New Geography

Tag: China

  • The Kids Will Be Alright

    America’s population growth makes it a notable outlier among the advanced industrialized countries. The country boasts a fertility rate 50% higher than that of Russia, Germany or Japan and well above that of China, Italy, Singapore, North Korea and virtually all of eastern Europe. Add to that the even greater impact of continued large-scale immigration to America from around the world. By the year 2050, the U.S. population will swell by roughly 100 million, and the country’s demographic vitality will drive its economic resilience in the coming decades.

    This places the U.S. in a radically different position from that of its historic competitors, particularly Europe and Japan, whose populations are stagnant. The contrast between the U.S. and Russia, America’s onetime primary rival for world power, is particularly dramatic. Some 30 years ago, Russia constituted the core of a vast Soviet empire that was considerably more populous than the U.S. Today, even with its energy riches, Russia’s low birth and high mortality rates suggest that its population will drop to less than one-third that of the U.S. by 2050. Russian Prime Minister Vladimir Putin has spoken of “the serious threat of turning into a decaying nation.”

    An equally dramatic and perhaps more critical demographic shift is taking place in East Asia. Over the past few decades a rapid expansion of their work force fueled the rise of the “East Asian tigers,” the great economic success stories of the late-20th and early-21st centuries. Yet that epoch is coming to an end, not only in Japan and Korea but also in China, where the one-child policy has set the stage for a rapidly aging population by mid-century.

    Within the next four decades, most of the developed countries in both Europe and East Asia will become veritable old-age homes: A third or more of their populations will be over 65, compared with only a fifth in America. Like the rest of the developed world, the U.S. will certainly have to cope with an aging population and lower population growth, but in relative terms the county will boast a youthful, dynamic demographic.

    As many other advanced countries become dominated by the elderly, the U.S. will have the benefit of a millennial baby boom as the “echo boomers” start having offspring in large numbers later in this decade. This next surge in growth may be delayed if tough economic times continue, but over time the rise in births will add to the work force, boost consumer spending and allow for new creative inputs.

    The differing demographic trajectories create a diverse set of issues for 21st-century America than those facing its rivals. The key challenges the European Union, Japan and Korea will contend with in the coming decades involve coping with a rapidly aging population, filling labor shortages and finding ways to invest in growing economies. In contrast, the U.S.’s greatest priority will be to create opportunities for its ever-expanding population. The New America Foundation estimates the country needs to add more than 125,000 jobs a month simply to keep pace with population growth in 2010. What the U.S. does with its “demographic dividend”—that is, its relatively young working-age population—will largely depend on whether the private sector can generate the incomes among the young to meet the needs of a larger aging population.

    Entrepreneurialism and America’s flexible business culture—including the harnessing of entrepreneurial skills of aging boomers—will prove critical to meeting this challenge. Many of the individuals starting new firms will be those who have recently left or been laid off by bigger companies, particularly during a severe economic downturn. Whether they form a new bank, energy company or design firm, they will do it more efficiently—with less overhead, more efficient use of the Internet and less emphasis on pretentious office settings.

    “People are watching their companies go under. Therefore you get three vice presidents who get laid off but know their business,” says Texas entrepreneur Charlie Wilson. “They start a new company somewhere cheap that is more efficient and streamlined. These are the new companies that will survive and grow the next economy.”

    It is here—at the grassroots level—that you can best glimpse the essential sources of American resiliency. American society draws most of its adaptive power not from its elite precincts but through the efforts of communities, churches, entrepreneurs and families.

    You can see this in the resurgence of once-declining Great Plains cities like Fargo, N.D., where high-tech now joins agriculture and manufacturing to form one of the country’s strongest local economies. Or you can visit the emerging immigrant hotbeds, such as the San Gabriel Valley east of Los Angeles or the Sugarland area, just west of Houston, with their plethora of new churches, temples, companies and ethnic shopping malls.

    Immigrants represent a critical component of our next wave of new dynamism. Between 1990 and 2005, immigrants started one quarter of all venture-backed public companies. Large American firms are also increasingly led by people with roots in foreign countries, including 14 of the CEOs of the 2007 Fortune 100.

    But much of the energy will come from more obscure enterprises. Recent newcomers have already distinguished themselves as entrepreneurs, forming businesses from street-level bodegas to the most sophisticated technology start-ups.

    What drives immigrants is their optimism in America’s future. California developer Dr. Alethea Hsu, in explaining why she opened a new Asian-oriented shopping center in Orange County, cited the entrepreneurial energy of both affluent and working class immigrants which, she said, will allow them to thrive through the recession and beyond. “We are leased up, and we think the supply of shopping still is not enough,” Ms. Hsu said in early 2009. “We feel great trust in the future.”

    This entrepreneurial urge also extends beyond the immigrant community. In 2008, 28% of Americans said they had considered starting a business, more than twice the rate for French or Germans. Self-employment, particularly among younger workers, has been growing at twice the rate as in the mid-1990s. In the most recent Legatum Prosperity Index, the U.S. ranked at the top among all countries in terms of entrepreneurship and innovation.

    Most important of all will likely be the rise of the millennial generation—a group of Americans who will start reaching their prime earning years late in the next decade. Surveys identify them as strongly family- and community-oriented. The millennials will be America’s new entrepreneurs, workers and consumers in the coming decades. They will provide the kind of resource our major competitors are destined to run short on.

    The millennials also will help shape an increasingly culturally diverse America which by 2050 will be roughly half made up of ethnic minorities. This emerging post-ethnic future contrasts dramatically with the ethnic politics common among the nation’s chief global rivals. Even famously politically correct nations as Sweden, Denmark and the Netherlands have turned against immigration. Switzerland just banned the construction of minarets, while France is considering banning some forms of Islamic garb.

    Our prime Asian rivals—China, Japan, and Korea—remain even more culturally resistant to diversity. Chinese xenophobia, in particular, is deeply entrenched, notes Martin Jacques, author of “When China Rules the World.” A Chinese world superpower would be both racially homogenous and far from tolerant of newcomers. Recently the appearance of a mixed-race Shanghai girl on a national talent show sparked a surge of racist invective.

    The very diversity of the emerging America makes many wonder what will hold the country together. Ultimately, this unique society will find its binding principle in the notions that have long differentiated it from the rest of world: a common belief system, a sense of a shared destiny and an aspirational culture.

    As the British writer G. K. Chesterton once put it, the U.S. is “the only nation…that is founded on a creed.” This faith is not, and was not initially meant to be, explicitly religious; rather, it is a fundamentally spiritual idea of a national raison d’être.

    Of course, this optimistic scenario depends on intelligent and energetic actions by central and local governments, as well as community organizations. But the road to the American future will be primarily laid not by the central state but by families, individuals and communities. During the industrial age Ralph Waldo Emerson once observed, “The age has an engine, but no engineer.” Much the same may be said in the coming decades.

    This article first appeared at The Wall Street Journal.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His next book, The Next Hundred Million: America in 2050, will be published by Penguin Press February 4th.

    Photo: jcolman

  • E-Bikes, China and Human Aspirations

    The Wall Street Journal recently carried an article entitled “E-Yikes: Electric Bikes Terrorize the Streets of China.” The article describes difficulties arising from the fact that nearly 120 million electric (battery) bicycles (E-Bikes) are now in operation in China, as people have abandoned mechanical bicycles and highly-polluting petrol motorbikes.

