Urbanization in China: The Urbanization in China: The Next DecadeNext DecadeShahid YusufShahid YusufThe World BankThe World BankFebruary 22nd, 2010February 22nd, 2010

Why an Urbanization Why an Urbanization Strategy is a PriorityStrategy is a Priority

Promoting industrialization.Promoting industrialization. Leveraging productivity and Leveraging productivity and

innovation for growth.innovation for growth. Quality of lifeQuality of life Resource use and carbon Resource use and carbon

emissions.emissions.

The State of Urbanization in The State of Urbanization in 2008: A Snapshot2008: A Snapshot

Urbanization rate: approaching 50 Urbanization rate: approaching 50 percent. Urban built up area rising fast.percent. Urban built up area rising fast.

Urban population including migrants: Urban population including migrants: almost 650 million.almost 650 million.

Living space per capita has risen Living space per capita has risen fivefold.fivefold.

Share of GDP: over 80 percent.Share of GDP: over 80 percent. Number of cities: more than 650.Number of cities: more than 650. Cities with population in excess of 1 Cities with population in excess of 1

million: 120.million: 120. Secondary cities growing faster.Secondary cities growing faster.

China’s Population by Residence, China’s Population by Residence, 1980-2007 (million)1980-2007 (million)

The Shape of Things to The Shape of Things to ComeCome

Continuing shift in composition of GDP from Continuing shift in composition of GDP from the primary sector to the urban sector and the primary sector to the urban sector and from industry to services.from industry to services.

Migration to cities: 20+ million per year.Migration to cities: 20+ million per year. Rising demand for urban infrastructure, Rising demand for urban infrastructure,

housing and services.housing and services. Transfer of populations from interior areas Transfer of populations from interior areas

and the north to coastal locations.and the north to coastal locations. Concentration of population in a few vast Concentration of population in a few vast

urban regions: Pearl River, lower Yangtze urban regions: Pearl River, lower Yangtze Valley and the Bohai region.Valley and the Bohai region.

Urban Development: The Urban Development: The ChallengesChallenges

Managing migration to mega and Managing migration to mega and secondary cities to optimize long secondary cities to optimize long term geographical distribution of term geographical distribution of urban population.urban population.

Accommodating demand for housing Accommodating demand for housing and services.and services.

Controlling overbuilding of high Controlling overbuilding of high income housing and managing threat income housing and managing threat of housing bubbles.of housing bubbles.

Urban Development: The Urban Development: The Challenges (cont.)Challenges (cont.)

Designing polycentric urban regions so as Designing polycentric urban regions so as to maximize agglomeration economies to maximize agglomeration economies while keeping cities compact and low while keeping cities compact and low carbon. Limiting consumption of arable carbon. Limiting consumption of arable land.land.

Building or maintaining an industrial base.Building or maintaining an industrial base. Creating a system of sustainable financing Creating a system of sustainable financing

comprised of adequate and buoyant local comprised of adequate and buoyant local taxes and user charges, and with access to taxes and user charges, and with access to term financing.term financing.

Ensuring that urban planning and Ensuring that urban planning and governance are equal to the challenges governance are equal to the challenges cities face.cities face.

Land Consumption Per CapitaLand Consumption Per Capita

Private Vehicle Ownership in Private Vehicle Ownership in China, 1995-2008China, 1995-2008

Cars and Space: International DataCars and Space: International Data

% wrk trips by private car

floor area (m2/pers) Fitted values

2 81

12.25

55

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Melbourn

Gaborone

Brasilia

Curitiba

Recife

Rio de J

Sofia

HamiltonToronto

SantiagoBrazzavi

Zagreb

Camaguey

La Haban

Prague

Copenhag

Djibouti

Paris

Librevil

Tbilisi

Duisburg

Erfurt

FreiburgKoelnLeipzig

Wiesbade

AthensBudapest

Tehran

AmmanAlmaty

Riga

VilniusChisinau

AmsterdaAuckland

Buchares

Kostroma

Moscow

Nizhny NNovgorodRyazan

Sao Tome

BratislaBratisla

Stockhol

Bedfords

Cardiff

Hertford

BelgradeNis

Novi Sad

Urban Strategy and PolicyUrban Strategy and Policy A long term urbanization strategy that promotes A long term urbanization strategy that promotes

future urbanization in the areas south of the future urbanization in the areas south of the Yangtze (with enough water) and away from Yangtze (with enough water) and away from vulnerable coastal locations.vulnerable coastal locations.

A nationwide transport infrastructure to anchor the A nationwide transport infrastructure to anchor the urbanization strategy.urbanization strategy.

Industrial and innovation policies to build Industrial and innovation policies to build capabilities in manufacturing, productive services, capabilities in manufacturing, productive services, technology and training. Develop enough tradable technology and training. Develop enough tradable activities to achieve trade/current account balance.activities to achieve trade/current account balance.

Urban planning, and design policies and techniques Urban planning, and design policies and techniques for grouping secondary cities within a networked for grouping secondary cities within a networked urban region.urban region.

Implementation of land use and other policies is the Implementation of land use and other policies is the key test: i.e. building compact vertical cities that key test: i.e. building compact vertical cities that are livable and well served with public transport.are livable and well served with public transport.

Urban Strategy and Policy Urban Strategy and Policy (cont.)(cont.)

Design, codes and standards for cities, infrastructure, Design, codes and standards for cities, infrastructure, buildings, and appliances so as to realize objectives of buildings, and appliances so as to realize objectives of compactness and low resource and carbon intensity.compactness and low resource and carbon intensity.

Local taxes, user charges, center-local fiscal Local taxes, user charges, center-local fiscal arrangements, fiscal discipline rules to mobilize arrangements, fiscal discipline rules to mobilize resources for long term/recurrent expenditures.resources for long term/recurrent expenditures.

Public sector salaries and incentives to attract/retain Public sector salaries and incentives to attract/retain leadership and managerial/technical expertise needed leadership and managerial/technical expertise needed to build and run “smart cities”. Harnessing ICT and to build and run “smart cities”. Harnessing ICT and organization design to reduce transaction costs and organization design to reduce transaction costs and increase accountability.increase accountability.

Raising adequate fiscal resources, mobilizing talent Raising adequate fiscal resources, mobilizing talent and developing tradable sector vital for secondary and developing tradable sector vital for secondary cities.cities.

Institutions for governance and inter-jurisdictional Institutions for governance and inter-jurisdictional coordination in urban regions comprised of a matrix of coordination in urban regions comprised of a matrix of cities.cities.

Advantages and some Advantages and some CautionsCautions

Growth momentum.Growth momentum. Early stage of urbanization.Early stage of urbanization. Few capital constraints because of high Few capital constraints because of high

savings rate.savings rate. Awareness of global warming and Awareness of global warming and

readiness to embrace green technologies.readiness to embrace green technologies. National innovation system geared up to National innovation system geared up to

generate skills and technology.generate skills and technology. Organizational apparatus for planning and Organizational apparatus for planning and

implementing urban/industrial policies with implementing urban/industrial policies with demonstrated track record.demonstrated track record.

Sense of urgency.Sense of urgency.

Thank youThank you