China Regional Urbanization Trends: 2014 Edition

OLYMPUS DIGITAL CAMERAThe Economist Intelligence Unit (EIU) shared with us their new study on “China’s Urban Dreams 2014” – an update on the country’s urbanization program. With all the uncertainty about China’s property sector in the news recently, this in depth analysis gives some clarity to the often murky topic of Chinese development.

While Western media tends to paint China with one large brushstroke when discussing the country’s property sector, the reality is that real estate markets vary greatly from region to region. China, like the U.S., is a large, diverse country with many different cities and regions with varying strengths and weaknesses. If there is one takeaway from the EIU study, it’s that not all regions are created equally, and going forward, there are bound to be winners and losers.

Before we delve into the details of regional urbanization trends, let’s take a look at where China as a nation stands today. The country’s urbanization ratio is right around 50%, pretty much on target with the Chinese government’s projections. China’s per capita GDP is still relatively low- above India and Nigeria but below Brazil, Russia, and South Africa. Of course, China’s enormous population is a contributing factor to this being the case.

By 2020, the Chinese Government wants to bump up urbanization to 60%.  This will require another 100 million people in cities. It is important to keep in mind though, that this will not only be a result of migrants explicitly “moving” to the city, but urban boundaries continuing to expand into the surrounding countryside. As cities grow in China they annex the land around them, transforming once rural land into urban real estate.

Another key factor in meeting urbanization targets is household registration (hukou) reform, which would help afford migrants a form of permanent residence status in a given city.

Where will these 100 million new urban residents live in 2020 and beyond? According to the EIU study, Guangdong Province will pick up the lion’s share of new urban development. This is not surprising given that the Pearl River Delta region is already the most urbanized in the entire world and is further developing in a manner to help better integrate the region as a whole.

Central province Henan is also urbanizing rapidly, as is the Beijing-adjacent province of Hebei. Yet both of these provinces won’t reach the urban populations projected for coastal provinces Shandong and Jiangsu.

Perhaps unsurprisingly, it is projected that the direct-controlled municipalities of Beijing, Shanghai and Tianjin will have the highest rates of urbanization by 2030. The Central Government has made it a priority to integrate Beijing, Tianjin and the adjacent province of Hebei into one large mega-region of 100 million people called “Jing-Jin-Ji“. The aim here is to take pressure off of Beijing, which suffers from traffic gridlock, pollution and astronomical housing prices.

Along with the announcement of the formation of the Jing-Jin-Ji mega-region was a move by Hebei Provincial officials announcing that some of Beijing’s Central Government functions will move to the city of Baoding, 150 km southeast Beijing. Although specifics have yet to be articulated, this is a clear indication that the China plans to decentralize its government functions.

WEB - Victoria Lai - Access China - Demographics.inddOverall it looks as if the coastal areas of China will continue to urbanize at high rates while inland regions lag a bit behind. Although there is a wave of manufacturing moving from coastal areas to inland provinces, there still appears to be a logistical advantage being on the coast. To see where China is heading, perhaps it is best to look at the Pearl River Delta, which has led the way since initial economic reform and continues to lead the way today.

Organic Farming in China: Chengdu’s Anlong Village

With the ongoing spate of food safety scandals, Chinese consumers are rightly weary of the source and quality of their food. Unfortunately, food quality regulatory bodies in China remain unreliable and direct access to fresh food sources is limited for an increasingly urbanized populace. This is one of the great contradictions of China’s urban development: a country which for most of its history was majority agriculturally based is on the fast track to be one of the most urbanized nations in the world.

Status conscious Chinese urbanites would rather not associate with anything related to farming, as it evokes the recent memory of rural peasant life. For many upwardly mobile city dwellers, international restaurant chains like KFC, McDonalds and Pizza Hut are considered the best options for upper-class ‘healthy’ dining (that is, food with high caloric content).

The urban growth of China is a boon to these chains as more American consumers shun them in favor of a more organic, natural diet. The shift in American consumer preferences is reflected in the success of supermarket chain Whole Foods, local farmers markets, and the growing popularity of the Slow Food movement.

Given China’s new-found love affair with processed food and growing ambivalence about the role of agriculture, I was confident there was probably not much interest in organic farming. That was until I visited Anlong Village- a wholly organic, zero waste farm 50 km northwest of central Chengdu. With a full-time population of 3,000 residents, Anlong Village is sponsored by the Chengdu Urban Rivers Association (CURA), a local non-profit NGO.