    However, to the millions of owners, China’s E-Bikes are a boon, not a bane. E-Bikes are best understood in terms of human aspiration (just like cars in America or Western Europe). People generally seek to improve their lifestyles. Research at the University of Paris, the University of California, the University of North Carolina and elsewhere has clearly demonstrated a strong relationship between higher incomes and higher rates of economic growth where people have greater personal mobility. This is what the E-Bike provides.

    In the large urban areas of the 21st century, even the dense Chinese urban areas, travel is highly dispersed. The efficient operation of the urban area requires an ability to travel from any point in the urban area to any other point in a short amount of time. As effective as public transport can be for trips within the dense (but generally small) urban core or to the urban core from suburban areas, a large share of trips simply cannot be feasibly made any other way than by personal mobility. This includes walking, for very short trips and bicycles for somewhat longer trips. But, it also includes substantial and increasing travel by faster modes of transport, particularly cars and two-wheeled vehicles. E-Bikes have greatly improved mobility. At the same time, the E-Bike has enormously reduced both the air pollution and carbon footprint of two-wheeled personal mobility.

    This is not to discount the traffic and other difficulties. However, the Chinese, like their western counterparts, will continue to seek better lives and that means greater personal mobility. It means that E-Bike usage will continue to grow and that car usage will also continue to grow, as incomes rise. While that will make traffic congestion even worse, the spectacular automobile fuel efficiency improvements ahead will allow massive expansion of personal mobility, while moving in the right direction with respect to the carbon footprint. In the final analysis, the Chinese (and the Indians, Indonesians, etc.) would like to live as well as we do in the United States and Western Europe. And why not?

    Photograph: E-Bike display at a Suzhou (Jiangsu) hypermarket.

  • Don’t Give Up On The U.S.

    If the U.S. were a stock, it would be trading at historic lows. The budget deficit is out of control, the economy is anemic and the political system is controlled by academic ideologues and Chicago hacks. Opposing them is a force largely comprised of know-nothings–to call them Neanderthals would be too complimentary.

    Not surprisingly, many Americans have become pessimistic. Two in three adults now fear their children will be worse off than they are. Nearly 40% think China will become the world’s dominant power in the next 20 years, as indicated by a recent survey.

    Yet, in spite of everything, I would still place my long-term bets on the U.S. Here’s why:

    1. The U.S. is the only advanced country in the world with viable demographics. By 2030, all our major rivals, save India, will be declining, with ever-larger numbers of retirees and a shrinking labor force. By 2050 Germany, Japan and South Korea could approach having twice as many people over 65 per capita as the U.S. By then, the U.S. will have 400 million people, which may be more than the entire EU and three times the population of our former archrival Russia.

    2. In terms of energy resources, the U.S., combined with Canada, is the second richest region in the world after the Middle East. The country possesses vast resources of natural gas, about 90 years’ worth, as well as strong areas for wind power. Given America’s past profligacy, the country could derive considerable savings with even modest conservation efforts.

    3. America remains the world’s agricultural superpower, with the most arable land on the planet. With another 3 billion people expected on the planet by 2050, the U.S. should enjoy a continuing boom in food exports.

    4. Military power matters now and in the future. We are not living in a Star Trek future of earthly harmony. The U.S. leads in military technology and, yes, our martial spirit remains a positive factor, despite the portrayals from Hollywood. For all its missteps, the U.S. military has achieved its strictly war-fighting missions–in Iraq and Afghanistan, as well as a host of smaller conflicts–over the past 20 years. Meanwhile, Europe and Japan have taken themselves out of the military game, and it will be decades before China will be ready for a head-to-head challenge.

    5. There is no large country that comes close to the U.S. as an entrepreneurial hotbed (Taiwan, Israel and Hong Kong come close but are far smaller). The recent Legatum Prosperity Index showed the U.S. remains by far the largest generator of new ideas and companies on the planet.

    Of course, all these critical advantages could be squandered by fecklessness. The empowered American left–in sharp contrast to the tradition that runs from Franklin Roosevelt and Harry Truman all the way to Bill Clinton–often envisions the U.S. as a country headed into the dustbin of history, and deservedly so.

    Leftist historian Immanuel Wallerstein, for example, asserts that the U.S. has been “a fading global power” since the 1970s. The only question now, he suggests, is “whether the United States can devise a way to descend gradually, with minimum damage to the world, and to itself.” Another leading liberal analyst, Parag Khanna, envisions a “shrunken” America that is lucky to eke out a meager existence between a “triumphant China” and a “retooled Europe.”

    The traditionally pro-American right increasingly shares this pessimism, albeit for different reasons. With Obama and the Democrats in power, many conservatives, including such keen observers as Charles Krauthammer and Victor Davis Hanson, believe the country has hit the historical skids.

    Yet declinism is often overstated. Today, only someone delusional would suggest that once widely feared Japan, soon to fall to third place (behind China) as an economic power, constitutes a serious threat to American preeminence. However, the fantasy of a European resurgence remains deeply embedded among American policy wonks and academics. It is a firmly held belief despite the continent’s decades of slow growth, demilitarization, disastrous demographics and mounting budget woes, particularly on its southern and eastern fringes.

    On the other hand, China and India represent true ascendant economies of the next decade and beyond. China’s rise has led one writer, the Guardian’s Martin Jacques, author of When China Rules the World, to suggest that America must “learn to bow” before the great power of the 21st century.

    Yet for all their impressive growth, neither China nor India possesses either the institutional strengths or natural resources of the U.S. China’s current boom has much to do with an orgy of money-printing that would make Barack Obama blush. Real estate in some places is turning bubblish. There are reports of vacancy rates as high as 50% in Shanghai’s commercial market.

    India, as anyone who has spent time there knows, remains a highly fragmented and largely impoverished country. It will be a great power of the future, but a very poor one, which will take many decades, even a century, to approach even a decent fraction of America’s current per capita income.

    Often overlooked as well is America’s unique advantage as an inclusive multiracial society. Over the past decade America has produced two African-American Secretaries of State and one President. America remains unique in its ability to absorb different races, religions and cultures, an increasingly critical factor in maintaining global preeminence.

    What Americans need most now is to develop policies that build on our essential strengths. Some tech enthusiasts and members of the Obama Administration claim that “the age of infrastructure is over.” However, in reality there is no way to assure a decent future for the next 100 million Americans without a major investment in everything from roads and broadband to transmission lines, water systems and basic skills training

    Some conservatives may oppose such a domestic surge, but the investment reflects a strong American tradition. The critical issue will be to make sure a commitment to infrastructure does not morph into a Washington-led industrial policy that would inevitably reward the well connected and stunt our innovative edge.

    In the end, Americans must remain true to our individualist traditions. Compared with Europeans, who instinctively look to government for guidance, the vast majority of Americans still believe that hard work is the key to self-improvement. Our primary economic asset continues to lie with entrepreneurial spirit and adaptability.

    In the coming decade, American success will require precisely this blend of public support and private initiative. If the U.S. stays true to its unique traditions, it will remain the world’s best investment for decades to come.

    This article originally appeared at Forbes.com.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His next book, The Next Hundred Million: America in 2050, will be published by Penguin Press early next year.

