It discusses the challenges of urban sustainable development in China through a deeper understanding of the prevalent property-led urban development pattern and the dynamic impacts of the real estate's sector on urban economic, environmental and social landscape in China. It also indicates the prospects of eco city campaign, which remains being largely affected/shaped by the property industry.
Sustainability of Chinese cities: how does the urban growth model matter?
1. Dr. Yunqing Xu 徐蕴清博士
Managing Director
lynnxu1013@googlemail.com
Birmingham, 17 April 2013
Sustainability Challenges
for Chinese Cities
Zerstart Consulting
2. Page ! 2
Agenda
n The importance and complexity of sustainable
development in global and Chinese cities
n Three pillars for understanding China’s urban
growth pattern
n China’s urban sustainability strategies, new
development and opportunities
3. Page ! 3
Sustainable development is increasingly a problem
of urban sustainability
Centre for economic
growth but also
financial crisis and
economic risks under
accelerated globalisation
Economic roles
Use 80% of world’s
Energy, emit 70% of
world’s CO2, suffer
from recourse scarcity
and ecological decay
Environmental impacts
Cities are now home to over
half of the world’s population
32% of the world’s
population live in
slums under urban
sprawl and divide
Social-spatial divides
4. Page ! 4
How we view China: its world roles
World’s second
largest economy
since 2011
World’s largest
energy consumer
since 2010
World’s largest
waste generator
since 2004
World’s largest
emitter of CO2
since 2007
2027
2020
2016
5. Page ! 5
China’s urbanisation: profound influence to the world
“Urbanisation of China and the high-tech
development of the U.S. would be the two important
keys which would profoundly influence the human
development in the 21st century.”
Nobel economic prize winner
Joseph E. Stiglitz
6. Page ! 6
Chinese cities: key to potentials and challenges
“Urbanisation is a complex and big project that will
trigger profound changes in economy and society.”
- China’s Premier Li Keqiang
7. Page ! 7
The march of urban immigrants that are never seen
52.60%
17.9%
65.0%
80.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 30 50
Over 300 million urban immigrants by 2025
Another 300 million by 2050
Emergence of 10 mega cities with over 10 million by 2025
8. Page ! 8
Chinese cities: extremely diverse, unbalanced and sophisticated
9. Page ! 9
Property-led urban development: a prevalent
urban growth mode
Government sale of
land use right
Generate local land
revenue
Promote land and
property development
Reinvest in
infrastructure
construction
Lure local
investment
City image-
building
Improve
housing
conditions
Boost local
economic
growth
10. Page ! 10
Property-led strategy: a driving urban force
in the UK during the 1980s
n Tackle severe urban declines
n Urban regeneration led by and relies
on property development
n Revitalise old city centres
n Rebuild local image and confidence
n Create jobs
n Attract inward investments
n Boost economic growth
§ Government support
§ Private participation
§ Economic priority
§ Short-term perspective
11. Page ! 11
Pillar one: from project-level to city-scale
The role and scale of real estate sector in China
2012 Average (2000-2012)
Annual GDP growth rate 7.8% 9.9%
Ratio of fixed asset investment in GDP 72.1% 50.5%
Ratio of property development in GDP 13.8% 8.9%
Annual completion of property (million m2) 994.25 --
Chinese cities are becoming the
world’s largest building sites
A city-level movement: we will never be second?
12. Page ! 12
Over-reliance on land finance
Source: NBSC 2001-2012, MLR 2001-2012
16.6%
28.4%
38%
71.7%
48.8%
33.5%
50.7%
41.9%
39.0%
53.9%
55.0%
31%
0.0
500.0
1000.0
1500.0
2000.0
2500.0
3000.0
3500.0
01 02 03 04 05 06 07 08 09 10 11 12
RMB billion
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
land sale income ratio of land sale income to local fiscal revenue
13. Page ! 13
Rapid urban sprawl that intensifies land shortage
Source: CNKI statistics 1991, Google Earth Map 2011
72
15
1433
1055
644 603 587 563
465
354
37
141
336
182
397
254
0
200
400
600
800
1000
1200
1400
1600
Shanghai
Beijing
Shenzhen
G
uangzhou
Tianjin
D
ongguan
Suzhou
Xi’an
km2
1991 2011
14. Page ! 14
Local fiscal instability
Source: China Merchants Securities 2008
With most of the local debts in 2011-2012 being refinanced, the year 2013
onwards will see the greatest debt risks in Chinese local governments.
