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Chinese Cities, Indian Cities: A Telling Contrast

In China and India, cities are the locomotives of the new growth models. They pull the economy in the right direction, and this is reflected not only in their foreign trade performance but also in the reduction of poverty.

Chinese Cities, Indian Cities: A Telling Contrast

In China and India, cities are the locomotives of the new growth models. They pull the economy in the right direction, and this is reflected not only in their foreign trade performance but also in the

reduction of poverty.

DANIEL BIAU

C
hina and India are the two demographic giants of the planet. Together they count close to 2.5 billion inhabitants, representing more than 37 per cent of the world population (estimated at 6.6 billion people in 2007). They are about to become economic giants and are shaking traditional power relations in the international arena. A new world economic order is in the making, as called for by the non-aligned movement since the Bandung conference of 1955.

If the power of nations varies according to the economic policies adopted by their governments, its fundamental basis lies in their demography, numbers of inhabitants and available and active workers. History has demonstrated many times that the most populous countries are potentially the most powerful ones. And this power is also correlated with the territorial distribution of the population as we will observe in the cases of China and India. Economic comparisons between the two countries appear more and more frequently in specialised publications1 but they rarely emphasise the role of cities in the development of these economies. This article is an attempt to address this shortcoming by synthesising available data and highlighting the differences and similarities between Chinese and Indian cities.

Urban Growth

The most recent and official statistics2 can be used to make a first comparison from the demographic viewpoint between the two countries and their agglomerations.

In 1980, China had 999 million inhabitants, India had 689, i e, 310 million less. Fifty years later, in 2030, China and India will have, approximately, the same population – 1.45 billion. In 2007, China counts

1.332 billion inhabitants, India 1.135. The current gap between the two countries is therefore about 200 million. The demographic growth of India is much faster, due to the lack of family planning than the Chinese one. The present growth rate of population is estimated at 1.4 per cent per annum in India, compared to a lower rate of 0.58 per cent in China. China is getting older, which presents risks in the medium term, similar to those that Europe has to face in order to maintain an inter-generational solidarity as the share of active population decreases.

In 1987, China and India had the same rate of urbanisation – 25 per cent. In 2007, China is 42 per cent urban, India only 30 per cent. The rates of urban growth are 2.7 per cent per year in China (falling towards 2 per cent) and 2.35 per cent in India (increasing towards 2.5 per cent). At the start of the reform period, in 1985-90, the urban population of China was growing at a very high pace of 5 per cent per year.

If China has urbanised enormously during the last 20 years (in absolute terms, the number of urban residents doubled from 276 to 558 million), India has also followed the same universal trend but at a slower pace (urban increase from 200 to 340 million). In 2030, according to UN projections, China should be 60 per cent urban and India 40 per cent. China is likely to reach the 50 per cent urban threshold by 2016.

Main Features

As far as the size of large cities is concerned, China and India are rather similar. The two countries indeed have the same number of cities (seven) of more than 5 million people. In 2007, in China they are: Shanghai (15 million), Beijing (11.1 million), Guangzhou (8.8 million), Shenzhen (7.6 million), Tianjin (7.2 million), Hong Kong (7.2 million) and Chongqing (6.5 million). In India, also in 2007: Mumbai (18.9 million), Delhi (15.8 million), Kolkata (14.8 million), Chennai

(7.2 million), Bangalore (6.8 million), Hyderabad (6.4 million) and Ahmedabad

(5.4 million). The parallelism is striking – the two big ports in the lead, followed by the two capitals. We should clarify that the figures in parentheses correspond to the physical agglomerations (the only pertinent ones for international comparisons) and are not related to administrative boundaries, which often include large rural territories. For example, the autonomous municipality of Chongqing, which gathers 32 million inhabitants over 82,300 sq km – it is de facto what a “small” province would be, according to such an administrative definition, “the second most populous city in the world” (after Tokyo)!

