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China needs a new model of urbanisation to match the shift to a new model of growth. For decades, both urbanisation and growth have been based on robust export demand, cheap labour, cheap land and artificially low pricing of environmental externalities. None of these can support growth or urban development in the future. This review examines the major challenges associated with the shift to a new model of urbanisation, looking at a range such issues as social and labour-market policies, land use and transport planning, urban planning, urban governance and public finance. The review presents a new assessment of China’s major cities, which defines functional urban areas based on settlement patterns and commuting zones rather than cities defined as administrative units. The results show, among other things, that China has many more mega-cities, with populations above 10 million, than the official data suggest. The good news for China is that the reforms needed to foster what the authorities call “people-centred urbanisation”, while complex, are coherent with one another and supportive of the broader shift to a growth model that relies more on domestic demand and productivity growth.

This chapter examines urban governance in China. It assesses the main challenges presented by the current system of inter-governmental relations, which often seems to impede co-ordination across levels of government and among agencies at the same level of government. The chapter proposes strategies for strengthening collaboration for urban planning across levels of government and exploiting potential complementarities across jurisdictions and policy sectors. It also explores local government finance and the way the current arrangements for managing local public finance influence urbanisation decisions. It formulates some recommendations to enable local governments to finance urban development projects in a more sustainable, less distorting way. Finally, the chapter addresses the capacity gaps in Chinese local governments and proposes some measures to acquire the right competences and skills to formulate and implement urban development policies. It concludes with proposals to develop a strategic and integrated approach to urban planning involving real citizen participation.

This chapter looks at the major elements of Chinese urbanisation policies. It begins with an exploration of migrant integration, looking at current institutions and policies as they affect both economic efficiency and social equity, and proposing steps to facilitate smoother absorption of rural migrants in Chinese cities. This is followed by an examination of land policy, which considers the causes and consequences of the segmentation of land markets between urban and rural sectors, as well as a possible pathway towards unification of the land market. A major section focuses on the way Chinese cities are built, exploring urban planning and public transport from the perspectives of economic efficiency, social equity and environmental sustainability. Overall, the chapter emphasises the links between these three domains and it explores the potential benefits of addressing them in tandem.

This chapter presents an overview of China’s recent urbanisation, looking first at the growth of Chinese cities’ populations and the evolution of the urban hierarchy and then at their economic performance. It considers both the continuing concentration of population in the largest cities and the differences in economic performance observed across different classes of city. This analysis is based in large part on the redefinition of Chinese functional urban areas rather than administrative units. When cities are defined on the basis of settlement patterns and commuting times rather than administrative borders, the picture of China’s urban hierarchy changes substantially. The chapter also examines trends in inequality at different spatial scales, as well as interpersonal inequality, and at the economic structure of Chinese cities. Finally, it explores some of the environmental challenges facing China’s fast-growing cities, particularly with respect to air quality.

Over the last three decades, urban development has taken off in the People’s Republic of China, in tandem with its extraordinary growth performance. On the whole, urbanisation and development have reinforced one another. The growth of cities has been driven in large part by the dramatic growth in agricultural productivity set in motion by the first wave of reforms and the end of the 1970s, which reduced the need for labour on the land and generated unprecedented income growth. This, in turn, helped spur the development of China’s urban sectors, which took off as the country opened up to external markets, turning China into an export powerhouse. As cities grew larger and denser, the economic benefits of agglomeration came into play, helping to sustain productivity growth. The results have been staggering. The urban population has roughly quadrupled, reaching more than 750 million. Hundreds of millions of people have been lifted out of poverty, and China has been transformed from an overwhelmingly agrarian and relatively poor country into a predominantly urban, industrial middle-income economy. GDP has risen more than 16-fold, and its share of global GDP has risen almost 7-fold.

China’s urbanisation is unprecedented in scale and speed. Its urban population has roughly quadrupled in the last 35 years to more than 700 million, thanks chiefly to internal migration, and is likely to rise by a further 240 million over the next 35, lifting the urbanisation rate to around 75%.

Urban issues are increasingly prominent on national policy agendas in developed and emerging economies alike. Across OECD member countries, these policies encompass plans to solve traditional urban problems and to address newer issues such as urban competitiveness, city marketing, environmental sustainability and innovation. In much of the non-OECD world, governments are working to manage urbanisation processes that are unprecedented in speed and scale, confronting many of the same problems as OECD members but in a far more dynamic economic and social context. This dynamism, in turn, entails both challenges and opportunities: managing fast-growing cities can be harder than coping with stable ones, but it also offers more chances to innovate and, in many cases, avoid mistakes made in countries that urbanised much earlier – such as lock-in to a car-dependent urban form.