During the weekend it seems like Bloomberg was back up in full swing to discuss the growth potential of China, as a pre-Fourth Plenum house cleaning. Here, they focused on the potential for China to grow using a freer city planning style and letting internal migrations go completely without rules. I really like the analysis, but find myself disagreeing on some of the details. Sure, I bet a lot of the people here have condensed their comments from masses of research, but it still flies a bit in the face of what my personal experiences are. (mad respect to Andy Xie though!) Here’s hoping I can remain somewhat coherent while discussing this.
I do think that the whole argument goes into a large quality-vs-quantity debate, and is slow, measured, controlled quality growth of cities that leaves them better armed for the future really worth sacrificing for 1-1.5% of annual GDP growth? The latter part of the article highlights this, but I think it does so rather ineffectively.
Tying together the megalopolis that is Guangdong is a rather better example of what they should be shooting for in terms of infrastructure than some bus lines in Guangzhou individually in my opinion. Combating urban sprawl while also getting more populated cities will require a slightly different view of property development in many places, and allow for a bit more runaway prices. Now, property boom-to-bust or more gradual growth that limits the problems China is currently facing? I don’t like the idea of a property boom to be honest…
China has since Deng Xiaoping been very gradual in its political approach, and I really think that the idea of freely allowing and encouraging everyone who can buy a train ticket to go to Shanghai, Guangzhou or Beijing might not be the best idea. Besides, does the world have successful cities above the 30 million population mark? (No, Tokyo doesn’t count all of Greater Tokyo in my book, and it developed a lot slower than any comparison city in China. Tokyo at 37 million is identical to saying Guangzhou has 50 or 100 million.) Does anyone look to Mexico City as the hallmark of urban development and economic additions?
If you have considerable dialect barriers, some cultural barriers as well, and current problems with urban sprawl? Yes, you need better politics, but building the infrastructure for decisions that guarantees decent urban planning before calling in the migrants might be a better approach. Having massive economic and skill gaps between different areas in China (easily between Gross Province Product per capita of US$2 000 and US$25 000 economically) might provide better opportunities and avoid structural stickiness if the people are kept somewhat closer to home. Learning on the job and hoping for a promotion might not be the best if you have little savings and hope for a promotion to help you stay in the property you are in at the moment.
In addition, the Chinese inspired me greatly when I stayed in southern Guangdong and saw first-hand the people who went down to that area from western and central China to learn business and apply that knowledge to start firms back home. That reverse internal brain drain and future prospects at these areas I think are completely necessary for making it viable to mount infrastructure projects that connects and grows all of China, not just the eastern coastal cities, which will ultimately make all of China better off in my view.
There are a lot of short term vs. long term considerations on fuzzy data to begin with, which on top of that has to be extrapolated. But if we can compare apples to bananas (Tier 1 China vs Tokyo and Seoul, or even the US!), why not oranges? (New Delhi? Manila? Bangkok? Kuala Lumpur?) All these cities have rather significant problems with urban sprawl even though their economies have been growing slower than China. Development is a process, and Bloomberg implying that “developed world urbanization yesterday!” is good for China gives me flashbacks from the Chinese rocket scientists hired to draw out economic policy. By means of solving differential equations and deciding that the population metrics of the west were the best. Now there’s 20 million young men out there that can’t find wives and have to spend their time working to the bone to get a chance to buy an apartment to even have a chance. Property bubble and demographic disaster at once!
We all took our sweet time to get to where we were, China doesn’t have that luxury, and thus they might have to do things slightly different on their path than we are doing things now.