It should be noted that the seven largest Indian cities are much better distributed in terms of national territory than their Chinese counterparts, all located in the coastal region with the exception of Chongqing. In India. the hexagon DelhiKolkata-Chennai-Bangalore-Mumbai-Ahmedabad covers the country’s territory quite nicely. In China, urbanisation intensity focuses primarily on three eastern corridors: the Bohai industrial region (Beijing-Tianjin-Tangshan) in the north,

Economic and Political Weekly August 18, 2007 the Yangtze delta (Shanghai-Nanjing-Hangzhou) in the centre and the Xi Jiang or Pearl River delta (Guangzhou-Shenzhen-Hong Kong) in the south. We may add two secondary corridors: the Shandong peninsula and Yangtze banks.3 The extreme case of Shenzhen, a city whose population increased tenfold in 20 years, illustrates the boom of the special economic zones and magnitude of the migration to coastal provinces since the beginning of the economic reforms in the 1980s. The Pearl river delta economic zone, with 65 million people, would, as a separate country, be the world’s 18th largest economy and its 11th biggest exporter, ahead of India!4 According to The Economist, it has enjoyed an astonishing average annual growth rate of 17 per cent for the past quarter century.

China has a large number (100 in 2007) of million plus cities, 140 cities with above 7,50,000 inhabitants and 670 cities with more than 1,00,000 inhabitants, while India counts only 35 million plus cities (known as metro-cities), 57 cities with above 7,50,000 inhabitants and 400 cities with more than 1,00,000 inhabitants. The urban network of what should not be dubbed “useful China” (the coastal strip, 300 km wide, representing approximately 10 per cent of the country area but generating probably 75 per cent of its GDP) is dense and relatively balanced, while India remains a country of big villages and medium-sized towns, spatially well distributed but poorly interconnected.

Fundamental Differences

A comparative analysis of the key urbanisation factors is necessary to identify the structural differences between the two countries because they give their respective urbanisation processes specific and sometimes opposite physionomies.

History is important in both countries, which are also places of very ancient civilisations. The history of Chinese urbanisation is essentially endogenous [Biau 2007] (moving from the Yellow river to the Yangzi basin), in spite of two famous northern dynasties, Mongol (Yuan) and Manchu (Qing). It is a fundamentally exogenous process in India (started in the Indus and Ganges basins but mostly determined by invaders coming from central Asia in the 13th century to establish the Delhi sultanate, then by the Mughal empire as of 1526, and the British colonisation from the end of the 18th century to the creation of New Delhi) but in both cases the urban wave went from north to south.

After history, economy is the second explanatory factor of the urbanisation processes, and in turn, it can be partly explained by the urbanisation dynamics. If the two countries had the same per capita income in 1987, over the last 20 years, the figure has quadrupled in China and doubled in India. At present, the GDP per capita (purchasing power parity) in China is approximately twice that of India – $ 7,600 against $ 3,800 in 2005. The Chinese take-off has been much faster than India’s, thanks to the dynamism of its cities linked to an enormous investment in infrastructure, and to the earlier start of the reforms. The annual growth rate averages 10 per cent in China, 8 per cent in India.

The specialisation of China in manufacturing industries and of India in information and communication services should not overshadow the progressive diversification of the two economies and the growing share of high technologies in both GDPs. Chinese exports ($ 800 billion in 2006) represent 10 times Indian exports but the relative gap will probably diminish in the coming years.

Nothing differs more between the two societies than the role of the state apparatus. The state is strong in China (but shrinking as the central ministries have been downsized during the last two decades) and weak in India, both in the legislative and regulatory areas and in guiding public investment as well as in control and supervision of private and public companies. This is reflected in a policy of deliberate urbanisation and municipal activism in China that is in contrast with the largely spontaneous urbanisation in India associated with a liberal laissez-faire attitude marked by a continuous and lengthy search for consensus on all urban matters. However, the government of India seems to have woken up in the last few years, not only to defend the interests of its large firms in international negotiations but also help the states to better respond to the infrastructural needs of the same firms.

In fact, if the quality of national, regional and municipal infrastructure has made a great leap forward in China, it is still underdeveloped in India. This is linked to the investment rate, which is very high in China (45 per cent of GDP) and lower in India (30 per cent). Similarly direct foreign investments are quite huge in China ($ 80 billion in 2005) while they are extremely targeted in India (6.6 billion in 2005). It is becoming more and more urgent for India to drastically increase its investments in infrastructure.

