There’s undoubtedly a Quixotic character to the ‘China should do X’ mode of outside commentary, but Yukon Huang’s short Bloomberg article advising revision of the country’s urbanization policies represents the genre at its best. Noting the agglomeration effects that yield disproportionate returns to urban scale, Huang recommends a turn away from the proliferation of new minor cities, and towards megacity growth.
China is already in a class by itself in accounting for 30 of the 50 largest cities in east Asia. It boasts half a dozen megacities with populations of more than 10 million and 25 “large” cities exceeding 4 million. In fact, though, the only way China will achieve its desired productivity gains is if its leaders allow cities to evolve more organically in response to market forces. They need to let cities like Beijing get bigger.
Urban concentration creates real problems, but these are indistinguishable from the challenges any genuine process of socio-economic advance has to confront. The solutions to these problems will be the same steps that carry the country forward into unexplored territory — beyond ‘catch up’ and into the open horizons of the future. Everything learned from concrete economic history suggests that technological and business opportunity will be ratcheted upwards by exactly those forces which promote megacity agglomeration — and better still urban concentration or intensity — to historically unprecedented levels. That is how — and where — deep social innovation takes place.