  • Capping Emissions, Trading On The Future

    Whatever the results of the Copenhagen conference on climate change, one thing is for sure: Draconian reductions on carbon emissions will be tacitly accepted by the most developed economies and sloughed off by many developing ones. In essence, emerging economies get to cut their “carbon” intensity–a natural product of their economic evolution–while we get to cut our throats.

    The logic behind this prediction goes something like this. Since the West created the industrial revolution and the greenhouse gases that supposedly caused this “crisis,” it’s our obligation to take much of the burden for cleaning them up.

    Plagued by self-doubt and even self-loathing, many in the West will no doubt consider this an appropriate mea culpa. Our leaders will dutifully accept cuts in our carbon emissions–up to 80% by 2050–while developing countries increase theirs, albeit at a lower rate. Oh, we also pledge to send billions in aid to help them achieve this goal.

    The media shills, scientists, bureaucrats and corporate rent-seekers gathered at Copenhagen won’t give much thought to what this means to the industrialized world’s middle and working class. For many of them the new carbon regime means a gradual decline in living standards. Huge increases in energy costs, taxes and a spate of regulatory mandates will restrict their access to everything from single-family housing and personal mobility to employment in carbon-intensive industries like construction, manufacturing, warehousing and agriculture.

    You can get a glimpse of this future in high-unemployment California. Here a burgeoning regulatory regime tied to global warming threatens to turn the state into a total “no go” economic development zone. Not only do companies have to deal with high taxes, cascading energy prices and regulations, they now face audits of their impact on global warming. Far easier to move your project to Texas–or if necessary, China.

    The notion that the hoi polloi must be sacrificed to save the earth is not a new one. Paul Ehrlich, who was the mentor of President Obama’s science advisor, John Holdren, laid out the defining logic in his 1968 best-seller, The Population Bomb. In this influential work, Ehrlich predicted mass starvation by the 1970s and “an age of scarcity” in key metals by the mid-1980s. Similar views were echoed by a 1972 “Limits to Growth” report issued by the Club of Rome, a global confab that enjoyed a cache similar to that of the United Nations’ Intergovernmental Panel on Climate Change.

    To deal with this looming crisis, Holdren in the 1977 book Ecoscience (co-authored with Anne and Paul Ehrlich) developed the notion of “de-development.” According to Holdren, poorer countries like India and China could not be expected to work their way out of poverty since they were “foredoomed by enormous if not insurmountable economic and environmental obstacles.” The only way to close “the prosperity gap” was to lower the living standards of what he labeled “over-developed” nations.

    These predictions were less than accurate. World-wide systemic mass starvation did not take place as population escalated. Rather those many millions wallowing in poverty in the developing world, particularly in Asia, lifted themselves into the global middle class. Far more efficient ways to use energy have been developed, and unexpected caches of new resources continue to be discovered all over the planet.

    Yet however wrong-headed, Holdren’s world view now has jumped from the dustbin of history into the craniums of presidents and prime ministers. President Obama’s pledge to “restore science to its rightful place” has morphed into state-sponsored scientific ideology.

    The blind acceptance of this agenda threatens the credibility of Obama and other Western leaders. For one, if the crisis is by its nature global why should we allow massive increases in carbon emissions in developing countries–China will soon surpass us in greenhouse gas emissions, if it hasn’t already–while we draconically cut ours? Does the planet really care if it’s turned to toast by American- vs. Chinese-made gas?

    Then there’s the specious historical narrative that insists we pay for creating the industrial revolution since it brought on global warming. Should the West pay for the sins of the British who brought electricity and railroads to India? Does America owe carbon penance for making the technology transfers critical to East Asia’s remarkable rise? Maybe we should start by making Wal-Mart cancel its China orders. That might help de-carbonize the planet a bit.

    There’s also growing skepticism about the whole warmist narrative. Climate change now ranks last among 20 top issues in a recent Pew report. There’s been a similar rise in skepticism in the U.K., once a hot bed of warmist sentiment.

    The reasons for the shift may vary. First, there’s a controversy over the temperatures of the past decade, with even some concerned about climate change admitting that there has not been the expected warming. Or perhaps a deep recession has made many “rich” countries feel a trifle less “overdeveloped.”

    And now we have Climate-gate–where leading warmist pedagogues are trying to suppress unsuitably conformist scientists and perhaps even cook the numbers a bit. Although you won’t see too much tough coverage in the mainstream press, the tawdry details have poured out over the Internet and diminished the aura of scientific objectivity of some leading global warming researchers. One recent poll shows that a large majority of Americans believe scientists may have indeed falsified their research data. By well over 4 to 1, they also believe stimulating the economy is a bigger priority than stopping global warming.

    Clearly the political risks of giving first priority to the carbon agenda are on the rise. Australia’s Senate just voted down that country’s proposed cap and trade scheme. The Western center-right, once intimidated by the well-financed greens and their media claque, has become bolder in challenging climate change alarmism.

    There’s also something of a rebellion brewing, at least toward emissions trading schemes, among some liberals from the South and Midwest, notably Wisconsin’s Russ Feingold and North Dakota’s Byron Dorgan. As analyst Aaron Renn has pointed out, these areas are most likely to be negatively affected by the current climate change legislation. Feingold recently stated that he was “not signing onto any bill that rips off Wisconsin.”

    So why do leaders like Barack Obama and British Prime Minister Gordon Brown continue identifying themselves with the climate change agenda and policies like cap and trade? Perhaps it’s best to see this as a clash of classes. Today’s environmental movement reflects the values of a large portion of the post-industrial upper class. The big money behind the warming industry includes many powerful corporate interests that would benefit from a super-regulated environment that would all but eliminate potential upstarts.

    These people generally also do not fear the loss of millions of factory, truck, construction and agriculture-related jobs slated to be “de-developed.” These tasks can shift to China, India or Vietnam–where the net emissions would no doubt be higher–at little immediate cost to tenured professors, nonprofit executives or investment bankers. The endowments and the investment funds can just as happily mint their profits in Chongqing as in Chicago.

    Global warming-driven land-use legislation possesses a similarly pro-gentry slant. Suburban single family homes need to be sacrificed in the name of climate change, but this will not threaten the large Park Avenue apartments and private retreats of media superstars, financial tycoons and the scions of former carbon-spewing fortunes. After all, you can always pay for your pleasure with “carbon offsets.”

    So who benefits from this collective ritual seppuku? Hegemony-seeking communist capitalists in China might fancy seeing America and the West decline to the point that they can no longer compete or fund their militaries. A weakened European Union or U.S. also won’t be able provide a model of a more democratic version of capitalism to counter China’s ultra-authoritarian version.

    The Chinese may win a victory in Copenhagen greater than anything accomplished so far in the marketplace–and our leaders will likely thank them for it. Forget bowing to the emperor in Tokyo; like vassal states at the height of the old Middle Kingdom, the new requisite diplomatic skill for Westerners will be kow-towing to Beijing.

    Yet most people in the developing world will not benefit from the suicide of the West. The warmists’ vision is not one of growing prosperity, but of capping wealth at a comparatively low level. De-industrialization means the West falls back while emerging economies grow a bit. The “prosperity gap” may close, but ultimately everyone is left with less prosperity.

    In the long run developing countries gain less from harvesting guilt than enjoying a bounty of customers, capital and expertise. The West’s experience and technology can assist developing nations in improving their far more greatly threatened environment. Turning the West into a spent force will leave the world poorer, dirtier and ultimately less hopeful.