The political and fiscal decentralisation is systematic in China, particularly since 1994 but much more uneven in India despite the 74th amendment to the Constitution passed in 1992. Paradoxically, Chinese leaders remain rather quiet on this topic (China should be seen as a well unified country) while Indian politicians talk freely of their almost philosophical belief in local virtues. But it can be noted – this is the best indicator of effective decentralisation – that the income of local authorities are high in large Chinese agglomerations (thanks to the sale of public land and corporate taxes) [Mahadevia 2007] but depend on the uneven goodwill of various states in India. The annual per capita income of municipalities averages $ 200 in eastern China, more than 10 times the Indian equivalent.

Monetary or income poverty diminishes regularly in the two countries – this is why the world will certainly meet the Millennium Development Goals! – but the poverty of living conditions, which has diminished at the same speed in China, persists in most Indian cities. This “housing poverty” is visible in urban densities, higher in India, and in the relative share of informal housing in the urban fabric (roughly 50 per cent in India, about 10 to 15 per cent in China). On the other hand, social inequities, striking in India, are increasing in China, specifically between unregistered migrant workers and the official urban population.

The recent launch of the National Urban Renewal Mission in 2005 aiming at reducing poverty in 63 Indian cities, supported by a central government budget of $ 12.5 billion over seven years, should be compared with the absence of any central government subsidy to housing in China. The active role played by non-government organisations and community-based

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organisations in India, mainly in poor neighbourhoods, can on the other hand be contrasted with the influence of the Chinese Communist Party (70 million members) in the appointment of all managers (in the public and private sectors) and regulation of tensions. Two fundamentally different systems. This may compromise the Urban Renewal Mission if India tries to adopt – this is likely – the Chinese method of heavy renovation (demolition-population transfer-reconstruction) rather than the international recommendations on the incremental upgrading of slum conditions with the participation of communities.

In recent years, China has produced an enormous quantity of high-rise housing estates, targeting the expanding middle class, built by public and private developers and supported by municipal incentives (close to 10 million units annually). In the meantime, the production of social housing by public agencies has not increased in India, where there is an evolution towards high cost speculative housing. The Chinese miracle is indeed more than this massive production of flats at $ 50,000 per unit – that respond to the demand thanks to the mobilisation of often hidden family savings – than textile or washing machine exports. However, this does not exclude the prohibitive prices (western style and level) of luxurious apartments in the posh areas of all large cities.

Common Interests

Although there are essential differences between China and India, there are also many convergences linked to the common challenges that the two countries have to face. The recent political and ideological rapprochements are more than smokescreens.

Chinese and Indian leaders both see their cities as the engines of innovation, growth and export in a globalised economy on which they draw maximum benefits. But they are discreet about this shared vision for politically, they need to take into account the well-anchored ruralist traditions and show an interest in the hundreds of millions of people who will continue to (over) populate rural areas for the next two or three generations.

They both intend to encourage the strengthening of local powers, more autonomous and dynamic in China but emerging progressively in India. The very important role of sub-national (regional) levels of government (provinces in China, states in India), in urban policy development and financial transfers is, of course, essential in view of the immense size of national territories.

Acute regional disparities, insufficient natural resources (specifically in terms of energy) and huge environmental problems (air and water pollution, energy intensive modes of production, obsolete heavy industries etc) constitute major constraints and threats that both decision-makers and the population are beginning to be conscious of: China invests $ 40 billion a year to improve its living environment but pollution costs her twice that amount because of its impact on productivity, health and loss of human lives.

The rapid expansion of capital markets and mortgage finance, as the last missing element to ensure the full enforcement of the market economy, can be observed in the two countries, in a chaotic but somehow cautious way. Indian capital markets and financial institutions are generally seen as more efficient and transparent than their Chinese counterparts.

The fast development of technological competencies, mostly among the young generation, should be viewed as a real danger by industrialised countries (Organisation for Economic Cooperation and Development (OECD) members) due to the very high numbers of engineers and technicians so far put on domestic markets but who will soon look for international opportunities (including by staying home, see Bangalore). Already Chinese construction companies are winning public work contracts all over the world.

The adherence to western modes of consumption (private cars, fast-food, supermarkets, malls, modernist architecture, skyscrapers…) with sometimes local adjustments (perceived as kitsch or ostentatious by the foreigners) contrasts with an unhidden national pride and among the middle and upper classes, a sharp competitive spirit and an almost blind faith in the future and unlimited prospects of Asian capitalism.

