Sustainability of Chinese cities: how does the urban growth model matter?
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Dr. Yunqing Xu 徐蕴清博士 Managing Director [email protected] Birmingham, 17 April 2013 Sustainability Challenges for Chinese Cities Zerstart Consulting
description
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.
Transcript of Sustainability of Chinese cities: how does the urban growth model matter?
Dr. Yunqing Xu 徐蕴清博士 Managing Director
Birmingham, 17 April 2013
Sustainability Challenges for Chinese Cities
Zerstart Consulting
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
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
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
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
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
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
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Chinese cities: extremely diverse, unbalanced and sophisticated
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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
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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
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?
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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
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Rapid urban sprawl that intensifies land shortage
Source: CNKI statistics 1991, Google Earth Map 2011
72 15
1433
1055
644 603 587 563465
354
37141
336182
397254
0
200
400
600
800
1000
1200
1400
1600
Shanghai
Beijing
Shenzhen
Guangzhou
Tianjin
Dongguan
Suzhou
Xi’an
km2
1991 2011
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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. �
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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
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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 �
Page 17
Housing price inflation: embarrassment of macro controls
Source: NBSC 1998-2010
1.40%
0.00%1.10%
4.80%
7.60%
5.50%
7.60%6.50%
1.50%
9.70%
2.20%
9.99%
3.70%
-2%
0%
2%
4%
6%
8%
10%
12%
98 99 00 01 02 03 04 05 06 07 08 09 10
The growth rate of property prices �
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Fierce local competition: the case of Beijing-Tianjin Shift it into ‘THE’ Economic Centre of Northern China
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Fierce local competition: the case of Shanghai - Suzhou Remote location of Pudong International Airport
Page 20
Is this in Suzhou or London?
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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.”
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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 �
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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
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%
Page 25
Headline path in striving for sustainable development
9th & 10th FYP China 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
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.
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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
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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
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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
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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 qualityWater 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 protectionIdle 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 propertyPrice earning ratio for housing
Property investabilityReal estate investment
Vacancy rate of housingVacancy rate of officeVacancy rate of retail
Efficiency of property useReal estate use
Housing sizeProperty location Housing maintenance
Quality of property
Property completions & purchases Quantity of property
Scale of government land sale Revenue of government land sale
Property development capacityReal estatedevelopment
GDP growth & per capita GDP FDI & inward investment growth Share of property sector in GDP
Economic growth General performance
Measurement variablesIndicatorsThemes
Economic Sustainability
Annual days of good air qualityWater 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 protectionIdle 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 propertyPrice earning ratio for housing
Property investabilityReal estate investment
Vacancy rate of housingVacancy rate of officeVacancy rate of retail
Efficiency of property useReal estate use
Housing sizeProperty location Housing maintenance
Quality of property
Property completions & purchases Quantity of property
Scale of government land sale Revenue of government land sale
Property development capacityReal estatedevelopment
GDP growth & per capita GDP FDI & inward investment growth Share of property sector in GDP
Economic growth General 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 marketadministration
Transparency of planning processImplementation of urban plans
Transparency of urban planning
Capacity of non-government organisationsRole of non-govern-mental sector
Transparency of governments in generalGovernment coordination
Transparency of government Urban governance &planning
Enforceability at central & local levelsRule enforceability
Policy clarityPolicy continuityPolicy sufficiency
Policy guidance
Legal clarityLegal continuityLegal sufficiency
Legal guidanceLegal & regulatoryframework
Institutional Sustainability
Impacts of property developments on historic buildings Destruction 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 marketadministration
Transparency of planning processImplementation of urban plans
Transparency of urban planning
Capacity of non-government organisationsRole of non-govern-mental sector
Transparency of governments in generalGovernment coordination
Transparency of government Urban governance &planning
Enforceability at central & local levelsRule enforceability
Policy clarityPolicy continuityPolicy sufficiency
Policy guidance
Legal clarityLegal continuityLegal sufficiency
Legal guidanceLegal & regulatoryframework
Institutional Sustainability
Impacts of property developments on historic buildings Destruction 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