    This article originally appeared at Forbes.com.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His next book, The Next Hundred Million: America in 2050, will be published by Penguin Press early next year.

  • Obama in China: Walking the Great Mall

    Ever since Richard Nixon visited China in winter 1972—an event timed to play into that year’s presidential elections—American presidents have made the pilgrimage to the modern version of the Forbidden City.

    Landing in Shanghai on Sunday evening, President Obama has two days of meetings with the Chinese leadership, not to mention a town hall event with Chinese students (as if they were eligible to vote in a New Hampshire primary).

    As a stage-set for photo opportunities, China is hard to beat. American presidents can walk the Great Wall, toast a nation in the Great Hall of the People, tower over diminutive Chinese leaders dressed in gray Mao suits, and make sweeping statements about new world orders.

    For their part, the Chinese leadership loves nothing more than the chance to block traffic around Tiananmen Square, call out the drill corps, shoot off some fireworks, and release photographs of summit meetings, which then become the fodder of endless Sinologist conferences to try to figure out who has power in China and who is in line for a little “self-criticism.”

    When President Nixon went to China, his only political goal—other than to show up—was to reach agreement on a joint communiqué that was drafted to avoid all the contentious issues of U.S.-Chinese relations, such as the war in Vietnam or U.S. support for Taiwan.

    While aides haggled over the text of the equivocatory statement, Nixon and his National Security Advisor, Henry Kissinger, met with Mao, whose health was failing and who had to be propped up in a chair, as if part of a Disney World – Epcot diorama on the Long March.

    For reasons of domestic political consumption, Nixon and Kissinger needed Mao as much as he needed them to help fend off Russian threats along the Amur River and to nudge China into a broader world.

    They left the meeting and China gushing about how Mao had political magnetism, a great sense of humor, and the vision of a wise emperor, although he probably said little more than one of his gift pandas.

    That Mao’s Cultural Revolution had killed millions mattered little more than the American wars in Korea and Vietnam or that Nixon himself had devoted his political career to China’s political isolation.

    All that mattered was that the world would get the impression of Sino-American harmony—whatever the underlying reality—and that tea-like ceremony is how every subsequent summit meeting has been choreographed.

    For a while, after the Nixon visit, American presidents thought it was good politics to preface a China visit with strong words of U.S. support for Taiwan, which has always played well as a plucky anti-communist billboard.

    Even as the presidential administrations of Ford, Carter, Reagan, Bush, Clinton, and Bush II were turning toward the economic riches of the East, and Taiwan was relegated to a diplomatic sideshow, the warm-up footage to any Chinese summit had to include a few profiles of Chiang Kai-shek or Free Tibet as popular icons of freedom.

    After the 1989 massacres at Tiananmen Square, no American president could get close to Chinese airspace without finger waggling China for its abysmal record on human rights.

    So as not to be seen kissing the rings of communist autocrats, the American president would “bring up” the name of an imprisoned dissident, just so that it was clear that the United States did not place Wal-Mart’s inventory ahead of personal freedoms. Only later in the trips did anyone take out an order form.

    The problem for President Obama on this trip to China is that he arrives with the aura of someone late on his VISA card payments but still talking up his next trillion-dollar vacation.

    In this analogy, China’s leadership is best understood as a bunch of repo men nervous about the penalty interest, although, to be fair, in the last ten years, the economic miracles of both the United States and China have been founded on illusions.

    China accumulated its huge foreign trade surpluses based on an artificially low currency and the sweatshop wages paid to its workers. By contrast, the United States has thrived on debt funded from its reserve currency, and the cheap goods its can buy from overseas.

    In the middle of both pyramid schemes is the U.S. financial services industry that rolls over America’s $12 trillion debt, a large chunk of which is due to the Chinese and other Asian depositors.

    On most geopolitical issues, the United States and China have little in common. China props up the Stalinist regime of North Korea, abuses the human rights of its citizens, fires up a coal plant every month, buys spheres of influence in all sorts of rogue states like Iran and the D.R. Congo, and refuses to co-operate in international currency reforms.

    In turn, China has little time for American running-dog policies in Afghanistan and India, feels Taiwan is an internal matter, remains terrified of a re-armed Japan, and is fearful that its U.S. dollar-denominated financial assets are wasting away in Margaritaville.

    These differences of opinion ought to necessitate substantive diplomatic exchanges. In a positive sense, American consumers have fueled much of China’s economic growth and political confidence, and Chinese production can be an engine of increasing affluence in the developing world, interests that both countries should share.

    Instead, empty symbolism will likely reign for the remainder of President Obama’s package tour. Like President Nixon, he’ll leave behind an optimistic-sounding protocol (on global warming, nuclear disarmament, and the wealth of nations) and come home with swell pictures of the Great Wall.

    Someday the lack of a serious dialogue between the United States and China might be the subject of a show trial (in either country). After all, the question of “Who lost China?” has been a specter of American foreign policy since 1949. And even in the booming free-market China that Obama will no doubt admire, no one wants to be known as a “capitalist-roader.”

    Matthew Stevenson was born in New York, but has lived in Switzerland since 1991. He is the author of, among other books, Letters of Transit: Essays on Travel, History, Politics, and Family Life Abroad. His most recent book is An April Across America. In addition to their availability on Amazon, they can be ordered at Odysseus Books, or located toll-free at 1-800-345-6665. He may be contacted at matthewstevenson@sunrise.ch.

  • China’s Love Affair with Mobility

    China Daily reports that car (light vehicle) sales reached 10.9 million units in the first 10 months of 2009, surpassing sales in the United States by 2.2 million. This was a 38% increase over the same period last year. Part of the increase is attributed to government programs to stimulate automobile sales.

    China’s leading manufacturer is General Motors (GM), which experienced a 60% increase in sales compared to last year. By contrast, GM’s sales in the United States fell 33% in the first 10 months of the year on an annual basis. GM sold nearly 1.5 million cars in China, somewhat less than its 1.7 million sales over the same period in the United States.

  • Let Freedom Ring: Democracy and Prosperity are Inextricably Linked

    With autocratic states like China and Russia looking poised for economic recovery, it’s often hard to make the case for ideals such as democracy and rule of law. To some, like Martin Jacques, author of When China Rules, autocrats seem destined to rule the world economy.

    A columnist for the Guardian, Jacques predicted that by 2050 China will easily surpass America economically, militarily and politically. The belief in the power of autocracy even extends to such leading American capitalists as Warren Buffett and Bill Gates, who have nothing but high praise for what Gates enthusiastically describes as a “brand-new form of capitalism.”

    Fortunately a new study released Monday by my colleagues at the Legatum Institute refutes the notion that the road to worldly riches lies in autocracy and repression. In a careful study of everything from economic opportunity, education and health to security, freedom of expression and societal contentment, the Legatum “Prosperity Index” makes a powerful case for the long-term benefits of democracy, free speech and the rule of law.

    Some of this stems from how Legatum measures prosperity. The survey takes into account both wealth and well-being, and finds that the most prosperous nations in the world are not necessarily those that just have a high GDP, but that also have happy, healthy, free citizens.

