China

America Can’t Ignore The Economic Threat Of A Rising China

Joel Kotkin — Mon, 20 May 2019 01:33:38 -0400

In the aftermath of the Communist victory in the late 1940s, the question often asked in Washington was: “Who lost China?” That fueled the McCarthyite inquisition that followed. The question our children might ask is: “Who lost America?”

The long-running side-show around Russian “collusion” focused on the nasty but largely inconsequential ties between some of Donald Trump’s more sleazy aides and their equally disreputable Russian or Ukrainian counterparts. Yet, compared to China, Russia represents at most a pesky but fundamentally second-rate power; Russia’s GDP is smaller than that of South Korea and barely a tenth of China’s.

In the 21st century, how we cope with China will determine the future of American economic and political pre-eminence. One does not have to approve of President Trump’s haphazard diplomacy to support a tough policy. Historically many Democrats, including senators Sherrod Brown, Charles Schumer and Bernie Sanders, have backed measures to curb China’s economic assault.

America’s China faction

Until Trump, many influential voices tended to be soft on China. Some have seen China’s capitalist growth as a confirming the efficacy of market systems, and means to encourage some semblance of liberal democracy to the Middle Kingdom. This logic has collapsed given the increasingly obvious mercantilist and authoritarian nature of the regime.

China’s wealth has won it many prominent allies from both parties, including former GOP Speaker John Boehner, who have signed up to defend China’s interests. Wall Street investors and many of our leading manufacturing companies — notably Apple — have benefited massively from China’s inclusion in the World Trade Organization in 2001. Since 1990 the United States deficit in trade goods with China has ballooned from under $10 billion annually to $419 billion last year. China’s ratio of imports to exports was four to one in 2018.

This trade, one can argue, has benefited American consumers. But it hasn’t come without costs, including the loss of an estimated 3.4 million jobs in the U.S. since China’s admission to the WTO.

It has also hurt many companies, particularly in technology. American firms in China, either as part of their entry fee to the country’s market, or through surreptitious means, have been forced to surrender the historic advantages of our innovative economy; the Chinese government, as one observer noted, encourages its large companies to work as “patriotic thieves.”

Like Stalin’s liberal apologists in the 1930s, some like The Atlantic’s Peter Beinart even deny that China’s economy engages in “cheating,” particularly on the theft of technology. Even people who should know better, like former Vice President Joe Biden, whose own family has benefited from close business ties with Beijing, have minimized the Chinese threat to our economy. Biden recently claimed, incredibly, that “You know, they’re not bad folks, folks. But guess what? They’re not competition for us.”

Time to chill “the cool war”?

Noah Feldman, writing in the left-leaning Democracy, labels our conflict with China a “cool war” as opposed to the Cold War that ensued after 1945. Unlike the Soviet Union, China’s economy has become globalized, increasing the risks from a too drastic break in trade tries.

But China’s pragmatic nationalism, exemplified by expansion into the South China Sea, its Belt and Road initiative and stated desire to dominate virtually all high value-added industry, could threaten the very core of American prosperity if not challenged.

With China’s economic and population growth rate slowing, its bloated real estate markets showing signs of implosion, and industrial production at the lowest level since 2004, this may be the time to strike.

The country faces enormous internal problems as hundreds of millions of ordinary Chinese remain excluded from a system that favors both the very rich and the government-funded clerisy. China, notes one observer, itself is now developing “something resembling a permanent caste system.”

To gain back the initiative, we need to alter, as Trump suggests, not only current trade agreements, but also such things as the Paris Accords, which have exempted China, a larger GHG-emitter than the U.S. and the European Union together, from reducing reduce emissions until 2030. As Western countries de-industrialize, China can use coal, oil and gas to fuel its economic drive for predominance while the West engages in ever more drastic virtue-signaling. We need to make China focus on solving its own environmental and social challenges rather than seek to solve them at our expense.

Additionally, we certainly would be far better off returning jobs to developing countries like Mexico that have been lost industrial employment to Beijing, both for our neighbors’ sake and for the security of our own border.

Liberal economists like Paul Krugman fear that Trump’s actions threaten “Pax Americana,” but that assumes China isn’t playing Sun Tzu’s Art of War. We now face a powerful and highly nationalistic adversary that does not share a commitment to the rule of law and human rights. If unchecked, China's rise to global supremacy could usher in a new authoritarian Dark Ages, shaped by Mandarins and supported by their intellectual and economic satraps, both here and around the world.

This piece originally appeared in The Orange County Register.

