Barely two decades ago China was known as the “Kingdom of Bicycles” and cars were a rare sight on the streets. Now there is hardly any room to park. The likes of Shanghai and Guangzhou have morphed into giant urban centers as millions of new arrivals flooded in to pursue economic opportunities. They are widely touted as examples of the new Asian megacity.
As China reaches the limits of its current export and investment-based growth model, its biggest cities have also begun to reach a developmental limit. The megacity no longer appears to be a sustainable path forward. Changing track will not be easy, but plans are already underfoot to break existing megacities up into clusters with a central hub surrounded by smaller cities.
Across the country, in Shanghai and Suzhou, in Beijing and Tianjin, and in the Pearl River Delta around Guangdong and Shenzhen, cities are linking up, clustering together into urban units of a truly grand scale – approaching and potentially exceeding 100 million people. By building stronger physical and economic links with their surrounding areas, big cities can relocate industry, jobs and people, making them less dense and more efficient. The formation of these clusters is not simply the future of the urban landscape, but the future of China’s development.
Megacity vs. cluster
The sheer scale of this phenomenon is dizzying, to be sure, and not a little bit confusing thanks to a complicated nomenclature. The terms megacity and cluster cities are often used interchangeably to describe what is going on, but in fact each has a distinctive meaning, and the differences are crucial to China’s development.
“Megacity” is a hefty term. Written in proper, that big capital “M” imparts a swagger commensurate with the cities themselves. It conjures up an image of towering skyscrapers by the dozens, hundreds of kilometers of subway track, people and cars filling the streets, big money, big opportunity… and big smog, too. But like most buzzwords, it’s a bit more fanciful than descriptive.
The United Nations officially defines a megacity as any municipality with over 10 million residents – an arbitrary but convenient benchmark. However, this doesn’t account for how municipal boundaries are drawn. For example, it’s easy to be wowed by Shanghai’s 24 million people versus the eight million in New York City. But it is often omitted that Shanghai covers an area five times that of the Big Apple that includes large swathes of farmland. The broader New York Metropolitan Statistical Area, essentially greater New York, has a population of 19.9 million. Yet nobody considers New York as ranking among the world’s megacities.
“Everybody has a different definition” of a megacity, says Jonathan Woetzel, co-chair of the Urban China Initiative and director at consultancy McKinsey. “I think 10 million on up is reasonably accepted as a megacity, but we may end up changing that definition over time.” Particularly, he added, if the population of cities in the average continues to push higher.
According to the China Urban Sustainability Index, an annual research project carried out by UCI and the McKinsey Global Institute, an urban planning model known as cluster cities might be more appropriate for China. “In the first report, we contrasted two versions of urbanization: Concentrated megacities and clusters,” said Woetzel. “We concluded that the cluster form made a bit more sense … and that has been borne out [by the data].”
Clusters, as he refers to them, comprise at least one very large city as a central hub surrounded by many other smaller cities as its spokes. This model allows for more diversity, as each city remains an individual player and can bring its complementary strengths to bear regionally through smart integration. This geographical huddling has major implications. “We think of clusters as the most sustainable form of urbanization,” said Woetzel. “In all ways.”
Best laid plans
Cities across China are a curious mix of careful planning, thoughtful consideration and a whole lot of happenstance in between. The vast urban regions of today are the result of planners forging ahead with their ideas first and then reacting to change.
Most of the big urban centers we see in China now resulted directly from the opening up of the country in the 1970s and the productive tumult that followed. The Pearl River Delta manufacturing hub is a prime example: Before 1949, a huge portion of Chinese goods were sent through Guangzhou and on to Hong Kong for export. Once that route closed, the need for a new one became apparent, setting in motion the birth of the port city and factory hub of Shenzhen where once a sleepy fishing village stood.
“15 years ago, there was no Shenzhen,” said Ma Xiangming, chief planner at the Urban and Rural Planning and Design Institute. “When Deng Xiaoping opened up policy in Shenzhen… it meant that things could only be sent to Shenzhen. For ten years things concentrated in Shenzhen.”
Money flowed, factories were built, more people followed. Soon the city was expanding. In 1990, the region’s highway system was severely underdeveloped, so Shenzhen took it upon itself to begin correcting that. “The city itself planned its own road system, and then the central government connected it and formed the regional highway system,” Ma said. “So it comes two ways: Bottom-up, and top-down.”
The new Shenzhen was not a naturally occurring urban center; the city was created through policy, and then it grew. The newly built highways encouraged further growth, and its population exploded. Greater Guangdong grew as well: Dongguan, its third major city, became the destination of choice for young migrant workers fresh from the countryside. The region became what we know it as: China’s engine, the world’s factory. “If there is no new China, there is no Shenzhen,” Ma said. It would seem the same is true vice versa.
The current planning ethos is both active and reactive, both bottom-up and top-down. China’s urban population surpassed 50% a few years ago and now it is the explicit goal of the central government to keep the trend going. By 2020, 60% of the population will be in urban areas, rising to 70% by 2030, according to a new urbanization blueprint released by the State Council in May. As Ma concedes, there is no way to wrench the fire hose of migration closed, whether you plan for it or not. The question now is figuring out the best way to turn villagers into urbanites.
Rethinking the economic model
Huge cities tend to conjure mostly negative images of sprawl, density, overpopulation, crime, social inequality and all the other downsides of modern urban living. These cities might be economic centers, but they are tough going for most residents and rank poorly in terms of sustainable living.
But that doesn’t always have to be the case. The China Urban Stability Index 2013, published by McKinsey, shows that most Chinese cities have in fact improved their level of sustainability in recent years, and that the top 10 best performing are located mostly in the coastal or eastern regions. Sustainability is positively correlated with increased population size, density, migration and foreign investment, the index noted. As urban conurbations grow, public services and utilities scale up quickly, in effect reducing the negative footprints of their inhabitants. Water and heating are provided in tighter networks over shorter distances, while waste collection is more focused and therefore more efficient. While some Chinese urban dwellers continue to dispose of their rubbish in public streets, armies of cleaners are there to remove it quickly; no urban dweller burns refuse in open pits or lights crop fires that pollute the skies.
Still, cities can only be green and clean up to a certain point. “There is a limit to how far one can go without reth
inking the economic model,” said Woetzel. According to the CUSI report, the “turning point” where big cities outgrow their efficiency comes when the population tops 4.5 million, density reaches over 8,000 people per square kilometer and migrants make up over 30% of residents. Places like Shanghai and Tianjin passed that point long ago.
Over the next 15 years or so, more cities will join the ranks of such giant urban areas. In order for them to be sustainable and successful, urban planners will need to improve how they are put together. Cluster cities can provide one such path forward.
The cluster cities paradigm is, at its heart, a way of rethinking the urban economic model. A traditional megacity, by contrast, typically encompasses all functions within itself. Many of the other factors generally considered necessary for sustainability are more or less related to that core principle of centralization. But in the cluster model, one big city acts as the main hub for administrative functions, capital and talent, and plays host to a few core sectors such as services. Meanwhile, smaller outlying cities develop their own specialized economic fields, such as high-tech or industrial production. This axle-spoke style of planning allows for industry, services, jobs and people to be spread out, but still easily connected.
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.