    The top of the list, which ranks 104 countries, is dominated by flourishing democracies. The only exception in the top 20 is No. 18’s Hong Kong, which ranks first in economic fundamentals and continues to be ruled, if not quite democratically, under a far more permissive system than the rest of mainland China. The next semi-autocratic state on the list is Singapore, at No. 23 – another Confucian-style autocracy with great economic and human capital fundamentals.

    This linking of democracy and prosperity with well-being is by far the most significant aspect of the study. But what else determines the success of nations in the modern world?

    1. Small democracies do best.

    The denizens of the Greek city-states or their Renaissance counterparts would have recognized something of themselves in the small, well-managed countries that dominate the top of the list. The top five, Finland, Switzerland, Sweden, Denmark and Norway – as well as the Netherlands at No. 8 – certainly fit this description. These countries rank highly on the quality of life measurements, and, not surprisingly, their main cities also tend to dominate the most-livable-cities lists. With the exception of Switzerland and the Netherlands, these places do not perform as well in terms of basic economics, scoring between 10th and 18th. Although some might ascribe these rankings to successful social democratic policies, virtually all these mini-states have instated significant market-oriented reforms in recent years.

    Other top players Australia (No. 6) and Canada (No. 7) are far larger than their European rivals. And though their citizens are not as socially coddled as in Scandinavia, they enjoy strong democratic institutions, high levels of social well-being and good governance and education.

    And in purely economic terms Australia and Canada boast better economic fundamentals than the Scandinavian countries. One reason may be their enormous stockpiles of natural resources, now in high demand from countries like China and India. These countries also benefit by a large and often skilled migration from these and other Asian countries.

    2. Among the mega-countries, the U.S. is still way ahead

    Don’t cry for me, America. In terms of the large countries, both in population and size, no one comes close to the No. 9-ranked U.S. Indeed there’s not another country with over 100 million people on the list until you get to Japan at No. 16.

    Like all big countries, America is a complicated place, with distinct areas of strength as well as disturbing weaknesses. The U.S. leads all countries in entrepreneurship and innovation and ranks second in the stability of its democratic institutions – the Swiss are No. 1. Less than optimal health and safety rankings, however, push America from the top. Its economic fundamentals are also sub-prime, ranking only 14th, which isn’t surprising in light of persistent current account and now government deficits.

    Despite its problems, the U.S. still outperforms its other large rivals, not only Japan but also the U.K. (No. 12), Germany (No. 14) and France (No. 17). Yet judged within the ranks, all four of these economies have to be considered successful in terms of delivering prosperity and a reasonably high quality of life to their citizens.

    3. Breaking down the BRICs

    The Index’s most fascinating findings can be found a bit further down. The focus of the world’s economy has been shifting to countries that have been – and in some cases remain – governed by Communist, military or single-party dictatorships.

    Democracy’s efficacy can be seen clearly in success enjoyed by the former European Communist states – the Czech Republic, Poland, Latvia, Estonia, Slovakia and Hungary – all of which land in the first third of the ratings. Similarly, Taiwan (ranked 24th) and South Korea (26th), long ruled by military-dominated dictatorships, show how democratization and rising prosperity can flourish together.

    This pattern can also be seen among the “big boys” of the economic upstarts – the so-called BRIC countries. Here the leaders of the pack are both functioning democracies, Brazil (No. 41) and India (No. 45). These rapidly growing economies are kept out of the top tier by significant shortcomings in vital fields such as education, health and public safety.

    The other two BRIC powers, China and Russia, neither of which can be considered anything close to open societies, lag behind. Russia’s mineral wealth gets it a respectable 39th in economic fundamentals, but a lack of democracy, personal freedom and personal safety – as well as poor governance and corruption – drags it down to a paltry 69th. China, ranked a disappointing No. 75, also performs admirably on economic fundamentals, clocking in at No. 29, but is hammered for glaring shortfalls in democracy, personal freedom and governance as well as health and education.

    4. Autocracy may seem to pay, but not in the long run

    Throughout modern history, autocracy has proved effective in sparking fast growth, but a pervasive democratic deficit, poor governance and lack of personal freedom seem likely to constrain long-term progress. For one thing, the ruling elite in the dictatorship is under no strong compulsion to adjust to the needs of its population. Short of forestalling outright rebellion, nest-feathering tends to gain the upper hand.

    As you get to the bottom of the list, the price of dictatorship rises higher still. In this nether-region, there is nary a democratic state. Some of the low-ranking Third World countries are obvious – like Cameroon (No. 100) or Yemen (No. 101) – but some potentially rich but despotically ruled nations do poorly as well.

    Take, for example, No. 94 Iran, a country with enormous natural resources, a well-educated population and a rich cultural heritage. A reasonably enlightened Iran would likely sit in the top third of the list instead of skipping toward the bottom.

    Even the bottom-ranked country, Zimbabwe, left its colonial period with a thriving agriculture sector and great mineral wealth. Here again despotic rule has shown itself an adept destroyer of economic promise.

    In these times of acute self-doubt not only in America but across the democratic world, the Legatum ratings validate the idea that if democracy is not the inevitable wave of the future it represents by far the most efficient way to manage a society. In the end, democracy and prosperity prove not two distinct elements, but, in fact, inextricably linked to each other.

    This article originally appeared at Forbes.com.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His next book, The Next Hundred Million: America in 2050, will be published by Penguin Press early next year.

  • Play It Cool at the G-20, Mr. President

    Barack Obama goes to this week’s Pittsburgh G-20 with what seems the weakest hand of any American president since Gerald Ford. In reality, he has a far stronger set of cards to play — he just needs to recognize it.

    Our adversaries may like our new president, but they don’t fear him. And, on the surface, why should they? The national debt is rising faster than the vig for a compulsive, debt-ridden gambler. And our primary rivals, the Chinese, continue to put the squeeze on American producers by devaluing their currency, subsidizing exports and penalizing imports.

    When the Chinese threaten to call in their debts, they can count on Timmy Geithner to kowtow like an obedient vassal. Some of Obama’s most important supporters — like Warren Buffett and The New York Times‘ Thomas Friedman — have discovered what Friedman calls “the great advantages” of autocracy over our cockamamie, boisterous democracy.

    From Virgil, Maecenas and the court of August to Hitler-admirers Henry Ford and George Bernard Shaw, as well as Stalin-fan Max Eastman, imperial scribes and money lenders have long demonstrated a weakness for even the worst autocrats. But our bedraggled democracy may have a lot more aces to play than many recognize.

    Just look at the other players around the table. French President Nicolas Sarkozy, when not worrying about his (lack of) height, tells his countrymen to stop worrying about gross domestic product. Productivity, one presumes, doesn’t mean as much as a good baguette, long vacation or wet kiss from a former model.

    Across the channel, Prime Minister Gordon Brown seems determined to take the Good Ship Brittania further underwater. According to Tony Travers of the London School of Economics, Britain, with the exception of London, is already well on its way to becoming “a second- or third-tier country.” And as my colleague Ryan Streeter points out, New Labour’s response to the economic crisis — basically raising taxes and doubling down on regulation — doesn’t seem a formula for a vibrant economy.

    Germany, Italy, Spain and the rest of E.U. face equally daunting problems. These “progressive” role models suffer from unsustainably low birthrates, and many face a future more Islamic than European. Their “green” rhetoric may thrill some fans in the U.S., but these economies still run largely on oil and natural gas, which makes them ever more dependent on the autocrat of all — Russia.

