franke says the project had several successes.His team found a willing ear and collaborator in the local government, and a city of the right size to affect change. They contributed to the local government’s recent decision convert the entire city’s heating system from coal to natural gas – a feat then accomplished in just nine months – as well as the decision earlier this year to raise new housing efficiency standards by 25%.
In terms of new ideas, Franke says that sustainable housing has been the most promising in Urumqi. With extreme winters as cold as minus 30 degrees centigrade, a huge amount of energy is required for heating. The construction boom created the opportunity for the popularization of the “passive house” concept, which Franke says utilizes modern design and materials to achieve better insulation. “Passive housing can be done in a very demanding climate, in a very poor area and be done quickly,” Franke said, crediting the Urumqi proof-of-concept success story with the landing of the scheme’s next passive housing project in Tianjin. That spreading of innovation to cities across the country is crucial.
Urumqi is on track to become a major city in China, and the fact that it is implementing policies focused on sustainability early on in its development could set it on a good path for future development. Nevertheless, the issues accompanying its rise also point to the problems other emerging centers will face.
Competing ambitions
Planning and building China’s future urban environment is no easy task. Regardless of the research into and awareness of urbanization, sustainability and other related issues, there is a lack of a unified national vision for how to move forward, and many competing priorities.
Back in Xinjiang, Franke and his team came across a PVC plant that used coal as feedstock. Franke says that switching to petroleum-based fuels would cost a bit more but curb carbon emissions significantly. “I said [to the CEO], what if the government banned PVC production from c
oal?” recalls Franke. “He said, ‘Then I would have to find something else to do with my coal.’” Many industries are vertically integrated in this way and not easily changed.
Perhaps more important is the issue of communication and coordinated planning between the central government and the many local governments. Right now, Urumqi is the proposed location of a new coal gasification plant that will generate cleaner-burning natural gas to be piped to Beijing. But coal gasification itself is enormously dirty, so much so that its central location in Urumqi would effectively cancel out the gains brought by more efficient housing standards and the conversion of city heating to natural gas. From a sustainability and environmental standpoint the project thus seems to make little sense. Even so, the powers that be are pushing hard for the project to boost the local economy.
Communication and disputes are also a problem at lower levels. In the Pearl River Delta, all the constituent cities and the provincial government recognize that integrated rail systems are the future of the region. What they cannot agree on is who exactly will build what. According to Ma, every city wants its own subway system, while the provincial government prefers a broader, integrated network. Space is already extremely scarce, meaning there’s no room to build both – and even if there was, doubling-over construction would be a waste of resources. The idea may sound ludicrously redundant, but the delta already has four international airports within just 50 kilometers of each other.
Beijing’s more radical plan faces an entirely different set of problems. The first is getting nearby local governments to fall in line with its own plan for fairer regional tax systems and social infrastructure. The second, perhaps more intractable problem is moving all those factories and their migrant workers out of Beijing. In the short term this would lessen pressure on Beijing’s infrastructure and might alleviate some of the nasty pollution for which it has become infamous. In the longer term, that’s less of a real solution to the pollution than it is simply moving the problem elsewhere.
Crucially, not every city in China is a growing metropolis or is located close enough to other emerging cities to form the big clusters that would give the best returns on integration. By nature of its strategic location in China’s far-flung northwest, Urumqi sits closer to Kazakhstan than to any other major Chinese city – one of the reasons planners in Beijing are content to send coal gasification and other dirty industries its way.
These cities, perched on the cusp of real progress, could very well turn out to be the big losers in the urbanization game. “The reality is that we will have a portfolio of outcomes,” said Woetzel. “If you have an isolated city, you have a failure. The risk is blowing a hole in the balance sheet of cities.” With the mounting indebtedness of local governments posing a major risk to China’s financial stability, that could spell disaster.
A blueprint based on clusters
Challenges notwithstanding, the integration of cities into clusters is clearly the best way forward. The future of China as a dynamic country now hinges on moving to higher value-added industries, solving pollution problems and creating space for the comfortable and growing middle classes to build a consumption-based economy. Bunching cities together is integral to this process.
“Clusters work because they capture economies of scale,” Woetzel said, adding that, “a cluster city is very specific. It goes to one specific product and dominates.” In other words: Specialize, divide and conquer. That’s what Suzhou is trying to do by leaning on the resources and global connectedness of nearby Shanghai. That’s what the cities in the Pearl River Delta can all do while also sharing a tremendous and well-connected regional pool of skilled workers.
Still another aspect of the cluster approach is its ease of experimenting at reduced risk, and then sharing what works. “Regardless of where it is derived, what matters is dissemination… and that starts with the cluster,” said Woetzel. “If Xintiandi [an upscale shopping district] works in Shanghai, then we see it in other cities. It goes to other cities in the cluster and then beyond.”
Similarly, if a city tries something and falls flat on its face, it isn’t out there all alone. Part of the point of a satellite linking up with the big city is that the latter can step in if there is a problem. There are resources to fall back on.
All of the above challenges and opportunities are more than what a traditional megacity can handle as a single entity where space is quickly spent, local resources and infrastructure are overwhelmed, and living standards are sacrificed. The cluster instead lets the largest city act as a center of gravity for a diverse system of satellite areas that divide the wide variety of urban tasks. To paint a picture familiar to any Chinese urbanite: Ten families in ten different houses is resource inefficient; ten families in one giant room is chaos; ten families living in an apartment complex pools group needs and preserves individuality. That’s what the cluster does on a grand scale.
Ultimately, the cluster model enables people to keep doing what they’ve been doing here for the past 30 years: Envisioning a richer future. China should embrace it.