15. Page ! 15
Pillar two: dominant role of government
n US1$ trillion to expand from 78,000km to
120,000km by 2020
n Build 13,000km high-speed rail by 2020
16. Page ! 16
Government priority: housing privatisation
and commercialisation
Source: Statistics Canada 2006; Whitehead and Scanlon 2007; NBSC 2008; BFS 2010; Statistics Sweden 2010; Census Bureau of US 2011; DCLG 2011
68.4%
63.0%
43.0%
57.2%
54.0%
34.6%
83.0%
66.4% 66.2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
China Canada France Germany Netherland Sweden Switzerland UK US
International comparison of home ownership rate
21. Page ! 21
Third pillar: weak power of private sector
n Good ‘guanxi’ with government: critical to business success
n Professional organisations: under government surveillance
n Exceptional: property developers enjoy much greater influence
President of Beijing Huayuan Group
“I am a businessman, so
that I should not
consider the poor.”
“Making profit is the
priority of property
developers.”
22. Page ! 22
Expansion of high-end development
Source: NBSC 2009, REICO 2009
77%
64%
50%
16%
22%
13%
19%
28%
9%
0%
10%
20%
30%
40%
50%
60%
70%
80%
1980-1989 1990-1999 2000-2005
<90 m2 90-120 m2 >120 m2
Proportion of housing units by size
23. Page ! 23
Low housing affordability and intense social divide
Source: INSEE Official Statistics 2009; 2009; BFS 2010; J.P. Morgan 2010; SCB 2010; 2010; Census Bureau of US 2011;
DCLG 2011; SBD 2011; Hypoport Group 2011; Statistics Netherlands 2011
7.18
7.04
6.70
5.84
4.96
3.96
2.82
0 1 2 3 4 5 6 7 8
Sweden
France
China
Germany
UK
Netherland
US
International comparison of housing price to earnings ratio
24. Page ! 24
15.1%
17.6%
35.2%
6.0%
13.5%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
UK 2006 Sweden 2006 Netherland 2004 Germany 2006 France 2007
Proportion of affordable housing in total housing stock
Social housing shortage: social inequality and instability
Economic decent housing (EDH) construction 2000 2005 2010
EDH investment to total investment in housing 14.0% 4.6% 3.0%
EDH new starts in total housing new starts 21.8% 6.4% 4.0%
EDH construction in total housing construction 20.2% 6.3% 4.2%
EDH completion in total housing completion 26.1% 7.4% 5.0%
25. Page ! 25
Headline path in striving for sustainable development
9th & 10th FYPChina Agenda 21
Hu-Wen
Administration
Xi-Li
Administration
1994 1996 2006 2013
China’s increasing commitment towards sustainable development
§ The
first
developing
country
to
establish
a
na6onal
agenda
21
§
Severe
local
resistance
with
economic
priority
§
Main
targets
of
reduc6on
of
energy
intensity
were
not
met
§
Watershed
§
Op6mise
the
mode
and
structure
of
growth
§
Harmonious
society
§
Energy
target
by
2010
was
not
met
§
Change
of
growth
mode
§
New
type
of
urbanisa6on
§
Redirect
incen6ves
of
local
officials
26. Page ! 26
Urban sustainability strategies: a new fever in Chinese cities
n Recycling (Circular) Economy
n Green Urban Growth
n Eco-cities or Low-carbon cities a tangible solution to
international pressure and national conditions
n National task of ‘saving energy and cutting emission’
n Measurable indicators of local officials’ performance
Among the current over 600 cities in China, more
than 90% of them are planning to build eco-cities,
and 50 municipal governments have already made
formal proposal to the central government.
27. Page ! 27
Motivation of local governments
Local benefits
of Eco-cities
Central
Support
‘Eco-City’
Title
City
Promotion
Policy support to
foster economic
restructuring
Official designation
that opens more
opportunities
Attract domestic
and international
experiments,
technologies and
innovation
28. Page ! 28
n Build from scratch at grand scale (e.g.