Joel Kotkin is the Presidential Fellow in Urban Futures at Chapman University, director of the Chapman Center for Demographics and Policy and executive director of the Center for Opportunity Urbanism in Houston, Texas. He is author of eight books and co-editor of the recently released Infinite Suburbia. He also serves as executive director of the widely read website www.newgeography.com and is a regular contributor to Forbes.com, Real Clear Politics, the Daily Beast, City Journal and Southern California News Group.

Photo Credit: The White House c/o:Shealah Craighead [Public domain], via Wikimedia Commons

A New Good Neighbor Policy

Joel Kotkin and Luis B. Torres — Sat, 06 Apr 2019 01:33:38 -0400

Whatever one thinks of Donald Trump’s proposal to build a “beautiful wall,” it is unlikely to resolve the crisis sending ever more people—largely from Central America—to America’s borders. The problems that drive large numbers to leave their homes and trust their families to criminal gangs will not be solved by bigger fences but better thinking. Fundamentally, the United States should regard Mexico and Central America not as adversaries but as economic partners in a world increasingly defined by competition between the U.S. and an ever-more aggressive China determined to establish global hegemony—even in our hemisphere. In this context, a strong policy of investment and aid to our southern neighbors makes both economic and political sense.

The American relationship with Mexico and Central America is implicitly complementary. The U.S. and Mexico not only exchange products and services; they also produce them jointly. American manufacturing or value-added inputs represent 40 percent of every dollar Mexico exports to the United States. Chinese exports to the U.S. represent only one-tenth as much.

Read the entire piece on City Journal.

Luis B. Torres is research economist at Texas A&M University’s Real Estate Center, which studies the U.S. economy, world economy, and real estate markets. Formerly with Mexico’s central bank, Banco de Mexico, he has published articles in academic and nonacademic publications about banking, international economics, trade, real estate, and applied econometrics.

Photo Credit: Martin D, via Flickr, using CC License.

Beijing and Shanghai Limit Population Growth

Wendell Cox — Thu, 28 Mar 2019 01:33:38 -0400

Public policies to cap population in China’s two largest municipalities are yielding results. The latest annual statistical communiqués indicate that Shanghai and Beijing are now at population levels below the all-time peaks reached earlier in this decade, as population growth is being steered to peripheral areas in exurban and rural areas. This article describes population trends through the end of 2018.

Beijing Population Drops 165,000

Beijing’s objective of limiting the provincial level municipality’s population showed particular success in 2018. According to the Statistical Communiqué of the National Economic and Social Development of Beijing in 2018, the population of the nation’s second largest municipality dropped 165,000 in 2018, to 21,542,000 from the end of 2017.

This loss places Beijing’s population at only slightly above its 2014 level of 21,515,000. Between the 2010 census and 2014, Beijing had grown at an annual rate of 2.3 percent, adding 1.9 million new residents. From 2014 to 2018, the annual growth rate has been 0.3 percent, only 1/8th that of the previous four years. Beijing’s population peaked at 21.73 million residents in 2016.

The contrast with the previous decade is even greater. Between the 2000 and 2010 censuses, the annual growth rate had been 3.8 percent, as the municipality added more than six million residents (Figure 1). Even so, Beijing’s population remains eight million above the count from the 2000 census.

The population limitation objective is a part of the overall strategy to disperse the population, manufacturing and administrative functions that are concentrated in Beijing to adjacent areas in Tianjin (also a provincial level municipality) and the province of Hebei (See: “The Evolving Urban Form: Jing-Jin-Ji: Dispersing Beijing”). It is expected that population growth will be in the areas of Jing-Jin-Ji outside Beijing.

Shanghai 2018 Population Remains Below 2014 Peak

Shanghai, China’s second largest municipality, has also limited its population growth in the second half of this decade. According to the “Statistical Communiqué of Shanghai National Economic and Social Development in 2018,” Shanghai had 24,237,800 residents at the end of 2018. This was an increase of nearly 35,000 from the 24,183,000 estimated at the end of 2017.

However, Shanghai’s population remained below its 2014 peak of 24,256,800. Shanghai’s population trajectory has been similar to that of Beijing. Between 2000 and 2010, Shanghai’s population grew by 7.4 million, from 16.4 million to 23.8 million, for an annual growth rate of 3.8 percent. Between 2010 and 2014, the annual growth rate was much lower, at 0.5 percent, while there was a 0.02 percent annual loss from 2014 to 2018 (Figure 2). Yet, Shanghai’s population is almost eight million more than in 2000.

