One Hour China | What everyone is getting wrong about urbanization in China

Jonathan Woetzel is the “go-to guru” for Chinese urbanization. He is a senior partner at McKinsey & Company and the co-Chair of the Urban China Initiative, a thinktank. Whether it is Chinese city officials, multinationals or government officials in Riyadh and Moscow, he is the person everyone calls for this subject.

I interviewed him about the current state of Chinese urbanization – and in particular about what people are getting wrong.

Jeff: Looking at Chinese urbanization today, what are the main trends that you see?

Jon: Generally, the main China trends are going be the same in 10 years as they are today.

You can start by saying that people will continue to move to cities. So the size and the scale of the urban population will grow incrementally for the next 10 years at 1% to 1.5% per annum. After 10 years, I wouldn't place any more bets on that.

The other thing you could say is rock solid, or relatively rock solid, is the demographics. Every year, the Chinese urban population will get older.

I should also say something about costs inherent to urbanization. But I think probably the only thing we can really say is that the cost of labour will go up every year. It may be there's a little more volatility around that in the short term. But over the medium term, it's hard to avoid given the demographics and the productivity growth.