Preparing for China's urban billion
By pursuing a more concentrated urbanization path guided by action to boost urban productivity, China's local and national policy leaders would minimize the pressures and maximize the economic benefits of urban expansion. A two-part report details the scale, pace, and global implications of urbanization at the sector and city levels.
Read more Launch executive summary (PDF - 3.54 MB) Launch this report (PDF - 7.56 MB)
Executive summary
If current trends hold, nearly one billion people will live in urban centers by 2025, bringing enormous pressure points to many cities, including the challenges of securing sufficient public funding for the provision of social services and dealing with demand and supply pressures on land, energy, water, and the environment. MGI finds that a more concentrated pattern of urbanization is most likely to mitigate pressures and increase the overall productivity of the urban system, while encouraging "urban productivity" initiatives at the city level could also generate substantial positive outcomes in all scenarios.
In 2008, more than half of the world's population live in urban areas—and one
in five of these city dwellers are Chinese. China's urbanization will have
profound consequences not only for the People's Republic itself but also for the
rest of the world. The purpose of this report is to explore this spectacular shift toward urban living and use its findings to provide a reliable fact base for the benefit of political
decision makers as well as those in the private sector.
This chapter describes the history of China's urbanization since the creation of the People's Republic in 1949 and discusses the political drivers and economic trends that have enabled China's urbanization on a massive scale. It illustrates how recent years have seen power devolve from the center to cities that are now the driving force of urbanization. It also focuses on the emergence of new and "unofficial" cities. At the end of this chapter, MGI discusses the complexities of defining urbanization, urban areas, and migration in China and the definitions used for the purposes of the analysis in this report.
This chapter tells a predominantly qualitative urbanization story at the city level based on 14 city visits and research. It presents the microeconomics of the drivers of urbanization in cities and describes the three-horizons framework that MGI formulated as the basis for analyzing the evolution of policy and approaches that cities employ as they urbanize.
This chapter describes MGI's trendline projections for China's urbanization, showing that
urbanization will likely continue at a pace resulting in huge scale over the next 20 years, drawing out comparisons with the period from 1990 to 2005 and putting urbanization in a global context. It also describes how current trends are leading China toward a dispersed pattern of urbanization, and it lays out alternative urban shapes—two dispersed urbanization scenarios and two concentrated urbanization scenarios.
The research draws out the key implications of these shapes of urbanization to better inform our understanding of the pros and cons of models of urbanization that favor the growth of midsized and small cities.
Chapter 5: The opportunity of concentrated urbanization
This chapter articulates the argument for concentrated urbanization, spells out its benefits and challenges, and outlines the policies that China could put in place at
the national level to engineer a shift toward a concentrated urbanization model. It explores the implications of concentrated urbanization and other scenarios along four
dimensions: land and spatial development, resources and pollution, jobs
and skills, and the economy and funding. MGI introduces the concept of urban
productivity as a way of engraining a shift in mind-set from an exclusive emphasis on GDP growth toward a focus on the efficiency of urbanization in a concentrated model.
Chapter 6: An urban productivity agenda for city leaders
This chapter makes the case that, regardless of the shape of urbanization, China can pursue an effective urban productivity agenda at the local level. Cities can focus such an effort around the four "pillars of urbanization": land and spatial development, resources, people development (jobs and skills), and the economy and funding. MGI offers examples of city-level initiatives and puts these in the context of local and international best practices.
Chapter 1: Local urbanization: 14 city case studies
This section presents stand-alone profiles of 14 representative cities with a short preface explaining the urbanization framework prevalent in China in three urbanization horizons: industrializing, transforming, and modernizing. Each city case presents the fact base
of observations along the dimensions of urbanization used in our horizons framework. Launch this chapter (PDF - 1.43 MB)
This section looks at sector-specific pressure points and opportunities over the next 20 years across urbanization scenarios. The research discusses the implications of urbanization for the economy and other major dimensions. It also includes a technical appendix providing more detailed information on the methodology used as the basis of MGI's analysis of the implications of four urbanization scenarios for these ten features of the Chinese landscape.
Urbanization in China: Test your knowledge Understand the implications of China's urban planning decisions through an interactive quiz simulating the impact of choices made by city mayors in China. Launch interactive quiz
Video presentation of findings A video presentation of the findings of MGI research on China’s urbanization brings to life the opportunities and challenges of China's urban growth. Watch a video
Visualizing alternatives for China's urban growth An interactive graphic highlights four-alternative scenarios for urbanization in China and the potential impact on the economy, natural resources, transport, floor space, jobs, and skills.
View Interactive graphic overview
If you've got it, spend it: Unleashing the Chinese consumer By pursuing a more aggressive program of comprehensive reform, China's leaders could raise private consumption above 50 percent of GDP by 2025, bringing the consumption rate in line with other Asian countries and vaulting China's economy into a new phase. A more consumer-centric economy would generate more jobs, allocate capital and resources more efficiently, spread the benefits of growth more equitably, and also enrich the global economy with $1.9 trillion a year in net new consumption. Read more
Meeting the challenges of China's growing cities China's cities are booming. Intelligent policies could make the good effects prevail over the bad ones. China's dramatic economic growth is intensifying the challenges of urban policy. Read more on the McKinsey Quarterly site
The ‘bird of gold': The rise of India's consumer market If India continues on its current high growth path, incomes will almost triple over the next two decades, and the country will climb from its position as the 12th-largest consumer market today to become the world's 5th-largest consumer market by 2025. Read more
From 'made in China' to 'sold in China': The rise of the Chinese urban consumer Over the next two decades China is expected to transition from an investment-led to more of a consumption-led economy. MGI research finds that as this rebalancing occurs, a massive middle class will emerge. Read more
The value of China's emerging middle class Global companies that focus mainly on serving China's urban affluent consumers risk missing the real opportunity—the emerging middle class. Read more
