Building a Better China

The world's cities will experience massive growth over the next decade. But are they ready to handle it?

Urbanization today is powering a transformation in the prosperity of billions of people in the world's emerging economies. The global consuming classes -- made up of people with incomes of more than $10 a day, sufficient for discretionary spending on goods and services beyond the basics of food, shelter and clothes -- will grow to 4.2 billion in 2025, up from about 1.2 billion in 1990. And more than half of those 4.2 billion will live in only about 440 mostly mid-sized cities in emerging markets. Consumers living in cities could spend an additional $20 trillion a year by 2025, a powerful growth opportunity for companies and the global economy.

China's growth dwarfs that of other countries -- and even entire continents. According to current trends, the country's urban population is expected to grow from about 570 million in 2005 to 925 million in 2025 -- an increase larger than the entire current population of the United States. By 2025, China's cities, 29 of which made our list of the 75 Most Dynamic Cities of 2025, will also account for nearly 40 percent of global urban demand growth for buildings, nearly 30 percent of urban demand growth for additional port capacity, and more than one-quarter of additional municipal water demand globally.

But what it will take for the world's cities to serve their expanding, and ever more prosperous, citizens while still sustaining growth? Our analysis of expected GDP growth and past investment patterns shows that the world's cities will need to more than double their physical capital investment from nearly $10 trillion today to more than $20 trillion by 2025. If this much-needed injection of additional spending into the world economy -- some $30 trillion -- comes to pass, urbanization could offer a rare bright spot in an otherwise cloudy outlook for the world economy. Here's how we think that money should be spent.


Expanding cities -- and the rising incomes of many of their citizens -- will necessitate a building boom. To meet demand, residential and commercial floor space needs to increase by more than 80,000 square kilometers (including replacement buildings), an area equivalent to the entirety of Austria.

China alone will be responsible for almost 40 percent of that total between now and 2025. Three-quarters of that space will need to be residential, as the number of urban households in China rises and individuals become richer and demand more living space.

Indeed, cities in emerging markets like China are expected to account for more than 80 percent of growth in urban demand for residential floor space. And more than half of all new urban construction taking place between now and 2025 is likely to be in the cities of China and South Asia alone. These cities are set to build 27,000 square kilometers and 7,000 square kilometers, respectively. Together, that's the equivalent of the entire land area of the Netherlands. In total, the investment needed to power this building boom is likely to be almost $80 trillion in just 15 years.

Shipping Containers

As demand for many products soars around the globe, the question is whether the world has the capacity to transport these goods to their customers. The answer, at the moment, is no. The vast majority of consumer goods today -- more than 90 percent -- is transported by ship, and there are simply not enough ports (or big enough ports) to support the current number of containers.

The urban world will need port container capacity to increase by two and a half times by 2025 -- the equivalent of 24 new ports the size of Shanghai's port, the world's largest. About 85 percent of the growth in container traffic demand is likely to be in the economies of emerging markets, where demand for many products is rising swiftly and steeply, already straining current capacity levels. The estimated cost of this port building boom is more than $200 billion. More than one-third of that investment will be needed in China.

Municipal water

Water is the most basic human need, and demand in cities is set to rise by 40 percent from today's level by 2025. An estimated 80 billion cubic meters of additional water will be required by the world's cities -- more than 20 times what New Yorkers consume today.

Expanding the municipal water-supply infrastructure could cost about $480 billion by 2025, including both the supply of water and the treatment of wastewater. Cities in emerging economies will account for about 80 percent of this surging demand for water, with East and South Asia alone responsible for more than half of the additional demand, and China another 22 percent.


The global economic downturn has delayed investment projects worldwide and created a highly uncertain near-term investment climate. But cities that under-invest in infrastructure and fail to keep pace with the demands of their expanding populations -- or invest inefficiently or in the wrong things -- will ultimately come up against barriers to growth. Indeed, growth has already slowed down in many of the world's megacities because they have not kept pace with population growth. Only by investing ahead, or at least along with the curve, can cities build a foundation for the productivity they will need once the economic gains from their rural-to-urban transitions are exhausted.

