The Challenges and Opportunities of China’s Urbanization in the New Era

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As many may have witnessed, ever since the opening and reform in the 1990s, China’s economy has been on the high growth trajectory, transitioned from the state-controlled communist economy to the free and competitive market. Going hand in hand with the economic boom is the urbanization of Chinese cities, with the unprecedented scale and speed.

In 1950 13% of people in China lived in cities. By 2010, the urban share of the population had grown to 45%; it’s projected to reach 60% by 2030. Such rapid acceleration of the urban expansion presents significant challenges as well as opportunities to every city dwellers, urban planners, and business investors.

Unbalanced Structure of Urban System

Due to economic and urban reforms, the structure of China’s urban system has experienced a significant transition. A rank-size analysis of the urban system of China reveals that smaller cities are increasing in size; however, the overall structure remains unbalanced due to the extraordinarily large number of small cities.

With an excessively large population, these smaller cities stand in a crucial transition point in China’s urbanization process, since it is traditionally an agricultural country with a massive rural population. Linking the rural and urban life by transporting culture, technology, and economic benefits, the small cities help to coordinate a more balanced development.

However, the surplus of small cities has led to a series of socioeconomic problems, such as inefficiency in the production of goods, lack of investments, and oversaturated labor force.

On the other hand, with the announcement of the emerging new megacity Xiongan being built near Beijing, the Chinese government have taken another attempt to take pressure off China’s biggest metropolises.

This emergence of urban clusters provides new challenges, in terms of planning the growth of urban clusters with comprehensive strategies and maximizing their leading role in strengthening rural-urban linkages.

Emerging Environmental Pressures

In 2015, a documentary Under the Dome set off a maelstrom of online criticism of the government’s ineptitude in dealing with the air pollution in the city. Acknowledging citizens’ outrage and responses to the film, the top environmental officials compared it to Silent Spring, the 1962 book that ignited the environmental movement in the United States.

The threat was real. When the coal-fired plants that provide heat to the 11 million citizens of the far northeastern Chinese city of Harbin came on, the air quality got so bad it created a whiteout that halted traffic, closed schools and shut down the airport.

At the same time, there are efforts to set stricter environmental standards. Last winter, the authorities issued a ban on using coal to heat homes in some regions surrounding Beijing. Beyond that, there are more than 80 low-carbon programs going on around the country, including developing emissions inventories for carbon dioxide and other greenhouse gases, setting measurable emissions-reduction targets, establishing carbon emission trading platforms, and creating carbon intensity standards.

Real Estate in the Intersection

The transformation of the urban landscape also manifests itself in the real estate industry, transitioned from the state-controlled economy and allocated “work-unit” housing by the government to the free and competitive market. While housing is a word that not only carries economic value but also translates into the persistent concern in numerous Chinese families, purchasing a house was seen as a milestone of one’s life. This industry is more than a significant contributor to the overall GDP growth but shaped every individual’s life.  

As such, the affordability and supply have been major concern and impetus for the industry in the past two decades. On the one hand, with the booming industry generating houses for almost the entire urban population, it has led to the formation of “ghost towns” inland, where experts may call “buffer zone” of China’s urban expansions. Yet, On the other hand, Tier I cities continue to experience a strong influx of demand, and the competition for the resource has caused housing price to surge.

Zooming out, when looking at the broader picture nationwide, one might find that the real estate industry has been losing its momentum in the last few years. While private builders are cutting down prices and the government is assisting the housing sectors with aid packages to stimulate the housing market, it is hard to predict whether this will lead to stagnation, stabilization, or even similar booming 10 years ago, and how this trend will further shape the urban landscape.

By Tiffany Zhou