    And Japan, once considered the mega-tiger of the future by American policy wonks, is transforming itself into something of a post-modern pussycat. It won’t take immigrants even as its population begins to shrink. Largely dependent on exports, its new government does not like globalization and wants to expand its welfare state. Moreover, Japan seems to be wobbling toward a future as a quiescent vassal for the Greater Chinese East Asian sphere.

    So how does America compare? Let’s start with the basics. The U.S. is the only major advanced country that enjoys a steady population increase. Yes, immigrants are driving much of that growth, but our newcomers are generally very different from the largely alienated and isolated Muslim communities now nesting in Europe. America’s Mexicans, Chinese, Indians, Armenians, Caribbeans and Africans — and more pointedly Arabs and Iranians — do not constitute a hostile “them.” Instead they are the ones redefining us by adding new dimensions to what Nathan Glazer once described as “a permanently unfinished country.”

    Of course, it helps to be the only serious global military presence in the world. A strong military represents an invaluable asset in a world dominated by autocrats and lunatics. That doesn’t mean Obama should swagger like a Viagra-enhanced neo-con. He just needs to follow Teddy Roosevelt’s dictum: Speak softly, but keep a hold on that big stick.

    A powerful military and better demographics represent just part of America’s strong hand. Compared with the E.U., Japan, China or even India, the U.S. remains phenomenally rich in resources.

    Take our most basic need: food. The U.S. has the most arable land in the world and is its largest food exporter. Our $1.4 trillion food sector accounts for 12% of our economy, and prospects for expansion are enormous. By 2050, the population of the planet will be around 9 billion people — up from 6 billion today. More than 85% of the world’s population will reside in developing countries, most in cities, and they will constitute a gigantic future market.

    Equally important, the U.S. is sitting on huge energy resources. Of course, renewable fuels should become a major, even dominant, factor, but in the short- and maybe mid-term, oil, gas and even coal will continue driving the economy. The Great Plains and even the Northeast, particularly Pennsylvania, have enough natural gas to become a junior Abu Dhabi.

    Furthermore, despite its many weak links, our industrial base remains the most advanced in the world. If mindless “green” policies don’t force us to dismantle it, we could produce, through the use of new technology and a better-trained workforce, virtually everything we buy from the Chinese and the Europeans.

    This is not to argue for strict protectionism. But right now we buy almost $4.50 from the China for every $1 we sell there. China’s trade with us is worth 13 times to its economy what our trade with them is worth to us.

    Fundamentally, this means that the Chinese are more exposed to a potential trade war than we are. Without rising exports to the U.S., China’s leaders could face massive unemployment and internal unrest. For us, reducing Chinese imports means somewhat higher prices at Wal-Mart — and perhaps more vigorous business with better partners such as Mexico, whose future prosperity is directly tied to ours.

    All this suggests that Obama has more leverage to demand better trade terms than some might think. There’s nothing in the Constitution that mandates that Americans be the world’s trade chumps. So you want trade war, President Hu? Give him a little Clint Eastwood. Make. My. Day. Then give them a wink or a chance to think about it.

    How about the $1.5 trillion that the Chinese are holding? Well, they could call in their $1.5 trillion for yen or euros, ruining those economies by inflating their currencies. Polish zlotys? Iranian rials?

    Of course, losing Chinese investors and cheap products would hurt in the short term, but it could prove beneficial in the long run. After all, during World War II, we learned to thrive without German machinery or Southeast Asian rubber. Best of all, a Chinese withdrawal could force Washington to live on a budget, just like the rest of us.

    None of this suggests that Obama should discard his charm and morph into a svelte Dick Cheney. America’s preeminence rests on far more than missiles, resources, land or machines. The U.S. is more than a geographic place, or the home of a race, but, as Lincoln noted, the great human experiment about self-government and individual aspirations.

    Whatever his faults — and there are plenty — Obama epitomizes this ideal with his very being. When he arrives in Pittsburgh, our president should play the American hand like the guy who knows he holds aces in the hole.

    This article originally appeared at Forbes.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His next book, The Next Hundred Million: America in 2050, will be published by Penguin Press early next year.

    Photo: White House Photo/Pete Souza

  • The Costs of Climate Change Strategies, Who Will Tell People?

    Not for the first time, reality and politics may be on a collision course. This time it’s in respect to the costs of strategies intended to reduce greenhouse gas emissions. The Waxman-Markey “cap and trade” bill still awaits consideration by the US Senate, interest groups – mainly rapid transit, green groups and urban land owners – epitomized by the “Moving Cooler” coalition but they are already “low-balling” the costs of implementation.

    But this approach belies a bigger consideration: Americans seem to have limits to how much they will pay for radical greenhouse emissions reduction schemes. According to a recent poll by Rasmussen, slightly more than one-third of respondents (who provided an answer) are willing to spend $100 or more per year to reduce greenhouse gas emissions. About 2 percent would spend more than $1,000. Those may sound like big numbers, but they are a pittance compared to what is likely to be required to meet the more than 80 percent reduction in greenhouse gas emissions that the Waxman-Markey bill would require. Even more worryingly for politicians relying on voters to return them to office, nearly two-thirds of the respondents would pay nothing to reduce greenhouse gas emissions.

    If we do a rough, weighted average of the Rasmussen numbers, it appears that Americans are willing to spend about $100 per household per year (Note 1). This includes everyone, from the great majority, who would spend zero to the small percentage who would spend more than $1,000. At $100 per household, it appears that Americans are willing to spend on the order of $12 billion annually. This may look like a big number. But it is peanuts compared to market prices for greenhouse gas emissions. This is illustrated by the fact that the social engineers whose articles of faith requires building high speed rail to reduce greenhouse gas emissions would spend $12 billion to construct just 150 miles of California’s proposed 800 mile system.

    Comparing Consumer Tolerance to Expected Costs: At $100 per household, Americans are prepared to pay just $2 per greenhouse gas ton removed. All of this is in a policy context in which the United Nations Intergovernmental Panel on Climate Change suggests that $20-$50 per greenhouse gas ton is the maximum that should be spent per ton. The often quoted McKinsey/Conference Board study says that huge reductions in greenhouse gas emissions can be achieved at $50 or less, with an average cost per ton of $17. International markets now value a ton of greenhouse gas emissions at around $20. At $2 per ton, American households are simply not on the same “planet” with the radical climate change lobby as to how much they wish to spend on reducing greenhouse gases.

    International Comrades in Arms? This is not simply about Americans and their perceived differences from others who are so often considered more environmentally sensitive. France’s President Sarkozy has encountered serious opposition in proposing a carbon tax on consumers to discourage fossil fuel use. He is running into problems not only among members of the opposition, but concerns have also been expressed by members of his own party. It appears that many French consumers (like their American comrades) are more concerned about the economy than climate change at the moment.

    China, India and Beyond: If only a bit more than one-third of American households are willing to pay much of anything to reduce greenhouse gas emissions, it seems fair to ask what percentage of households in China, India and other developing nations are prepared to pay anything? A possible answer was provided recently by India’s environment minister, Jairam Ramesh, who released a report predicting that India’s greenhouse gas emissions would rise from the present 1.2 billion tons to between 4 and 7 billion tons in 2030. The minister said the “world should not worry about the threat posed by India’s carbon emissions, since its per-capita emissions would never exceed that of developed countries.” . At the higher end of the predicted range, India would add more greenhouse gas emissions than the United States would cut under even the proposed 80 percent reduction scheme. Suffice it to say that heroic actions to reduce greenhouse gas emissions seem unlikely in developing countries so long as their citizens live below the comfort levels of Americans and Europeans.