Lintao Zhang/Getty Images


Junior Partner

How does Hillary Clinton stack up compared to her predecessors?

Now that Hillary Clinton's tenure as secretary of state is drawing to a close, it's possible to begin to assess her record and place her service in historical perspective. Although Clinton was not part of President Barack Obama's inner decision making circle, she has done a credible job representing the interests of the United States abroad. At the same time, Clinton's influence has grown during her tenure as secretary of state -- culminating in the pivot toward Asia, of which Clinton was one of the chief architects. But how does she stack up against past secretaries of state?

In a forthcoming encyclopedia of diplomatic and military history, I develop a simple typology for secretaries of state that helps us to understand the role -- and the historical importance -- of the men and women who have held this position. Broadly speaking, past secretaries of state fall into one of the following five categories or types: "senior partner/prime minister," "foreign minister," "junior partner," "figurehead," and "caretaker."

The "senior partner/prime minister secretary of state" advises the president on both foreign and domestic policy and is, for the most part, the dominant force in the executive branch after the president. Secretaries that fall into this category have almost complete freedom in foreign policy and also play an important role in shaping domestic policy. Martin Van Buren and William Seward were acknowledged as the most powerful Cabinet members in the administrations of Andrew Jackson and Abraham Lincoln, respectively. Lincoln, for example, took Seward's advice on issues ranging from White House protocol to the timing of the Emancipation Proclamation.

Other secretaries who served in the role of senior partner/prime minister were John Marshall under John Adams, Jeremiah Black under James Buchanan, Hamilton Fish under Ulysses S. Grant and William Evarts under Rutherford B. Hayes. Likewise, President Millard Fillmore asked Daniel Webster to be his secretary of state because he wanted Webster's advice and counsel on a range of foreign and domestic policies, especially on the bills that coalesced into the Compromise of 1850.

The "foreign-minister secretary of state," in contrast, controls U.S. foreign policy without at the same time dominating domestic policy. Occasionally, secretaries in this category derive their primacy in foreign policy from an existing friendship with the president. James Baker, for example, was a friend of George Bush for decades before his appointment and helped Bush on his first election campaign. Similarly, John Forsyth, Abel P. Upshur, and Elihu Root all had preexisting friendships with the presidents they served under. Other foreign-minister secretaries, such as John Quincy Adams, Charles Evans Hughes, and George C. Marshall, were not close with their bosses prior to taking office. Yet Adams shared in one of the most productive foreign policy partnerships in U.S. diplomatic history with President James Monroe while President Warren G. Harding devolved total control of foreign policy to Hughes. President Harry S. Truman, meanwhile, had the highest respect for Marshall, calling him the "greatest living American."

The "junior-partner secretary of state," as the name suggests, plays a less commanding role in formulating and executing U.S. foreign policy, but still participates in the process. Typically, this occurs because the president has strong ideas about how to direct foreign policy. Occasionally, however, the junior-partner secretary finds himself or herself sidelined when the president solicits foreign policy advice from another official. Thomas Jefferson, Cordell Hull, William Rogers, and Colin Powell all had their advice disregarded as other advisors pulled the foreign policy strings. Each of the secretaries mentioned above had at least one major competitor: Jefferson had Secretary of the Treasury Alexander Hamilton, Hull had Undersecretary of State Sumner Welles, and Rogers had National Security Advisor Henry Kissinger. Powell, meanwhile, had the unique misfortune of facing two competitors working in tandem: Vice President Dick Cheney and Secretary of Defense Donald Rumsfeld.

During his first year as secretary of state, Powell enjoyed something close to foreign minister powers -- buoyed by his previous working relationship with Dick Cheney - but after the 9/11 terrorist attacks he was reduced to junior partner status. It was Cheney and Rumsfeld, not Powell, who articulated the Bush administration's neoconservative national security strategy from 2002 onwards. Powell, who still favored a multilateral diplomatic approach, became little more than a reassuring face plastered on a policy that many -- including Powell -- had serious misgivings about. Indeed, so powerless was Powell, that some observers have argued that he was little more than a figurehead secretary of state by the end of his tenure.

