Beijing’s dream of a ‘super city’ cluster still faces many challenges

The tremendous growth of the Chinese economy in the past 30 years was largely driven by the rise of the two super-city clusters – the Yangtze River Delta (YRD) and the Pearl River Delta (PRD).

These country-sized regions, consisting of one or two mega metropolises surrounded by an assortment of satellite cities, together produce over 25 per cent of the country’s GDP. Not only that, for the past few decades they were the world’s greatest social and economic testing ground for wealth creation through urbanisation.

Here, the boundaries and classification of city tiers are blurred and comparative advantages exploited – wealth is more evenly shared. The secret of success of city clustering is that it bundles cities around a strong urban centre and utilises the comparative advantage of each city to forge a strong financial and manufacturing hub.

Meanwhile, the nation’s capital Beijing is the only first-tier city in northern China. Being one of the economic powerhouses of the country it has been trying to emulate the success of PRD and YRD over the past few years. A few years ago Beijing introduced the “Jing-Jin-Ji” super-city cluster, which integrates Beijing (Jing), with nearby Tianjin (Jin) City and Hebei Province (Ji). It is now being given support by the central government and expanding in full swing, vying to be the third major super-city cluster in the country in addition to the YRD and PRD.

As part of this blueprint, Beijing’s municipal government is already planning to move its offices by 2017 to the Tongzhou district, a suburban area 20km east of the city centre bordering Tianjin and Hebei, making Tongzhou the city’s “sub-administrative centre”. This moves the administrative core of Beijing a little closer to the heart of the Jing-Jin-Ji.

There is already a high-speed rail line linking landlocked Beijing and the port city of Tianjin, reducing the hour-long journey to just 20 minutes. There are also extensive motorway networks crisscrossing the region. Meanwhile, Beijing is planning to build a second major airport in the southern suburb of Daxing county by 2019. Once completed, the airport, serving the surrounding regions, will reach a capacity of 72 million passengers per year by 2025.

Conceptually, a city cluster is where a number of small to medium-sized satellite cities are pulled together and led by a core city. However, a super-city cluster requires not only the core city to be financially powerful but the satellite cities to be economically strong too in order to effectively share and support the economic activities of the whole cluster.

Over decades of development, a number of prosperous second-tier cities in the YRD and PRD flourished. These include Hangzhou and Suzhou near Shanghai, and Foshan and Dongguan near Guangzhou and Shenzhen.

The per capita GDP of these satellite cities is now on par with the core cities. In 2015, while Guangzhou’s per capita GDP was 134,000 yuan, Foshan’s was already 108,000 yuan. While Shanghai’s per capita GDP was 103,000 yuan in 2015, Hangzhou saw its number overtake Shanghai’s to reach 112,000 yuan. Throughout these two clusters there are dozens of cities that have produced that level of GDP.

In Jing-Jin-Ji, Beijing is by far the most dominating city in the landscape. Many smaller cities in northern China are either less well-known or economically insignificant nationally. As Beijing ploughs ahead, the gap between the capital and its neighbours widens. For example, Beijng’s per capita GDP in 2015 reached 106,000 yuan, while neighbouring Shijiazhuang, capital of Hebei Province, commanded only 50,800 yuan per head.

While gleaming skyscrapers sprout up against Beijing’s skyline, smoke billowing chimneys and small coal mines dot the landscape of Hebei. While Beijing is trying to curb people’s desire to own cars, Hebei province is struggling to close traditional heavy industries while at the same time trying to maintain people’s living standards.

Such a wide gap means that before the whole region can take off, Beijing has to spend time and money on bridging the disparity among the surrounding cities of the Jin-Jin-Ji. The region has a large rural population and the governments have fought constant battles over issues of water shortages, air pollution and administrative rivalry.

In comparison, there are two stock markets in the YRD and PRD. Financial institutions, IT firms, and developers are drawn to the deltas. The industries there are transforming from processing and manufacturing to high tech and innovation based enterprises.

For Jing-Jin-Ji, the central government will have a monumental task on its hand. However, the key to tackle this, as the government plan reveals, is to radiate geographically by moving administrative functions from the centre of Beijing to the outskirts, just like the case of building Tongzhou District to become the sub-centre of Beijing.

On the other hand, Beijing has to coordinate with Hebei and Tianjin to better share knowledge and expertise, as well as utilising each other’s comparative advantages – such as banking system, ports and relatively cheaper labour cost – so that targeted industries can be allocated more efficiently.

In short, the success of the Jing-Jin-Ji blueprint largely depends on the meticulous and systematic planning and execution of various government initiatives. Only when each sub-region’s comparative advantage is fully explored can investment and knowledge be drawn to this burgeoning super-city cluster of the 21st century.

David Ji is Head of Research & Consultancy, Greater China at Knight Frank