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China’s Shift to City-Led Growth

Though China has achieved some four decades of rapid economic development, one powerful source of growth has yet to be fully tapped: urbanization. Now, the potential of cities as an engine of dynamism and increased prosperity is finally getting the attention it deserves.

SHANGHAI – China has achieved some four decades of rapid economic growth. But one powerful source of growth has yet to be fully tapped: urbanization. Now, the potential of megacities as an engine of dynamism and increased prosperity is finally getting the high-level attention it deserves.

Over the last decade, China has been working to shift from a manufacturing-led growth model fueled by low-cost labor to an innovation-led, higher-value-added model underpinned by strong productivity gains. Urbanization will be critical to facilitate this shift, not least by enabling economies of scale.

Currently, though China is the world’s most populous country and its second-largest economy, only half the population lives in urbanized areas, and less than 10% reside permanently in megacities. And the country’s urbanization rate remains well below the global average.

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