    Lower Standard of Living not an Option: I have been giving presentations on this and similar subjects for some years. I have yet to discern any seething undercurrent of desire on the part of Americans (or the vast majority anywhere else) to return to the living standards of 1980, much less 1950 or 1750. Neither Washington’s politicians nor those in Paris or any other high income world capital are going to tell the people that they must accept a lower standard of living. Nor is there any movement in Washington to let the people know that their tolerance for higher prices could well be insufficient to the task.

    For Washington, the dilemma is that every penny of the higher costs will hit consumers (read voters), whether directly or indirectly. There could be trouble when the higher utility bills begin to arrive and it could mean difficulty in delivering on the primary policy objective of virtually all governments, which is to remain in power. This is not to mention the unintended consequences of higher prices on many key industries, notably agriculture, manufacturing, and transportation.

    There is an even larger concern, however, and that is the stability of society. Harvard economist Benjamin Friedman, in The Moral Consequences of Economic Growth suggested from an economic review of history that economies that fail to grow lapse into instability.

    A Public Policy Collision Course? A potential collision between economic reality and public policy initiatives could be in the offing. Many “green” proposals are insufficiently sensitive – even disdainful – towards the concerns of everyday citizens. This suggests that politically there should be an emphasis only on the most cost effective strategies. In a democracy, you must confront to the reality that people are for the most part more concerned about the economy than about strategies meant to slow climate change.

    The imperative then is not to ignore the problem, but to focus on the most rational, low-cost and effective greenhouse gas emission reduction strategies. Regrettably, it does not appear that Washington is there yet. The special interests whose agendas are to cultivate and reap a bounteous harvest of “green” profits or to convert the “heathen” to behaviors – such as riding transit and living in densely packed neighborhoods – that they have been advocating long before the climate change issue emerged.

    Those concerned about the future of the environment also have to pay attention to reality. Reducing greenhouse gases is not a one-dimensional issue. Environmental sustainability cannot be achieved without both political and economic sustainability.

    Note 1: The Rasmussen question was asked of individuals. It is assumed here, however, that the answers related to households. One doubts, for example, that a queried mother answered with an assumption that she would pay $100, her husband would pay $100 and each of the kids would pay $100, but rather meant $100 for the household, since, to put it facetiously, few households devolve their budgeting to the individual members.

    Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris. He was born in Los Angeles and was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley. He is the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.”

  • China’s Metropolitan Regions: Moving Toward High Income Status

    Changsha, Hunan (China): Over the past 30 years, China has eradicated more poverty than any nation in the world’s history. The reforms instituted by Deng Xiaopeng have not only created a large, new middle class in China, but have also produced some of the largest and architecturally most impressive urban areas in the world. There is still poverty in China, but the most extreme poverty is in the rural areas. The expansive shanty-town poverty found in Manila, Jakarta, Mexico City, Sao Paulo or Mumbai is absent in the large Chinese urban areas.

    While China as a nation is growing slowly, the same cannot be said of its urban areas. Perhaps the greatest migration in human history is underway, as rural residents move to the urban areas. United Nations population projections indicate that China will add 310 million people to its urban areas over the next 25 years, a figure equal to the population of the United States.

    Gross Domestic Product in Chinese Cities: China has seen its incomes and gross domestic product increase markedly. Urban economic growth has been even greater than that of the country as a whole. This article contains the latest available information on gross domestic product for the largest prefectural and provincial level cities in China, derived from annual yearbooks (see Table). It needs to be understood that “cities” are much different in China than anywhere else.

    The Differing Definitions of “City”: The most commonly used definition of a city in China is more akin to a large metropolitan region in the United States or Europe. Some cities, like Shanghai, Beijing, Tianjin and Chongqing are the equivalent of provinces, while other cities are “prefectural level,” administering large areas within provinces (Note 1). Each of these “cities” is comprised by smaller jurisdictions that go by at least 8 names, including city districts and “county level cities,” which are cities within the city, but not the main urban areas. Much of the land area in county level cities and even inside some city districts is rural rather than urban. As a result, analysts who should know better often make downright silly comparisons between Chinese cities and other cities in the world, simply because they do not understand the differing meaning of the term. Nearly all of China, urban and rural is broken into prefectural or provincial cities, just as nearly all of the United States is divided into counties.

    The large rural areas within the cities reduce the overall GDP per capita because incomes are generally so much lower outside the urban areas.

    Geographical Distribution of Wealth: China purposefully began its most significant reforms on the east coast, which is where much of the wealth of the nation is concentrated. All 25 of the most affluent metropolitan regions are on the east coast and 14 of the richest 20 metropolitan regions in China (measured by GDP per capita) are in the two river delta mega-regions, the Pearl and the Yangtze.

    The Pearl River Delta: China’s richest area is the Pearl River Delta, home of formerly British administered Hong Kong, Deng Xiaopeng’s megacity Shenzhen and historic Guangzhou (Canton). The area is one of the world’s great mega-regions, with a population of more than 50 million, in 8 virtually adjacent urban areas, tied together by a modern freeway system. Altogether the Pearl River Delta urban areas have more people than the world’s largest single urban area, Tokyo, and an overall higher density.

    Hong Kong, which remains outside the normal provincial governance structure, had the highest GDP per capita in the nation at $42,200 (purchasing power parity) in 2007, slightly more than 90 percent of the United States. Hong Kong and formerly Portuguese Macau have both achieved first world economic status, though Macau does not make the 1,000,000 urban area population threshold for inclusion on the present list.

    Shenzhen, on Hong Kong’s northern border ranks 4th in the nation at $22,100 and Guangzhou 5th, at $19,900. Two other Pearl River Delta metropolitan regions, Foshan, Zhuhai, have GDPs per capita greater than $15,000, which by some accounts qualifies them for entry into the high income world. The remaining large Pearl River Delta metropolitan regions, Dongguan, Zhongshan and Jiangmin each have GDPs per capita exceeding $10,000.

    The Yangtze River Delta: The Yangtze River Delta is another great mega-region, with more than 30 million people. It, however, covers much more land area than the Pearl River Delta and has much greater expanses of rural territory. The Yangtze River Delta metropolitan region of Suzhou, the city of canals, and neighbor of Shanghai, has the highest GDP per capita outside Hong Kong, at $25,500. One county level city within Suzhou, Kunshan has a GDP per capita of more than $28,000 (Note 2). Suzhou’s neighbor on the way to Nanjing, Wuxi, is next at $23,300. Shanghai, China’s largest metropolis, ranks 6th in GDP per capita at $18,400. Other Yangtze Delta metropolitan regions have GDPs per capita between $10,000 and $15,000, including Nanjing, Hangzhou, Changzhou and Ningbo.

    The Beijing Metropolitan Region: China’s third mega-region is around Beijing, the national capital. Altogether, this region has nearly 25 million people, but like the Yangtze River Delta, the Beijing megaregion has large swaths of rural territory. Beijing itself has a GDP per capita of $16,200, while Tianjin and Tangshan (site of the 1976 earthquake, one of history’s worst, which killed at least 250,000 people) have GDPs per capita of between $10,000 and $15,000.