As in Beijing, virtually all future population growth is likely to be in the periphery. Shanghai is the core of nearly contiguous urbanization that stretches from Zhoushan, Ningbo and Hangzhou in Zhejiang to Suzhou, Wuxi, Changzhou and Nanjing in Jiansu province, where population growth continues.

China’s Slower Urban Growth

After a decade and more of “breakneck” urban growth, China’s urban areas are growing more slowly, though they generally continue to grow outside Beijing and Shanghai (See: “China’s Shifting Population Growth Patterns,”). At least two factors have contributed substantially to this trend: China’s low fertility rate and overall reduced population growth rate (which is expected to yield net declines in the decades ahead) and the stronger growth of commercial activities (and jobs) in the central and western provinces (See: “China’s Next Leap in Manufacturing,” see Figure 4 in article).

The attempts to force decentralization and cap population in an entire urban area are unusual. Perhaps the most significant prior effort was London, following the related events of the 1940 Barlow Report, the 1947 Town and Country Planning Act and imposition of the Green Belt in the 1950s. All population growth from the 1951 to 2011 censuses was outside the London urban area, in exurban areas, beyond the Green Belt (though after 2011, London finally reached a population exceeding that of 1951).

The London, Beijing and Shanghai initiatives are considerably different from more recent urban containment initiatives. In Beijing and Shanghai, as well as in the early decades of the London experience, lower urban densities have been an objective. In contrast, modern urban containment policy normally seeks higher densities, seeking to stop new residential development outside virtually inflexible urban growth boundaries (such as in Vancouver, Seattle, Portland, San Francisco, Sydney, Melbourne and elsewhere).

Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed by Mayor Tom Bradley to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. Speaker of the House of Representatives appointed him to the Amtrak Reform Council. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

Photograph: Shanghai (by author)

Chinese Sci-Fi Writers Give Us A Glimpse Into China’s Dystopian Present And Future

Joel Kotkin — Mon, 18 Mar 2019 01:33:38 -0400

A thoroughly scientific dictatorship will never be overthrown — Aldous Huxley

In contemporary China, it’s hard to know what people outside the party dictatorship think about the future. As in the former Soviet Union, often the best guide may be not in the controlled media or cowed academia, but in the speculative wanderings of writers.

Chinese science fiction began back in the last days of the Qing dynasty, and, as author Liu Cixin suggests, became identified with a science-based optimism that fit well with the Communist vision. This has now “almost completely vanished,” he notes, replaced by a far grimmer vision.

These writers implicitly reject the notion of inevitable social progress now celebrated by President Xi Jinping and Communist-controlled media. They reflect not party orthodoxy but the most likely future, much as novels such as Yevgeny Zamaytin’s “We,” or the works of the Polish Stanislaw Lem, which identified the underlying realities of the old Soviet Empire.

The Surveillance State

These writers largely express the angst of a millennial generation, which faces a troubling future. In Chen Quifan’s “Year of the Rat,” a surplus college graduate ends up stuck hunting genetically altered rats. “We are just like rats,” the protagonist suggests, “all of us only pawns, stones, worthless counters in the Great Game.”

These writers suggest that the Chinese surveillance state, with untrammeled access to personal data, will continue to expand. Plans are being made to implant workers’ brains with monitors and to bolster a system of “social ranking,” which includes everything from credit worthiness to political reliability.

In his short story “City of Silence,” about the internet in the near future, author Ma Boyong speaks of attempts of “appropriate authorities” to restrict speech to “healthy words”; at the end of the book so few words are left that the “capital of the state” itself becomes mute.

Ma’s story suggests an autocracy amplified by technology far more subtle than the Stalinist horror depicted by George Orwell. As one dissident in “City of Silence” suggests: “The author of ‘1984’ predicted the progress of totalitarianism, but could not predict the progress of technology.”

Hierarchy in a ‘classless’ society

Hao Jingfang’s “Folding Beijing” describes a future Beijing divided into closely delineated communities for the elite, the middle ranks and a vast poor population, living largely by recycling the waste generated by the city. Hao depicts a city that literally changes shape into three forms — a luxurious first space with 5 million people, a still comfortable second space accommodating 25 million and a third space, where the protagonist, Lao Dao, lives among 50 million people clustered in dreary conditions.

