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Supersized citiesChina’s 13 megalopolises
Economist Intelligence UnitJuly 2012
About the Economist Intelligence Unit (EIU)
Research arm of The Economist Group for business executives380 analysts and industry specialists worldwide covering
• Analysis and forecasting for over 200 countries and territories
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• Custom client researchVisit www.eiu.com to register for free macroeconomic information on 187 countries
Today’s Presenters
Liu QianDeputy Director, China Forecasting Services
Economist Intelligence Unit
Duncan Innes-KerRegional Editor
Economist Intelligence Unit
4
Access China
Analysis Analysis of regional trends in China 31 provinces + 287 prefectures
Data National Bureau of Statistics Data cleaning
Forecasts State-of-the-art econometric framework—dynamic time
series Out to 2020
China’s growth prospects
• 2012 has been rockier than anticipated
• But longer-term fundamentals remain the same
• China’s development still has far to go—watch the regional story
The rise of the Chinese megalopolis
How many millions?
• What is a megalopolis? Megacity or megacity grouping with
metropolitan population over 10m Part of broader government moves to
integrate larger urban areas to achieve economies of scale
Also results from spread of economic growth inland
• Why does it matter? One-third of the urban population will live in
one of these megalopolises by 2020 In most of them the majority of their
populations will reach middle-class status
How many millions?
• First three megalopolises are well known
• Richer, and continued draw for the educated
• Will continue to see population growth faster than the national average in 2010-20.
From three..
….to thirteen.
• The seven emerging in this decade (2010-20) will be poorer and younger
• Driven by intra-provincial migration…
• …which is in turn driven by improving local economic opportunities
The young and the restless
• Migrants are young
• But the megalopolises are starting to mature rapidly
The young and the restless
• Not all the megalopolises will develop, and therefore age, in the same way.
From zero to 50
• Wider development of the middle class is central to China’s consumption story
• Urban disposable income of Rmb30,000 (nearly US$5,000) used as benchmark
• Megalopolises that emerged earlier are reaching the point where more than 50% of their populations are middle-class earners…
From zero to 50
• …but not all the megalopolises will hit the 50% mark by 2020.
Incomes? Shades of grey
• Income tends to be understated in official household surveys.
• EIU’s estimates show large discrepancy.
• Official figures say 12% of Chinese households earned more than Rmb80,000 a year in 2010.
• When adjusted for grey incomes, this reaches 32%.
Impact on business
Education
• Megalopolises provide weak access to education in comparison with smaller cities
• Population growth outstripped the rise in the number of schools and teachers needed to educate them
• Southern China clusters fare particularly poorly
People’s Daily Online
Retail—the case of Chengdu
• Regional shopping centre for the wealthy in neighbouring provinces
• Local government has set a goal of bringing 20 top international brands to the city every year in the period up to 2015
• City’s entertainment offerings to expand
People’s Daily Online
Healthcare
• Strain set to increase significantly Range of resources
needed to treat ailments associated with urban living
Several of the megalopolises are already starting to age
They are not yet fully equipped to care for the population boom
Not all of them have the same health needs
Xinhua
What next?
What to watch out for
• The rise of China’s megalopolises is sustainable, but subject to risks
• Mismanagement of hukou reform
• Energy and water supplies
• Financial capacity of local governments
• Social unrest
• But these urban agglomerations will be central drivers in China’s rebalancing towards consumption
What next?
Questions?
EIU reports on China
• Download our free report on China’s megalopolises: http://www.eiu.com/megalopolis
• You can also download other recent white papers from the EIU by visiting the Special Reports section on our website:
http://www.eiu.com/landing/special_reports
Thank you.
Contact for more information:
Coralie ThomsonSenior Marketing ManagerEconomist Intelligence [email protected]+852 2585 3839