Concerns for secondary cities

Second, they have greater flexibility to seize potential economic opportunities: They are closer to the untapped inland consumers and the inland labor markets, and their land costs are significantly lower than megacities. They also have more recently constructed infrastructure, which is better designed and more up-to-date. Communications technology, commercial parks, institutional structures, or enabling entrepreneurship, whatever it is, secondary cities are often in the early planning stages and do not have to work around legacy infrastructure and entrenched institutional and political systems. The inland cities are now witnessing the relocation of heavy industries from coastal areas and growth in the high-value technology sector.

However, such growth is not always rosy for secondary cities. In central areas large real estate projects spring up where much-loved historical neighborhoods once stood. At the suburban edges, a new wave of modern development is encroaching on farmland and villages. And as property values rise in the secondary cities, conversion of land into taxable residential and commercial properties is a common way for local governments to raise revenue.

Also rapid city-level economic growth is not always sustainable. Cities capturing fast growth at the margins of economic expansion risk losing it just as quickly. For example, Yantian, once an agricultural town on the fringes of the Pearl River Delta, experienced high growth from foreign industrial investment throughout the 1990s. Today, however, fewer than half of its manufacturing facilities are still operating. The faltering global economy, rising wages, and a stronger renminbi (up 34 percent against the US dollar since 2005) drove many local manufacturers to bankruptcy.

Cities losing manufacturing can experience rapid population decline, which weakens the consumer base. This is especially true for cities that fail to address the pitfalls of the household registration system, as workers denied social support services are increasingly transient.

China's secondary cities will also suffer a widening infrastructure deficit as population growth - both native and migratory - strains existing systems. Nearsighted urban planning strategies emphasizing speed over prudence have exacerbated this problem.

The benefits of urban real estate development are uncertain. Some inland cities are now experiencing an oversupply of housing. This undermines the strategy of "building to grow." Additionally, some farmers have aggressively protested at the seizure of agricultural land for commercial purposes when they were not been paid the market prices.

Finally, an ageing workforce and slowing population growth rate are creating economic headwinds in China, impacting not only secondary cities but all cities. Indeed, the UN projects that China's labor force is expected to shrink by 67 million between 2010 and 2030. By 2030, China will have more elderly people than the current population in the US.

Secondary cities must have diversified growth strategies and a sustainable competitive position to survive inevitable economic slowdowns.

Economic growth will produce many job opportunities in China's inland cities, as producers in the coastal megacities suffer lower productivity due to congestion and higher labor and land costs.

However, wise planning can help to mitigate these inevitable impact of problems in the inland cities. Decision-makers should start by heeding the lessons to be learned from the development experiences of the country's megacities.

China's inland secondary cities have a roadmap to achieve this goal, but it will require visionary leadership and comprehensive policies that address all dimensions of urban society.

Asit K. Biswas is the distinguished visiting professor at the Lee Kuan Yew School of Public Policy, Singapore, and co-founder of the Third World Centre for Water Management. Kris Hartley is a doctoral student at the Lee Kuan Yew School of Public Policy.

(China Daily 11/12/2013 page9)

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