    Outside the Megaregions: While the wealth is concentrated in the three large megaregions, prosperity has come to other metropolitan regions as well. One of Deng Xiaopeng’s original special economic zones, along with Shenzhen, was Xiamen, which is the richest metropolitan region outside the three large megaregions.

    Prosperity Comes to the West: The interior metropolitan regions are now well on their way to sharing the prosperity of the east. Changsha, from where I write, is now served by the nation’s “interstate” highway system in all directions. At the end of 2008, this system had expanded to 37,000 miles. Eventually, 53,000 miles are planned, which would make it longer than the present 46,000 mile US interstate system. This national expressway system is a pivotal factor in bringing prosperity to the interior. Now, trucks can reach Pacific Coast ports such as Guangzhou, Fuzhou or Hangzhou in six to nine hours of driving. This makes it possible for manufacturing businesses to locate in Changsha, Xi’an or Wuhan and a number of other metropolitan regions that are well inland.

    This should be of inestimable help as the nation seeks to decentralize its urban growth to the interior urban areas. Changsha, itself, has moved strongly into middle income status, with a GDP per capita closing in on $10,000. Moreover, local officials are planning for a near doubling of the current 2.5 million population in the next two decades. At least three major new towns under construction on the urban periphery and another will be built where the borders of three prefectural cities meet: Changsha, Zhuzhou and Xiangtan which is the birthplace of Chairman Mao Zedong (about 50 miles from Changsha, just off the Shangrui Expressway).

    Chongqing (formerly known in the west as Chungking), one of the four provincial level municipalities, has low GDP per capita of less than $5,000. However, this figure is skewed low by the fact that the urban area itself accounts for approximately one-sixth of the provincial city’s population, with the bulk of the population in the far lower income rural areas. Chongqing provides the ultimate evidence that cities in China are like nowhere else in the world. The “city” of Chongqing has a population of more than 30 million, in a land area the size of Austria or Indiana. The actual urban area, however, covers less area than the Indianapolis urban area and only 1.5 times the area of the Vienna urban area.

    Toward a High Income Nation: The urban areas of China still have poverty, but the commercial and residential development (both high rise and detached “villas”) make it clear that a great many people are doing “very well.”

    China is moving hard toward high-income world status. I specifically avoid the term “first world,” because metropolitan China already feels first world, regardless of its income status. However, should current growth rates continue relative to the high income world, metropolitan regions such as Suzhou and others could move into the list of the world’s 100 most affluent metropolitan areas within a decade. It cannot happen too soon.

    Note 1 : This includes sub-provincial level cities, which have jurisdiction over virtual prefectures within provinces, however have more administrative independence than prefectural level cities.

    Note 2: GDP per capita data is not widely available for divisions within prefecture and provincial level cities

    China Metropolitan (City) Regions Gross Domestic Product: 2007
    Provincial, Sub-Provincial & Prefectural Level Cities
    Purchasing Power Parity (US$)
    RANKED BY GDP/CAPITA GDP/Capita
    Rank Metropolitan (City) Regions ¥ (RMB) US$ PPP
    1 Hong Kong $42,200
    2 Suzhou, JS ¥91,900 $25,500
    3 Wuxi, JS ¥83,900 $23,300
    4 Shenzhen, GD ¥79,600 $22,100
    5 Guangzhou, GD ¥71,800 $19,900
    6 Shanghai, SHG ¥66,400 $18,400
    7 Zhuhai, GD ¥61,700 $17,100
    8 Foshan, GD ¥61,200 $17,000
    9 Beijing. BJ ¥58,200 $16,200
    10 Xiamen, FJ ¥56,200 $15,600
    11 Nanjing, JX ¥53,600 $14,900
    12 Changzhou, JS ¥52,800 $14,700
    13 Hangzhou, ZJ ¥52,600 $14,600
    14 Handan. HEB ¥51,900 $14,400
    15 Dalian, LN ¥51,600 $14,300
    16 Ningbo, ZJ ¥50,500 $14,000
    17 Zhongshan. GD ¥49,500 $13,700
    18 Tianjin. TJ ¥46,100 $12,800
    18 Dongguan. GD ¥46,000 $12,800
    20 Shenyang, LN ¥45,600 $12,600
    20 Qingdao. SD ¥45,400 $12,600
    22 Tangshan. HEB ¥44,700 $12,400
    23 Zibo, SD ¥43,500 $12,100
    24 Yantai, SD ¥41,300 $11,500
    25 Huizhou, GD ¥41,000 $11,400
    26 Baotau, NM ¥40,400 $11,200
    26 Shijiazhuang. HEB ¥40,300 $11,200
    28 Jinan, SD ¥39,300 $10,900
    29 Anshan, LN ¥38,400 $10,700
    30 Jiangmen, GD ¥37,800 $10,500
    31 Taiyuan. SAX ¥36,400 $10,100
    32 Wuhan. HUB ¥35,600 $9,900
    33 Hohhot, NM ¥34,900 $9,700
    34 Zhengzhou, HEN ¥34,100 $9,500
    35 Changsha. HUN ¥33,700 $9,400
    36 Urumqi, XJ ¥31,100 $8,600
    37 Nanchang, JX ¥30,500 $8,500
    38 Fuzhou, FJ ¥29,500 $8,200
    39 Changchun, JL ¥28,100 $7,800
    40 Hefei. AH ¥27,600 $7,700
    41 Wenzhou. ZJ ¥27,500 $7,600
    42 Baoding, HEB ¥27,100 $7,500
    43 Haikou, HA ¥26,700 $7,400
    43 Chengdu, SC ¥26,500 $7,400
    45 Lanzhou, GS ¥25,600 $7,100
    46 Luoyang. Hen ¥25,100 $7,000
    47 Harbin, HL ¥24,700 $6,800
    47 Fushun, LN ¥24,500 $6,800
    49 Jilin, JL ¥23,300 $6,500
    50 Xiangfan, HUB ¥22,500 $6,200
    51 Xi’an, SAA ¥21,300 $5,900
    52 Liuzhou, GX ¥20,700 $5,800
    53 Guiyang, GZ ¥19,500 $5,400
    54 Xuzhou, JS ¥19,200 $5,300
    55 Kunming, YN ¥18,800 $5,200
    56 Shantou, GD ¥17,000 $4,700
    57 Linyi, SD ¥16,300 $4,500
    58 Nanning, GX ¥15,800 $4,400
    59 Datong, SAX ¥15,600 $4,300
    59 Huiayn, JS ¥15,500 $4,300
    61 Chongqing, CQ ¥14,700 $4,100
    62 Qiqihar, HL ¥10,000 $2,800
    Sources: Annual statistical reports, generally from http://www.chinaknowledge.com
    GDP PPP calculated from 2007 International Monetary Fund data
    Caution: In some cases, GDP per capita may exclude temporary residents
    Includes all provincial, prefectural level and sub-provincial level cities and special economic regions on the mainland with a core urban area of more than 1,000,000 population (see http://www.demographia.com/db-worldua.pdf).
    Note: Cities in China are substantially different in definition than in other nations. See: http://www.demographia.com/db-define.pdf.
    Provincial abbreviations at db-china-abbr.pdf

    Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris. He was born in Los Angeles and was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley. He is the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.”