China’s Urban Billion

A recent McKinsey Global Institute report “Preparing for China’s Urban Billion” says that the country’s unprecedented urbanization will continue over the next 20 years, and by 2030 China's urban population will reach 1 billion. Here are some numbers that are indeed mind-bogging:

- By 2025, China will have 221 cities with more than one million inhabitants – compared with 35 in Europe today.

- China’ urban population will expand from 572 million in 2005 to 926 million in 2025. Over 350 million people will move from rural areas to the cities – more than the population of the Unite States.

- By 2025, China could have 15 super-cities with average populations of 25 million people. 41 percent of China’s higher income middle class will live in Beijing, Shanghai, Tianjin, Wuhan, Chongqing, Chengdu, Guangzhou and Shenzhen.

- China will build almost 40 billion square meters of floor space over the next 20 years, requiring construction of 50,000 new skyscrapers – the equivalent of ten New York Cities.

- Up to 170 cities could meet planning criteria for mass-transit systems by 2025, more than twice the current number in Europe. This could promise to be the greatest boom in mass-transit construction in history.

The report also says that China’s urban economy will generate 90 percent of its GDP by 2025. Urban China will become a dominant global market with its aggregate consumption almost twice, and disposable income over two times, those of Germany.

Businesses have not only an opportunity to leverage China’s booming middle class and a stratum of affluent consumers, but also to become major investors – in road and rail, public-transits, the energy-supply infrastructure, and energy efficiency technologies.

Change Across the Pacific to The Chinese Dream

Effective today, Across the Pacific is changed to The Chinese Dream - a blog on the emerging middle class in China. It strives to be a one-stop shop for all the resources and discussions about the Chinese middle class. Your contributions are welcome!

Choking on Growth? - Another Side of Stories

The New York Times ran a series of articles “Choking on Growth,” citing many severe environmental damages that accompanied China’s unparalleled growth.

One of the more startling problems is a shortage of water in northern China. Almost five-sixths of the wetlands in the North China Plain have dried up, and the area, where more than 200 million people reside, may be drained within 30 years.

The issues discussed in the article are true, but the tone is arrogant. Usually, there is another side of stories that is not told:

Five thousand years ago, one of the first emperors, Yu, fought to control the flood from Yellow River in the North China Plain. “大禹治水” (Honorable Yu Overhauls Water) is a story that can be cited by every child in China. Thousands of years later, Chinese are still fighting the same problem.

In 2002, China started a gigantic project called “南水北调” (South-to-North Water Transfer Project). Chinese compare this project to the Hoover Dam in the United States, but on a much bigger scale. It's a network of canals that brings water from flood zone of southern China to the North.

Another proposed solution is rapid urbanization, which is already under way. As radical as it may sound, scientists say “converting farmland into urban area would save enough water” because “wide spreading farming still uses more water than urban areas.”

As the article also points out, “Britain, the United States and Japan polluted their way to prosperity and worried about environmental damage only after their economies matured and their urban middle classes demanded blue skies and safe drinking waters.”

Indeed, Chinese look at Americans as their role models. They want to own homes, drive SUVs, and travel around the world. "Typically, industrial countries deal with green problems when they are rich," said Ren Yong, a climate expert in Beijing. “We have to deal with them while we are still poor. There is no model for us to follow.” – With this attitude, there is hope for resolution.

A Wake-up Call: China Passing Us By

An article by Knowledge @ Wharton cited David G. Marshall, a real estate guru and CEO of Amerimar Realty, about his experience of visiting China recently:

"In the last 10 years, not the last 22 years, Shanghai has built 2,000 high-rise buildings between 20 and 108 stories high -- one more spectacular than the next. We stayed on the fifty-ninth floor of the JW Marriott, which was the headquarters for our Wharton Fellows Conference. You can look in four directions as far as the eye can see and you see nothing but spectacular high-rises. At night it looks like Las Vegas: All the buildings are lit up, they look like rocket ships going off. It looks like the Fourth of July. It is absolutely incredible what they have accomplished.

And we, on the other hand, are arguing over Sarbanes-Oxley, stem cell research, an archaic tax code, social security and health care -- and I could go on and on. They're all very important issues, but we are paralyzed by these issues and we are not growing. It is reminiscent to me of what probably took place with Great Britain not watching the United States -- when the United States went flying by Great Britain. [China is] going to go flying by us and we're going to wake up one day and say, "Oh my God, look what we missed." That was my take away from China."

I think Mr. Marshall's observation and his sense of urgency are very valid. China is growing at a breathtaking speed. Things change in a matter of days. Yet people here are still rumbling about "human rights," "Internet censorship," "intellectual property," when it comes to China. It's not that these issues are not important, they are just so out of sync with the reality of China these days; or at minimum, they account for a small percentage of what's going on there. As Mr. Marshall said: "Their goals are to get one billion, 300-500 million people educated, clothed, housed and fed. Intellectual property rights are not on their radar screen and [won't] be."

I also think Mr. Marshall's comments are brilliant: "We're trying to play a basketball game with a basketball, and they're trying to play a basketball game with a football. It's a different set of rules. We better realize that it's a different set of rules and that they're not going to play by our set of rules."

It is a wake-up call for Americans, as Marshall further pointed out: "I think that it's very naïve for us to have our congressmen arguing about how we're going to punish China for not letting the Yuan float; and how we're going to punish China for intellectual property rights. When [China is] sitting there with $1.3 trillion of our Treasury bonds, you're not going to punish anybody." Perhaps America has been in dominance in the world for too long. I hope Americans won't learn the British lessons the hard way.