70km2 Dongtan, 30km2Tianjin, Beijing
100km2)
n Rely on real estate development
n Foreign designers and consultancy
(e.g. Arup, Atkins)
n Expensive to build partly due to
untested technologies
n No standard concepts
n Varied local strategies
n Difficult to monitor and evaluate
n Wait for more experiments and local
innovations
Features & challenges of eco-city projects in China
29. Page ! 29
Conclusions: opportunities through more understanding
n Tremendous opportunities: city-level and grand-scale
property-led urban growth and sustainability strategies urban rapid
urbanisation, keen to international experience and experiments
n Coalition with government: the predominant power of the
government in pursuing urban results and intense competition
among Chinese cities
n Role of foreign companies: contribute to bold and
innovative ideas, concepts, standards and technology that open up
new local development opportunities
30. Page ! 30
Zerstart Consulting: our strengths and focus
n Urbanisation and sustainable
development of cities
n Urban sustainability index
n Eco-city development and
evaluation
n Institutional rearrangements on
growth model change
n Land and housing market
n Property investment in the UK
and China
Annual days of good air quality
Water pollution and shortage
Green space per capita
Waste collection and recycling measures
Pollution levelPollution
Built density (site/city)
Floor area ratio/plot ratio (FAR)
Building density
Arable land protection
Idle land disposal
Recycling of landLand use
Proportion of new buildings that meet energy standardsEnergy efficiency of buildingsEnergy use
Environmental Sustainability
General transport facilities by modeGeneral transport
Mass transit projects by modePublic mass transitInfrastructure quality
Rental and price of commercial property
Price earning ratio for housing
Property investabilityReal estate investment
Vacancy rate of housing
Vacancy rate of office
Vacancy rate of retail
Efficiency of property useReal estate use
Housing size
Property location
Housing maintenance
Quality of property
Property completions & purchasesQuantity of property
Scale of government land sale
Revenue of government land sale
Property development capacityReal estate
development
GDP growth & per capita GDP
FDI & inward investment growth
Share of property sector in GDP
Economic growthGeneral performance
Measurement variablesIndicatorsThemes
Economic Sustainability
Annual days of good air quality
Water pollution and shortage
Green space per capita
Waste collection and recycling measures
Pollution levelPollution
Built density (site/city)
Floor area ratio/plot ratio (FAR)
Building density
Arable land protection
Idle land disposal
Recycling of landLand use
Proportion of new buildings that meet energy standardsEnergy efficiency of buildingsEnergy use
Environmental Sustainability
General transport facilities by modeGeneral transport
Mass transit projects by modePublic mass transitInfrastructure quality
Rental and price of commercial property
Price earning ratio for housing
Property investabilityReal estate investment
Vacancy rate of housing
Vacancy rate of office
Vacancy rate of retail
Efficiency of property useReal estate use
Housing size
Property location
Housing maintenance
Quality of property
Property completions & purchasesQuantity of property
Scale of government land sale
Revenue of government land sale
Property development capacityReal estate
development
GDP growth & per capita GDP
FDI & inward investment growth
Share of property sector in GDP
Economic growthGeneral performance
Measurement variablesIndicatorsThemes
Economic Sustainability
Professional qualification and trainingSkills & training
Availability and validity of dataAvailability and quality of data
Independence & professionalismProfessional bodies
Role & power of governmentGovernment administrationProperty market
administration
Transparency of planning process
Implementation of urban plans
Transparency of urban planning
Capacity of non-government organisationsRole of non-govern-
mental sector
Transparency of governments in general
Government coordination
Transparency of governmentUrban governance &
planning
Enforceability at central & local levelsRule enforceability
Policy clarity
Policy continuity
Policy sufficiency
Policy guidance
Legal clarity
Legal continuity
Legal sufficiency
Legal guidanceLegal & regulatory
framework
Institutional Sustainability
Impacts of property developments on historic buildingsDestruction to historic buildings &
sites
Cultural heritage
Level of compensation & relocationDemolition & relocationSocial cohesion
New starts & completions
Quality (size, location)
Social housing provisionSocial housing
Urbanisation ratePopulation growth & migrationPopulation change
Social Sustainability
Professional qualification and trainingSkills & training
Availability and validity of dataAvailability and quality of data
Independence & professionalismProfessional bodies
Role & power of governmentGovernment administrationProperty market
administration
Transparency of planning process
Implementation of urban plans
Transparency of urban planning
Capacity of non-government organisationsRole of non-govern-
mental sector
Transparency of governments in general
Government coordination
Transparency of governmentUrban governance &
planning
Enforceability at central & local levelsRule enforceability
Policy clarity
Policy continuity
Policy sufficiency
Policy guidance
Legal clarity
Legal continuity
Legal sufficiency
Legal guidanceLegal & regulatory
framework
Institutional Sustainability
Impacts of property developments on historic buildingsDestruction to historic buildings &
sites
Cultural heritage
Level of compensation & relocationDemolition & relocationSocial cohesion
New starts & completions
Quality (size, location)
Social housing provisionSocial housing
Urbanisation ratePopulation growth & migrationPopulation change
Social Sustainability