While cities are drivers of economic growth, this prosperity does not always come naturally. The fate of a city lies in its ability to balance the positives of dense, connected communities – mobility, accessibility, and innovation chief among them – while counteracting such negative components as congestion, pollution, and disease, among others. China, home to the world’s largest urban population, has had difficulty achieving this balance. Newly constructed towns are “ghost cities,” failing to attract people and jobs, while great metropolises like Beijing are racing to catch up with the influx of migrants with limited financial resources.

The recent release of China’s “National New-Type Urbanization Plan (2014-2020),” the first national strategy on urbanization, is a framework for fostering economic growth while combating as the rising trends of congestion, air pollution, and urban sprawl. In order for true progress, Chinese planners and policymakers will have to make this plan come to life to create sustainable, livable, inclusive, and competitive cities.

Planning for a new type of urbanization

One of the most significant departures from business-as-usual outlined in the Plan is a new focus on people-centered development. Specifically, the Plan proposes comprehensive approaches for structural reform of China’s legal, institutional and financial frameworks, focused on unlocking the huge social and economic potential of cities. Some specific measures include:

• Removal of the rural-urban migration restriction by empowering and ensuring equal entitlements to public services for rural-urban immigrants.
• Promote city clusters and small- or medium cities and townships.
• Encourage compact urban development, especially high density, mixed-use, transit-oriented development (TOD).
• Create livable cities by enhancing public transport, affordable housing and the social safety net.
• Diversify city revenues by promoting government bonds and property taxes while strengthening the enforcement of urban planning measures and imposing growth boundaries.

From plan to implementation

Although the policies outlined in the Plan are forward thinking, the real paradigm shift will depend on how they are applied. Three interrelated factors are key to ensure successful implementation of the Plan: incentive structure, institutional reforms, and innovative financing.

Incentive structure

Local political will and endorsement of the Plan is a must to ensure that the central government’s directives will be implemented at the local level. Political will often hinges on a proper incentive structure. In the past, local decision makers in China were evaluated solely based on their cities’ contribution to economic growth, measured in GDP. Under this incentive structure, long-term sustainable urban development was often compromised for short-term economic gains. For example, the conversion of rural land to low-density industrial land, leased at below-market prices were common practices for many Chinese cities to compete for business investments. However, these practices take a great toll on sustainable urban development, contributing to urban sprawl, degrading local ecology, depleting urban land supplies, and driving up the price of residential properties. Long-term incentives for sustainable development are key to catalyzing the plan into action at the local level.

Institutional reforms

The comprehensiveness of the Plan mandates action across sectors and across jurisdictions. With urban expansion, the spheres of influence of Chinese cities have extended beyond their original boundaries. In Beijing, for example, workers living outside the city spend over six hours commuting each day. Regional integration – between Beijing with its surrounding municipalities and the Hebei province – is the only way to combat such an issue and also confront regional inequalities. Creating change at the regional level will require increased clarity for the different government actors involved. This problem is compounded by the fact that municipal officials commonly exploit their cities’ master plans to promote economic growth at the expense of affordable housing and public space. Appropriate oversight and accountability mechanisms can help ensure that the Plan serves urban residents and improves quality of life in these cities.

Innovative financing

At present, Chinese cities rely heavily on tremendous fortunes from converting agricultural into urban land as a major source of funding for urban investment. Although property taxes are proposed as a replacement, cities still need multiple years to break away from their current model. This long transition period is an opportunity to find innovative financing mechanisms for urban development. Mechanisms such as leveraging private finance, capturing land value increases near transport hubs, and leveraging climate finance and national investments are viable approaches that could be explored.

The Plan has laid the foundation for sustainable urbanization, but its success hinges on the ability of Chinese decision makers to bring it to fruition. If successful, the Plan will not only have far-reaching impacts for the world’s largest urban population, but could also be a model for developing cities that are simultaneously economically successful, inclusive, and sustainable.