"Figurehead secretaries of state" are those who have had little or no impact on foreign policy. This has occurred when presidents demanded total control of foreign policy and treated their secretaries of state as glorified clerks. President Benjamin Harrison, for example, distrusted his first secretary of state, James G. Blaine, and was jealous of his popularity. (Blaine was introduced as the "plumed knight" at the 1876 Republican National Convention.) Harrison reviewed all of Blaine's state papers and liked to remind him that he, Harrison, controlled U.S. foreign policy.

Likewise, John Sherman held little sway under President William McKinley and both William Jennings Bryan and Robert Lansing were ignored by President Woodrow Wilson. Harrison and Wilson both preferred to keep foreign policy in their own hands and delegated responsibility to trusted personal advisors. McKinley relied heavily on Assistant Secretary of State William Day and Wilson regularly consulted Colonel Edward House, treating Lansing as nothing more than a legal draftsman.

The "caretaker secretary of state" is slightly different from the other categories in that it refers to the purpose of the appointment -- to form a bridge between administrations -- rather than the influence of the appointee. As such, caretaker secretaries are usually appointed at the end of a presidency and only remain in office for a short time. Edward Everett, John W. Foster, Robert Bacon, and Lawrence Eagleburger, for example, were all appointed in the last months or even weeks of an outgoing administration and were in office to ensure the continuation of policy. Despite their short tenure, some caretakers have left a lasting imprint on foreign policy: Everett rejected a British and French proposal to guarantee Spanish sovereignty of Cuba, Edmund S. Muskie helped resolve the Iranian hostage crisis, and Eagleburger influenced President Bush's decision to send troops to Somalia.

So where does Hillary Clinton fit in? Although she was the most high-profile official to be nominated at the beginning of a presidency since Harry S. Truman tapped James F. Byrnes for the top job at State in the summer of 1945, Clinton's impact has been fairly circumscribed. During her tenure, the bulk of U.S. foreign policy has been formulated in the White House, where the President Barack Obama relied heavily on aids like Thomas Donilon and Denis McDonough. Secretary Clinton, for example, played a relatively marginal role in the decision to implement the surge in Afghanistan in 2009. The same can be said of her role in formulating the administration's foreign policy toward the Middle East. Clinton, it seems, never managed to penetrate Obama's inner circle.

Perhaps part of the problem was that she was President Obama's major opponent in securing their party's presidential nomination. There also may have been some concern that if Hillary Clinton was too involved in setting policy early on, people would view the Obama presidency as Bill Clinton's third term, at least as it pertained to foreign policy. Yet, Clinton has done a credible job executing policies formulated by others and should be given credit for the "pivot" to Asia, which has increased U.S. popularity in the region (though perhaps not in China). Clinton also did an admirable diplomatic tap-dancing job to resolve the standoff between the U.S. and China over the blind dissident Chen Guangcheng.

But put into historical perspective, Clinton falls in the "junior partner" category for secretaries of state. The president and the White House staff have controlled foreign policy and have consistently excluded the secretary. To her credit, Clinton has maintained good professional relationships with both Secretaries of Defense Robert Gates and Leon Panetta and is viewed as a good chief by State Department personnel. In addition, Clinton has used her exceptionally high profile -- stemming from her previous roles as First Lady and U.S. senator -- to shepherd a number of her own initiatives like economic development and women's empowerment projects.

Given the constraints put on her by the White House and her own previous lack of diplomatic experience, Clinton has excelled as a junior-partner secretary of state -- thanks mainly to her intelligence and work ethic. Indeed, she has logged more miles than any secretary of state in history. And perhaps most importantly, looking forward to a presidential run down the line, Clinton now has the foreign policy credentials she lacked in 2007-2008.