Anlong Village was initially set-up in an effort to help clean up the Funan River, which flows into central Chengdu

Anlong Village is CURA’s flagship project, and unlike other purported ‘eco-cities’ under development in China, lives up to its claim of being 100% sustainable. The partnership was established in 2003 as an effort to help clean up the adjacent Funan River, which flows through central Chengdu, after it was discovered that most of the river pollutants come from agricultural runoff upstream.

Anlong helps abate this problem by avoiding the use of chemical pesticides and instead using natural methods to fight agricultural pests. These methods include surrounding plots with mint (a natural pesticide) and planting garden plots with a variety of different species (so if one crop succumbs to disease, it does not destroy the entire plot). This not only avoids dumping unnatural chemical waste into the river, but ensures that the farm’s soil is nurtured over the long-term.

The village also features a comprehensive composting system. Composting toilets turn waste into organic fertilizer and animal waste is recycled into concrete pits treated with anaerobic digestive microorganisms that convert it into methane gas used for heating and cooking. Plant waste is also re-used as organic fertilizer.

Organic waste is mixed together in large pits and composted naturally before being re-used as fertilizer

Throughout the village, greywater is treated in a series of specialized ponds that naturally remove pollutants. Treated greywater can then be re-used for agricultural irrigation. Constructed wetlands adjacent to the Funan River also treat greywater, assuring that potentially harmful waste water is filtered before entering the river.

Constructed wetlands treat greywater, naturally removing pollutants

Despite the initial apprehension of local government officials, Anlong Village is a tremendous success. Of the few plots available to non-Anlong residents (primarily health conscious families living in the city who tend to their crops on the weekend), demand outstrips supply.

Demand is also great for the organic produce grown in Anlong. This is in large part due to Chinese consumer mistrust of the validity of produce labeled ‘organic’ in large Chengdu supermarkets like Wal-Mart, Carrefour, or Isetan. Anlong, on the other hand, offers a trustworthy source.

Unfortunately, at this point there are very limited formal distribution channels for purchasing organic produce grown in the village. Farmers frequently venture to the city to sell their crops, but usually only those ‘in-the-know’ will know when and where exchange points are. To make it a bit easier for consumers, CURA is currently in the process of training Anlong farmers how to use microblogging sites to announce the time and location of exchange points.

An outdoor dining hall in Anlong Village. The 100% organic & vegetarian lunch I ate here ranks up as one of the best meals I’ve eaten in China

In its relatively short history as a 100% organic farm, Anlong Village is already a benchmark for other aspiring sustainable farms around China. Yet like in the U.S., there is ongoing debate about the scalability of such a model. Considering the high markup on price compared to commercially farmed crops (produce grown in Anlong can be two to three times the cost of commercially farmed produce), many argue that this method of farming is not practical to feed a nation with such a huge population as China.

In spite of this debate, and given China’s struggle with pollution as it continues to develop, Anlong Village is a blessing and a valuable reminder that practical steps can be taken to protect its environment.

Go West Project at the Chengdu Biennale

I had the privilege of sitting in on a round-table discussion led by the ‘Go West Project‘ at the Chengdu Biennale this past weekend. Go West Project is an independent think-thank based in Shanghai founded by two Dutch nationals, Michiel Hulshof, a journalist, and Daan Roggeveen, an architect. For the past two years, Hulshof and Roggeveen traveled around the country documenting the phenomenon of urbanization in China’s lesser-known cities (hence the name ‘Go West‘).

Their research culminated in a recently released book titled How the City Moved to Mr. Sun. The title refers to one of the several personal narratives they encountered in their travels. Mr. Sun, a corn farmer in a village on the outskirts of Shijiazhuang, capital of Hebei Province, saw his land seized by authorities nearly 20 years ago. Like many of the other villagers, he used the compensation money to develop his own 4-storey ‘mixed-use’ building complete with retail space on the ground floor, living space on the 2nd and 3rd floors and a small group of guestrooms for migrant workers on the 4th floor. On the roof, Mr. Sun created an organic garden to continue doing what he knew how to do best.

Inevitably, the pace of urbanization caught up to Mr. Sun once again, and after about a 10 year run of profitability, his self-developed building was razed by bulldozers. He reluctantly gave in and accepted compensation and now lives with his wife in a modern high-rise residential tower block where ‘he doesn’t know any of the neighbors’.