Comparison with West

China and India demonstrate once again that cities are simultaneously the cause and consequence of development, that there is a direct correlation between urbanisation and socio-economic progress. In his masterful synthesis on city history Paul Bairoch (1988) tested and illustrated this law in many regions during various periods of time. This clearly emerges out of our Sino-Indian comparison.

While Chinese urbanisation has been traditionally self-centred, at least until the 19th century, its dynamics have completely changed since the 1980s. Its recent expansion can be compared with the process followed by the United States a century ago, between 1880 and 1930, i e, with a focus on coastal areas (east coast and California in the US, east coast in China) and the large inner employment basin (one could suggest a fascinating parallel between Chongqing and Chicago, and between Sichuan and the American midwest). Obviously, Shanghai is becoming the new New York and Pudong intends to challenge Manhattan. The main difference is that US cities were working primarily for the domestic market and Chinese cities primarily target external markets (although the Chinese domestic market is also expanding fast). But the growth rate is similar. The traditionally introvert China has become an extrovert in a single generation.

The spatial development of India looks more like that of continental Europe around 1800, with a hierarchised urban network, underdeveloped pockets corresponding to the most rural regions and deficient infrastructure. In fact, the Indian economy is an archipelago economy, made of hightech islands surrounded by an underequipped hinterland. Extrovert until 1947, India became an introvert during the next 40 years, until the reforms of 1991 that initiated a vast liberalisation process (a well publicised success of the International Monetary Fund), still on-going.

Chinese and Indian cities appear to have the abolition of the centre-suburb dichotomy in common, which constitutes a feature of both European cities (which have a rich centre) and American cities (where the wealthy live in suburbs). With some exceptions (e g, Bangalore), Asian cities are becoming more and more multi-centred, due to the invisible hand of land markets and the investors’ strategies, a complex topic, which would deserve to be further investigated; in-depth case studies are still lacking.

China and India are the new faces of capitalism. They have replaced Japan in the mind and fears of the Western hemisphere. Rightly so, for they clearly threaten rich countries with their dynamism and strategic positioning in the current globalisation of the world economy.

As far as city management is concerned, the lessons emanating from our comparison

Economic and Political Weekly August 18, 2007 are clear albeit not extraordinarily original: one must decentralise according to the well known subsidiarity principle, invest more in urban and inter-city infrastructure, adopt modern cutting-edge methods and technology (such as satellite based urban information systems), try to improve the living “quality” to make cities more attractive, promote metropolitan regions or urban corridors associating cities, towns and rural areas and favouring intra-regional synergies. Only then, the current process of “glocalisation” (more local, more global) would benefit more countries, in the north and south. Therefore, a lot remains to be done at the local and sub-national (regional) levels, including in OECD countries, at the time when the announced decline of nation states becomes a tangible reality.

In China and India, cities are the locomotives of the new growth models. In spite of some heavily loaded wagons, they pull the economy in the right direction, and this is reflected not only in their foreign trade performances but also in the reduction of poverty and in a new, albeit insufficient concern for the environment. Urban specialists should devote more attention to the evolution of these booming cities. They are driving the current Asian revolution. The old Chinese saying “if you want to be rich, you must first build roads” is once again confirmed in the 21st century.

EPW

Email: daniel.biau@unhabitat.org

Notes

1 See for instance the compilation entitled ‘Chindia’, BusinessWeek, New York, 2007.

2 ‘UN Population Division, World Urbanisation Prospects: The 2005 Revision’. These statistics are the only internationally recognised data, accepted by all UN member states. They are elaborated in collaboration with national bureaus of statistics.

3 See maps by Gilles Antier, IAURIF, Paris, 2007. 4 The Economist, June 30, 2007, special report on Hong Kong.

References

Bairoch, P (1988): Cities and Economic Development, From the Dawn of History to the Present, Chicago.

Biau, D (2007): ‘China: 3000 Years of Urbanisation’ in Urban Planning Magazine, Shanghai.

Mahadevia, D (2007): ‘Urban Infrastructure Financing and Delivery in China’, Economic and Political Weekly, Vol 42, No 11, pp 964-72.

Economic and Political Weekly August 18, 2007

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