Foreign Policy and the McKinsey Global Institute (MGI) have performed a valuable service by providing
reasonable estimates of economic growth across the world's great cities over
the next 15 years ("The
Most Dynamic Cities of 2025," September/October
2012). But though the primary punch line of these results -- that China's
cities will increasingly dominate the urban world -- is quite possible, it is not
The recent performance of China's
economy and its cities seems to justify exuberance, but there are also reasons
to suspect somewhat less explosive expansion in the future. Across U.S.
cities, past population growth strongly predicts future population growth, but
past income growth presages future income decline, as an influx of new workers
brings down wages. If that pattern holds for China, we should expect the
population growth of China's cities to continue exceeding national population
growth (though perhaps not to the degree predicted by MGI). We should, however, also expect to see incomes rising
faster outside the megacities. A new flood of millions of internal
migrants into Shanghai, for example, should dampen wage growth among
less-skilled workers there, even as all that human capital creates more
opportunities for China's entrepreneurs.
We have watched China's expansion
slow in 2012, and it seems likely that China's national growth rate will
decline considerably over the next 15 years. Questions about China's
political future remain unresolved, and it will be far harder to sustain
blistering growth rates as China becomes wealthier.
Foreign Policy and McKinsey are right to emphasize that the biggest things
happening with cities are happening in Asia and that the biggest things
happening in Asia are happening in cities. While I wonder whether Chinese
urban growth will be as extreme as these figures suggest, China will continue
to grow, and its cities will undoubtedly be massive entities that the world
will need to respect and understand.
Professor of Economics
MGI's Richard Dobbs
and Jaana Remes reply:
As usual, Edward Glaeser makes a good point
about the uncertainties surrounding China's growth prospects. Between 2000 and
2010, China's urban growth exceeded even the most aggressive projections as
migration, population growth, and shifting rural-urban boundaries increased the
Yet Chinese cities will
still play a major role in global economic growth through 2025 because of
China's continuing urbanization, the country's above-average per capita GDP growth, and the expected appreciation of the
renminbi. We examined three scenarios to assess the robustness of our findings:
(1) slower real GDP growth in China and India, (2) slower real
global growth, and (3) faster real global growth. Our central findings hold
across all these macroeconomic scenarios, though global growth and individual
country and city projections naturally vary.
Finally, we agree that we
should expect incomes to rise faster outside China's megacities given the rapid
growth of the country's "middleweight" cities with populations less than 10
million. Ultimately, the question is not whether China's urban growth will
slow, but when and how quickly.