Mr. Sun’s story is one of several Hulshof and Roggeveen document in their book. In addition to Shijiazhuang, they visit 12 other cities in China’s interior including Zhengzhou, Wuhan, Chongqing, Hohhot and Kashgar, among others. Each city focuses on a different aspect of urbanization in China, and in Chengdu they chose to focus on cultural development.

And cultural development in Chengdu is what we focused on at the Biennale discussion. Hulshof and Roggeveen were interested in hearing from the people in attendance, mostly artists, designers and musicians from Chengdu’s local arts scene, what they thought of promoting ‘special arts zones’. As preposterous as this idea sounds, given that artists typically establish themselves from the ‘bottom-up’, China has already established designated arts zones throughout various cities in China.

This is perhaps no surprise as China’s approach to development in virtually every sphere comes from the ‘top-down’. As a matter of fact, the Chengdu Biennale coincides with the opening up of the new East Music Park, a re-used industrial zone that is also the site of the event. Spearheaded by the local government, the East Music Park is a new area full of bars, clubs, restaurants and gallery space intended to promote the arts in Chengdu.

Of course, the profit motive behind the creation of such arts districts is not hidden. Yet regardless of this commercial aspect, most Chinese artists agree that anytime the government is on board to promote culture it is a positive thing. China’s top-down development model excels at creating the ‘hardware’ of cities:  roads, bridges, public transit, buildings, etc…but when it comes to the development of ‘software,’ or the cultural side of cities, governments have a harder time of deciding the best route to take.

That is why in the case of Chengdu, the local government looked to the artists themselves for consultation on how to proceed. In their book, Hulshof and Roggeveen mention the story of local painter Luo Fahui, once a renegade who had to move around the country to avoid run-ins with government authorities, who later was literally given free gallery space developed by the local government to pursue his artwork. Change of fortune indeed.

As China’s development model continues to evolve, the ‘software’ of cities becomes increasingly important. And as more Chinese citizens realize that there is more to life than the acquisition of money, they will demand more ‘meaningful’ experiences, including patronage of the arts. This is the conclusion we reached at the Biennale round-table and the conclusion Hulshof and Roggeveen reached after their travels around China.

China is at a crossroads now. Next year will see a nationwide change in leadership and with analysts predicting the end to China’s growth model, the country is looking to new ways to continue economic evolution. That is why Hulshof and Roggeveen’s work is timely. To see where China is, and where it is going, I highly recommend their book.

Torrential Rains and Flooding in Chengdu

It’s been a rough start to the summer season for provinces in central and southwest China. Torrential rain and floods have affected millions, destroying crops and forcing many to evacuate their homes. Chengdu was largely spared any flooding up until this past Sunday when a heavy storm dumped on the city.

The storm blew out power lines while the flooded streets created traffic chaos throughout the city. My colleague took some photos of the flooding near his apartment in the low-lying southern part of Chengdu.

Some drivers mistakenly judged water levels and got stuck in the middle of flooded streets.

The storm drainage system in this part of the city couldn’t handle the huge quantities of rain that came down in such a short time period – resulting in covers being pushed off the tops of manholes. The girl in the above picture had the misfortune of unknowingly stepping into one of those holes. Luckily a nearby man came and rescued her before anything more serious happened.

Even though Chengdu experienced some flooding, the real damage took place in the more rural parts of Sichuan province. In Yingxiu county, flooding brought down part of a bridge, stranding villagers. Video of the dramatic rescue can be seen here.

China’s Ancient Cities and the Crisis of Branding

UNESCO Heritage Site, Longmen Grottoes Stone Carvings near Luoyang, Henan Province.  Photo by Easytourchina.

In April I had the honor of being invited to sit on a panel at a conference sponsored by Forbes China in Luoyang. The discussions that took place during the event centered around the next 10 years of development in central China. With Luoyang being the host, much of the discussion pertained to the city itself.

Luoyang, a city of about 6 million people, sits in China’s central plains in the northwestern part of Henan Province, 100 kilometers west of the provincial capital Zhengzhou. New buildings dot the skyline, but not at the high density one sees in 1st or 2nd tier Chinese cities. Automobile and pedestrian traffic is light as well. Wide, tree-lined streets with bike lanes and generous sidewalks lend the city a pleasant atmosphere.

What is not immediately clear traversing the streets of Luoyang is the fact that it is one of China’s Four Great Ancient Capitals. Luoyang was a seat of power for several dynasties- most prominently during the Eastern Zhou and Han dynasties, and later the Sui and Tang dynasties.

