The Rise of China’s Inland Cities

 
 

Last week, a solar plane on a round-the-world flight landed in Chongqing. The project promotes renewable energy, but the stopover also signifies Chongqing’s increasing global visibility and connectivity.

Maritime advantage has shaped urban destinies for millennia. With the exigencies of global trade historically driving seaboard growth, mid-continental cities have lagged mostly as agricultural and resource outposts. The isolation of these landlocked cities has compromised their ability to culturally diversify. Today, though, with enhanced global mobility and instantaneous communication, the world’s vast interiors have shed the profound disadvantage of geographic seclusion and are now asserting themselves in the new global economy. This is particularly evident in China’s inland cities, where a blended statism balances pro-developmentalism with the soft sovereignty of urban governments over economic growth.

Coastal cities like Shanghai, Mumbai and New York have traditionally been centers not only of trade but also of commerce, culture, and wealth. They monopolize infrastructure investment and media attention, and occupy the longings of aspirational youth seeking stimulation and opportunity. With this inherent advantage, however, come the practical challenges of overpopulation: infrastructure deficits, soaring property values, and glaring inequalities in wealth distribution that some argue compromise the social fabric. Furthermore, coastal cities are increasingly vulnerable to sea level rise associated with climate change.

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The world’s opportunistic inland cities are happy to take the development pressure off troubled coastal cities, and in the past two decades many have done so with the gusto of global ambition. But the path to transformative growth in these historically isolated cities is arduous. Economic progress is hard-won in the middle of continents and frequently occurs only through agonizingly sluggish and incremental development, punctuated by occasional resource windfalls that rarely prove permanent. Some inland cities, like Denver, USA (gold and silver) and Hyderabad, India (diamonds), have used resource luck to build a more durable economic base, while others enjoyed only momentary gains before declining from resource depletion. Still others, like Oklahoma City and Calgary, are currently riding the economic wave of new energy technologies, but their longer-term prospects are uncertain. China’s cities have taken notice.

Step-Changes

Aiming for step-changes in their economic trajectories, China’s inland cities are asserting themselves through a unique blend of state intervention and pro-developmental reform. Chongqing, one of five “national central cities,” has benefited from the country’s massive commitment to regional rail and water transport networks. Devolutionary reforms have expanded the borrowing capacity of China’s inland megacities, enabling them to invest in local public works such as ambitious transport projects. Chongqing’s economy is also expanding at a healthy clip and the city has recently been recognized as the world’s largest laptop producer. The combination of industrial zones, a strong state-owned enterprise presence, and public investment has been branded the “Chongqing model.” The results, however, are mixed. The city’s FDI is robust and GDP growth is unsurpassed so far in 2015, but municipal debt remains stubbornly high.

A modest 170 km from Tianjin’s port, Beijing appears better situated for growth than its peers further inland. However, it has developed a thriving economy independent of this coastal proximity. Beijing has parlayed certain advantages into a global brand, including education (as home to several of China’s top universities). The city is also transitioning to a service-based economy, reflecting a nationwide trend as domestic purchasing power creates new markets for tertiary industries. Also supporting Beijing’s growth are China’s national developmental strategies, including special purpose economic zones targeting specific industries (such as industrial parks and eco-cities). The city has also positioned itself as a cultural capital, with investments in arts facilities and preservation of traditional Hutong neighborhoods. Culture, political cache, and economic brawn have elevated Beijing’s status remarkably quickly.

National economic transformation is the shock-event generating opportunities for inland China. All cities benefit, but in these particular two an aggressively pro-developmental interpretation of liberalization fast-tracks economic growth and global visibility. Some Western inland cities share similar ambitions. As a Great Lakes powerhouse like Chicago and Detroit, Toronto owes much of its growth to an international orientation. Since the 1990s, waves of immigration by Hong Kong residents have boosted Toronto’s cultural diversity and economic linkages. Although it lacks a definitive global position in an economically transformative sector, the city hosts a handful of lively secondary industries (including education, arts, and entertainment) and is a major financial and corporate center. While Toronto is Canada’s economic powerhouse, Madrid has for many years been an economic sideshow to Barcelona. With a relatively balanced industrial profile, the city’s resilience against volatility across sectors is enabled by its lack of dominance in and reliance on any single one. However, it remains a regional rather than global center, despite its one-time role as bit-player in the speculative property investment craze. Similarly vying for status in a duopolistic national economy, Johannesburg has established a moderately global position due in part to the absence of other global cities in Sub-Saharan Africa. Over 580 km from the coastal city of Durban, it remains a center for finance, mineral extraction, and industry. Its City Deep “dry port” is an industrial district reminiscent of China’s special economic zones. Nevertheless, Johannesburg is dependent largely on residentiary economies found in most cities (such as basic services and retail), and is overshadowed by flashier Cape Town.

With increased autonomy, improved infrastructure, and an outward orientation, China’s inland cities have fiercely global ambitions that may help them outpace urban growth in the West. These cities view even their coastal counterparts – larger Chinese mega-regions – as competitors for investment and labor. Indeed, government data indicate that many migrants are returning from coastal cities to their home provinces, drawn by employment opportunities. Moreover, the recent announcement by China’s State Council that it would develop urban clusters along the Yangtze River raises additional prospects for inland growth. Ambition is now meeting preparedness.

It is not often that transformative economic opportunities miraculously appear, as they have in most global cities. Urban governments should not expect to replicate the success of Silicon Valley, Wall Street, or even Hollywood. These cases represent exceptional turns in history for the lucky few. Such cities had a unique combination of characteristics – whether planned or accidental – for capturing fleeting opportunities to establish global dominance in emerging industries. These characteristics are largely inimitable and thereby reinforce competitive advantage for cities fortunate enough to inherit them. Pedestrian as it may be, the linear and workmanlike approach seen in the “global rest” – a majority of inland cities – is the most practical growth scenario. It also fails to earn global status. However, there are cities whose ambition and creativity will help them over-fly their peers. For these rapidly developing cities, connective infrastructure, international networks, empowered local governments, and an opportunistic private sector are critical in parlaying latent economic potential into global status.

Kris Hartley is a Visiting Researcher at Seoul National University and PhD Candidate at the National University of Singapore.

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