Growth fueled by urban investment
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It was China's 11th Five-Year Plan (2006-10) that first called for greater efforts to rebalance China's development patterns. The quest for a harmonious society has been energizing efforts to reduce regional and income disparities. Today, growth is also reaching China's central and western regions. For example, Chongqing had 2.5 million inhabitants in 1980. Today, its urban area has 5 million people and the municipality more than 31 million people. The world's greatest megacity, Tokyo, has only a few million more.
Recently, Chongqing was promoted as a national central city. It is the only municipality under direct central government control in the central and western regions. But it has a group of powerful cities around it.
Like Chongqing, the leading megacities - Shanghai as the center of eastern China, Beijing and Tianjin in northern China and the Bohai Sea rim, Guangzhou in the Pearl River Delta (PRD) region - serve as "heads of the dragon" driving rapid economic growth and integrating China into the world economy.
China's development depends on the rapid growth of these megacities. It is driven by high levels of fixed asset investment and foreign direct investment, their role as trade hubs, rapid restructuring, and high levels of per capita consumption in comparison to other cities.
In fact, China's growth is driven primarily by three economically dominant regions: the YRD and PRD regions, and the Beijing-Tianjin corridor.
For instance, the PRD region is seeking economic integration with Hong Kong and Guangdong to develop a world-class PRD megapolis. In turn, this quest is energizing efforts at the merger of Shenzhen, the mainland's IT center, and Hong Kong, the world's financial center.
In the next 30 years, the GDP of the PRD megapolis could exceed $2.7 trillion on the basis of the current exchange rates. By the end of the 2030s, the PRD region's GDP would be comparable to that of the New York metropolitan area, while its per capita GDP is expected to reach the 2005 level of the London metropolitan area - that is, about $45,000.
Ultimately, China's new regional development is not just about the restoration of the historical glory of the great coastal urban centers. It is driven by these megacities as they serve as growth engines for the neighboring regions. It is history in the making.
The author is the research director of International Business at the India, China and America Institute.
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