Today the most important relic left from Luoyang’s imperial past is the Longmen Grottoes- a series of caves and magnificent Buddhist statue carvings stretching nearly 1 kilometer along the Yi River. Begun in the 5th Century A.D. during the Northern Wei Dynasty, much of what is left now was built during the later Tang Dynasty when Buddhism still played a central role in Chinese life.

The Longmen Grottoes became a UNESCO World Heritage Site in 2000, and since then Luoyang has seen its tourism industry growing steadily. Despite this growth, the city is not on the international radar at the level of Xi’an, another Ancient Capital 300 kilometers to the west.

Like Xi’an, Luoyang’s main draw lies outside the city proper. Yet Xi’an offers much more to the visiting tourist than its famous Terracotta Warriors. The massive historic city wall remains intact and the city center possesses a lively Muslim quarter offering tasty cuisine from the Hui ethnic group.

In contrast, central Luoyang offers little in the way of history aside from a few old neighborhoods with shops specializing in selling Tang-inspired porcelain and lacquerware. Much history actually lies beneath the ground, where Tang dynasty treasures are routinely discovered during the construction of new projects throughout the city.

But how can Luoyang do a better job of positioning itself to not only attract more tourists but business investment as well? What are the city’s strengths that can be played up to give Luoyang a more prominent place on the map?

These are the issues that were deliberated on the panel I took part in at the Forbes China forum. Along with panelists Ge Jianxiong, professor of historical geography at Fudan University, Li Dihua, vice dean of the Graduate School of Landscape Architecture at Peking University, and Wu Zhongqing, vice president of Shanghai Yuyuan Tourist Mart,  we discussed how Luoyang can use ‘soft power’ to better place itself for the future.

Both Professor Ge and Professor Li lamented the fact that Luoyang does not give the impression of being an Ancient Capital, having lost most of its historic architecture to various invasions and internal strife. Professor Ge contrasted Luoyang with Kyoto- the ancient capital of Japan (which was incidentely inspired by historic Luoyang during the Tang dynasty)- which retains much of its historic charm.

While acknowledging the value of traditional architecture is an important part of preserving Chinese cultural heritage, there is nothing that can be done to bring back the past. Attempting to rebuild ancient buildings exactly the way they were runs the risk of creating faux-village tourist traps that end up trivializing the past. Rather, Luoyang should focus on its current strengths to attract tourism and investment.

During my turn to speak I suggested that Luoyang already has a tremendous asset with the Longmen Grottoes, and is strategically located not far from two other internationally famous tourist spots- Xi’an and the Shaolin Temple. Luoyang should do a better job of promoting itself as a requisite stop for tourists visiting either or both of these places.

Unfortunately Luoyang has limited air connections, with only one flight per day from Beijing and Shanghai and a flight every other day from Chengdu. Luckily, the city is a stop along the new Zhengzhou-Xi’an high-speed rail line, giving it easy access to both of those cities.

Economically speaking, Luoyang will probably never compete with Zhengzhou, yet it can strengthen ties with Zhengzhou to create a strong central China trading zone. Furthermore, Luoyang should play up its assets such as its pleasant urban environment to attract investment. As cities on China’s eastern seaboard become evermore expensive and out of reach for the aspiring middle class, Luoyang could offer a much lower-cost alternative for Chinese workers looking for a higher quality of life.

As Henan is one of China’s most populous provinces, Luoyang needs to do all it can to retain local workers to help its economy grow. With the interior regions of China beginning to play a more important role in the country’s overall development, now is the time for Luoyang and other central cities to make their mark by promoting their own unique character rather than becoming carbon copies of other, more successful cities.

Chengdu and Chongqing Leading the Way in Hukou Reform

The hukou system, or household registration system, is a method of accounting for the country’s population by requiring each citizen to officially register his or her place of residence.

Possessing an urban hukou in a large city means that one is an official ‘resident’ of that city and eligible to receive benefits such as  access to medical insurance and education as well as the right to purchase property. This poses a problem for the floating population of rural migrants to cities who are not afforded similar benefits due to their lack of an official urban hukou.

Given the difficulty rural migrants have in obtaining an urban hukou, most have no incentive to settle in a city once their period of work is finished. This means that until the system is reformed, rural migrants will always have one foot in the big city and one foot back in the village.

When China first opened up 30 years ago, opportunity was limited to places like the Pearl River Delta, where access to overseas markets made it the logical place to begin economic reform. As economic growth and prosperity has spread from the coastal regions to the interior, migrants from the western part of China have less incentive to head all the way to coastal areas to look for work. In fact, the Pearl River Delta has even seen a migrant worker shortage recently.

