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Challenges of Urbanization in China

I watched this 7 min video from the McKinsey Quarterly and thought it was pretty good. It focuses on the urbanization that China will undergo over the next decade as hundreds of millions of people flock to urban centers. It also deals with how China should build those urban centers - lots of mega-cities of 10 million+ vs. some mega-cities surrounded by mid-size cities in a hub-and-spoke model vs. proliferation of small townships. Here's the video:









The accompanying article on the topic covers the same material in a little more analytic detail.  Beyond the exact format the urbanization will take, what I think is more interesting is the implications that any mass urbanization will have on the economy there.  Here are some areas of concern:

  • Land - with urbanization and development comes urban sprawl and the loss of arable land - which means heightened concerns over food security
  • Energy - the demand for energy and energy resources will more than double (from 60 quadrillion British thermal units (QBTU) to over 123 QBTU's)
  • Water / Pollution - demand for water will increase while water pollution will increase (with over 60% of the current river water supply not potable and an estimated 5x increase in water pollution, there will be significant shortages of water)
  • Budgets - municipal budgets will need to dramatically increase to keep pace with the services these cities will require (this will be challenging given that many cities already run budget deficits)
  • Talent - education will have to find a way to keep pace with the ensuing demand for top talent (although I would argue this is the kind of problem you want to have)
Lots of challenges and lots of opportunity given how much money will be invested in developing these centers (and in the consumer class that will result from it).


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