By 2030, nine Chinese cities will join the world’s 50 biggest municipal economies, while eight in Europe will drop off the list, showed the paper released this week by the Oxford, England-based advisory firm. Of the 10 forecast to grow the most by gross domestic product, seven are in China, including Tianjin, Beijing, Guangzhou, Shenzhen and Suzhou.
China’s Premier Li Keqiang, who has advocated urbanization as a key to growth, is up against a shrinking pool of rural workers, rising local-government debt and mounting air pollution. Local governments have set up thousands of financing vehicles to fund projects from subways to sewage systems, which account for 80 percent of state capital spending and 40 percent of tax revenue, the World Bank estimates.
“China is already facing some challenges in its megacities, which include air quality, water quality and this is something that probably requires an even bigger effort to address if we want to make this process sustainable,” said Frederic Neumann, Hong Kong-based co-head of Asian economics research at HSBC Holdings Plc.
Shanghai’s economy is projected to grow by $734 billion from 2013 to 2030, while Beijing is expected to gain $594 billion in GDP over the same period, according to Oxford Economics. The projections were made using official national and sub-national data, and involved some estimation.
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