The expansion of economic growth throughout China has been of great benefit to interior cities like Chengdu and Chongqing- both large cities surrounded by vast rural areas. The growth of these two cities means that rural migrants from Sichuan and nearby provinces need not go too far in order to find good job opportunities.

Seizing the opportunity to strengthen urban growth, both Chongqing and Chengdu are taking the lead in hukou reform. Chongqing recently pledged to grant 3 million urban hukous to farmers by 2012, and 10 million altogether by 2020! Chengdu has initiated a pilot program to unify rural and urban hukous, granting access to urban unemployment benefits for migrant workers.

It is clear that hukou reform is the key to long-term successful urbanization of China’s cities. While economic reforms first emerged in China’s coastal areas, could social reforms arise from the country’s great cities on the interior?

China Daily: Chongqing Turns Into Red Capital

Chengdu Living: Chengdu’s Pilot Program to Abolish the Hukou

(Mis)understanding China’s Suburbs

Beijing Suburbs. Photo by Manuel.A.69.

As China’s expanding cities inevitably swallow up surrounding countryside, the boundaries between urban, rural and suburban areas become progressively more blurred. What today might be farmland could tomorrow be the next central business district sprouting state-of-the-art skyscrapers. This fast-changing reality makes defining what constitutes urban vs suburban with developed-world standards insufficient. China needs its own definitions.

Dan Chinoy, a student at Beijing’s Tsinghua University, ponders this conundrum with a post for The Atlantic titled “Is this Beijing’s Suburban Future?“. As Chinoy gets further from Beijing’s center, he describes coming upon what seem to be the remnants of a village. He explains:

This suburban expansion has taken place so quickly that in some places, it has created what are known in Chinese as ??? or chengzhongcun, which translates roughly to village-in-a-city: older mud and brick houses and abandoned fields surrounded by brand new apartment complexes.  Often, residents of these villages choose to rent them out to migrant workers.  Some even build small apartment buildings of their own and become full-fledged landlords.  This creates something that’s not quite a slum, but not exactly a well-regulated residential complex either.”

The existence of this not quite slum, not quite well-regulated residential complex will probably be a short-lived phenomenon as soon as full-fledged urbanization reaches it. Rather than being a permanent condition, the suburban experience Chinoy describes is a perfect example of the transitory and sometimes flat-out contradictory condition of China’s urbanization process.

The Atlantic: Is this Beijing’s Suburban Future?

Development in the Far West: Bumpy Road Ahead

Uyghur people in Xinjiang. Photo courtesy of Nicolas Marino

One advantage of China’s top-down approach to urban development is the lack of organized resistance to new projects. Aside from the occasional story of a  lone-ranger hold out protesting imminent demolition of property, China is a nation almost completely devoid of NIMBYs (not in my backyard). This is due largely in part to the collectivist nature of China’s ethnic majority.

That majority is of course the Han people, who comprise more than 90% of China’s overall population. There is a very strong self-identification among the Han, which begets an unspoken but omnipresent social unification. This spirit has been one of the driving forces behind China’s rapid and successful urban development.

Yet as momentum shifts  westward, the outlook for peaceful development looks more uncertain. Whereas the east coast of China consists mainly of Han people, the interior areas are more mixed ethnically. The far west autonomous regions of Tibet and Xinjiang are majority-minority populations.

Xinjiang Autonomous region- which is home to the Uyghur people, a  Turkic Muslim minority- is currently experiencing a significant migration of Han people from the eastern provinces as a result of the central government’s ‘Go West’ campaign. Cities in this vast and resource-rich region in China’s northwest corner are developing quickly. Unfortunately, Uyghur’s and other  local minorities feel as if they are being left out of the new prosperity.

Frustrations boiled over last year when riots broke out in the Xinjiang capital city of Urumqi. The violence pitted the Uyghurs against the Han, leaving nearly 200 people dead. Fortunately, there has not been any flare ups since then but as a New York Times article said recently, ‘resentment is simmering‘.

Urumqi and other cities in the west of China will undoubtedly continue to move full steam ahead with development. Urbanization and modernization need not be a threat to local culture though. Rather, it should reinforce long-standing traditions as prosperity eventually leads to diversity appreciation. The major challenge here will be a social one- including non-Han minorities in with the huge changes taking place.

The New York Times: Resentment Simmers in Western Chinese Region