"The Unrest In Hong Kong And China's Bigger Urban Crisis"

From New Geography:

The current protests in Hong Kong for democracy reflects only part of the issues facing Chinese cities, as they grow and become ever more sophisticated. In just four decades, China has gone from 17.4 percent to 55.6 percent urban, adding nearly 600 million city residents. And this process is far from over: United Nations projections indicate that over the next 20 years, China’s urban population will increase by 250 million, even as national population growth rates slow and stall.

Overall this transition has been spectacularly successful. As it has urbanized, China, following the lead of Hong Kong, has become a much richer country, expanding its share of global GDP from 2 percent in 1995 to 12 percent in 2012.

China now boasts four megacities of over 10 million people, the most of any country. The population of Shanghai, a cosmopolitan world city decades before the Communist takeover of the country, has expanded almost 50% since 2000, and the ancient capital Beijing and the southern commerce and industrial hub of Guangzhou have grown nearly as rapidly. The U.N.’s growth projections suggest that the future list of megacities will include Chongqing, Tianjin and Chengdu.

Shenzhen, one of the four current megacities, epitomizes the speed of China’s urbanization. A small fishing village along the Hong Kong border with a few factories when I first visited three decades ago, the city rose as the focus of Deng Xiaoping’s first wave of modernization policies. In 1979 it had roughly 30,000 people; now it is a thriving metropolis of 13 million whose population in the past decade grew 56%. Its rise has been so recent and quick that the Asia Society has labeled it “a city without a history.”

Shenzhen has not only grown but thrived over the past three decades, as was evident on my most recent trip. In contrast to the often impoverished slum cities of the developing world, China’s cities have grown much as Britain’s did in the 19th century, upon the back of rapid expansion of manufacturing and trade. This sets Chinese urbanization apart from India‘s; manufacturing’s share of Indian GDP is half that of China. In the process, Chinese cities have become more tied to the global economy, exposing its people to international trends, as well as greater affluence. This is exactly what has happened earlier in Hong Kong, setting the stage for some of the recent unrest. At the same time, the leading cities of the West are, for the most part, barely growing, and much of that by dint of immigration. With plunging birthrates and generally anemic economies, the great cities of the Europe and North America are hardly likely to blaze a brash urban trail; they are more concerned with retaining what they can from their historical inertia. There is no city in the West — even Houston and Dallas-Fort Worth — that approaches the dynamism one now finds in China.

The Coming Chinese Urban Economic Crisis
China’s successful urban transformation now faces a challenge as the country’s export-led economy weakens. Labor costs are soaring and young adults, some four times as many of whom have attended college than those who came of age a decade ago, have little interest in factory work. At the same time, many of China’s most successful and talented people are seeking out lives abroad; two-thirds of the country’s affluent residents, according to one survey, are considering migrating overseas.

The labor crunch is most intense in China’s coastal cities, home to most of the urban population. These face greater competition from less expensive urban areas further west, such as Chongqing and Chengdu. But even these areas are facing a labor shortage, forcing companies to fill their ranks with not necessarily voluntary student laborers. There is also growing competition as well in labor-intensive industries like textiles from cheaper cities in places like Vietnam, Indonesia and Bangladesh....MORE