Stefano Negri: Preparing For China’s Urban Billion

At TEDxShanghai 2009, Stefano Negri gave a talk based on his research for McKinsey & Co. concerning urbanization or the growth of cities in China, offering some great observations about how China’s cities have developed over the past 30 years, and some ideas on how China should approach continued urbanization.

But first, an TEDxShanghai introduction of Stefano:

Stefano Negri helps cities juggle their growing urbanization challenge. Literally. After juggling his way through Europe, one public square at a time, Stefano graduated as a Land Planning and Environmental Engineer. He worked for NGOs counting crocodiles in Colombia’s lagoons, cows in Tanzania, trees and cars in Italy. In 2001 he figured out he could have a greater impact on the planet by advisng private and public sector companies for management consulting company McKinsey & Co. recently, as part of the mcKinsey Global Institute, he authored several macroeconomic research articles and reports including “Preparing for China’s Urban Billion”, which analyses the evolution of urbanization in China and its implications for businesses and policy makers. Currently, he lives in Shanghai and juggles a wife, two kids, and McKinsey’s City Service line – advising cities on smarter, more efficient ways of urbanizing.

Negri starts off by explaining the big question he started off with in his research: What is the ideal size of a city?

The joke: An American urban planner answers “about half a million.” The Chinese planner says “something between 10-15 million.” And the Italian? “For every 300-500 people, as long as there is a church a place to get a good cup of coffee.”

[It wasn't really funny for me either, but I'm not Italian.]

Negri asks, “but is there an ideal size for a city?”

30 years ago, Shenzen was a fisherman village with maybe a few thousand people. Today, it is a massive metropolis home to 8 million people.

The fact is, China has replicated in mere decades what too centuries to happen in other countries. Over the last 20 years:

• Disposable income has gone up 3x,
• Over 250 Chinese cities have tripled their GDP per capita, and…
• More than 350 million Chinese have been lifted out of poverty.

However, urban sprawl has led to problems:

• Shortage of resources and pollution,
• Small cities are fiscally strained trying to provide public services, and…
• There is “not enough talent.”

While there are plenty of graduates each year in China, there just isn’t enough “quality”, or so Negri argues, and this talent is necessary to manage such urbanization.

But what about the future? The next 20 years?

• +350 million urbanites as rural Chinese continue to migrate into cities,
• >200 cities bigger than 1 million (in Europe, only 35 cities are of this size, America has 9), and…
• Up to 50,000 new skyscrapers (or building 20 Manhattans from scratch, or 1 Chicago every year).

Chinese cities are redefinng urbanization. So…what is the ideal size of a city in China?

Where are the 350 million new urbanites going to go? Negri suggests there are two options:

A. Dispersed urbanization

• Flow to smaller cities, or create new cities.
• 300 new cities of less than half million people.
• Smaller cities growing faster.

B. Concentrated urbanization

• 15 cities with more than 20 million people.
• 5 cities with more than 30 million people.

Of these two options, Negri believes concentrated urbanization would be best for China, arguing that bigger cities in China are more efficient and even cleaner. There are the pros:

• Faster economic growth.
• More jobs.
• Less arable land loss.
• More energy efficient.

…but of course, also the cons:

• Traffic congestion.
• Peak air pollution.
• Water scarcity.

These cons certainly demonstrate how even if concentrated urbanization is better, it is not the “complete answer.” But what else is part of the answer? The mayors of these Chinese cities who, like jugglers, must constantly juggle economic development, allocation of resources, management of people/talent, and land. Like pilots, these mayors need instrument and control panels to monitor the development and conditions of their cities, and manage what Negri calls “urban productivity.”

That latter part seems to be what Negri may be looking into next, but concluding his TED talk, Negri says China has definitely surprised the world in the last 30 years, and he’s confident China will continue to do so in the future.

For more reading on urbanization and why even bigger cities in China is good for China, check out the Newsweek article “Where Big Is Best” that used his research from McKinsey. More TEDxShanghai 2009 coverage here.