Han Song’s clever “The Passengers and the Creation” speaks of a world contained within an airplane, with strict designations between first, second and coach class. The velvet curtain that separates First Class, Han writes, is “soft” but “as impenetrable as iron.” In this world, the wealthy aged live in comfort and can call on the services of young flight attendants recruited from coach.

Writers also have confronted the dire situation in the country’s countryside, where many of the some 600 million rural Chinese still live in poverty. Liu Cixin’s “The Village Schoolteacher” describes a place “so poor that a bird wouldn’t poop on it.” Mao’s revolution may have been driven by the peasants, but President Xi ‘s “moderately prosperous society” may never reach them.

The demographic crisis

China’s historic problems with overpopulation are morphing into a dearth of babies and the prospect of a rapidly shrinking workforce. This is made worse by a huge unbalance, about 33 million, of marriage-age boys over girls. By one estimate, 37 million Chinese girls were lost by abortion or infanticide since the “one child” policy came into force in 1980. China’s current male generation is so socially disconnected that the Communist Party, and some private firms, now teach them how to date.

Maggie Shen’s remarkable novel “An Excess Male” describes a society where women are allowed to take more than one husband, all to encourage greater breeding and relieve social pressures. Shen’s heroine May-ling is married to two men, neither of whom is much interested in carnal relations with her, and is looking to marry a third, an “excess male,” in order to have more children.

Life is made more problematic by the fact that May-ling’s favorite husband, Hann, is gay. In the China of the future, people designated “willfully sterile” are persecuted for not procreating. The state, whose policies fostered a looming demographic disaster, persecutes innocent citizens who don’t care to solve the country’s demographic shortfall.

Ultimately, the science fiction writers tell us much you won’t hear from the official sources or that country’s admirers here or in Europe. China could well be evolving into an authoritarian dystopia. True heirs to Orwell, Huxley and Zamaytin, these brave artists portray not only a view of China’s future but offer a window to its already existing contemporary reality.

This piece originally appeared in The Orange County Register.

Photo credit: The Erica Chang [CC BY 3.0], via Wikimedia Commons

The Middle Kingdom and the U.S. Economy

Joel Kotkin — Tue, 15 Jan 2019 00:33:38 -0500

In the poker match between President Donald Trump and China’s new all-but-emperor, Xi Jinping, it’s widely assumed that Xi holds the best hand. Yet President Xi’s hand may not be as awesome as it appears, while the United States, even under this very flawed president, may hold some fine cards.

Of course, Xi wields power in a way that Trump could only dream about. He has close to total control over the media, academia and the business community. In a way not seen in my over three decades of travel to China, Xi has fostered a cult of personality that looms over that vast country, and even has developed a strong cheering section among western business and intellectual leaders.

Trump, in contrast, faces an almost universally hostile press, an academy that detests him and an elite business community that largely fears his nationalist program. Having lost control of the House of Representatives, he is politically weakened and hardly seems a match for the Chinese leader.

The bizarre politics of class

Yet Xi’s position is not as strong as it seems. His country, which has enjoyed one of the greatest booms in human history, is clearly losing its economic momentum. Its once all-powerful industrial sector has begun to wobble and now Trump’s tariffs, coupled with competition from other countries, threatens the principal driver of China’s economic ascendency.

This decline could exacerbate what is a growing class chasm in the country. A large portion of China’s population remains very poor, and the prospects for moving up even for the educated middle class have diminished. China now suffers a surplus of college-educated people for whom the economy has little place, a potential threat to the Mandarin elite that runs the country.

More serious still is unrest among China’s lower classes, particularly the over 200 million migrant laborers who drove much of the country’s remarkable growth. There have been mounting protests from this constituency, some supported by new Marxist clubs on university campuses. Detestation for the crony regime — 90 percent of China’s millionaires, notes Australian political scientist David Goodman, are the offspring of high-ranking officials — is already widespread. This is forcing Xi to focus more on economic inequality when he might rather be conquering the planet.

Can the American economy live without China?

China’s profound economic problems weaken Xi against Trump. The country’s rising debt, much of it tied to real estate speculation, threatens the country’s fundamental health. If China tries to become more responsible on environmental issues — it is now a bigger emitter than the U.S. and the European Union combined — it could further weaken the country’s industrial competitiveness.

In contrast, despite all the hysteria from the establishment in both parties, Trump’s trade policies have not yet undermined the economy. Indeed U.S. employment, now at historically high levels, has been resurging, including in the industrial sector. Wages are increasing for manufacturing and other blue-collar workers, something that President Obama’s “progressive regime” never accomplished.

As in the run-up to the Second World War and in the winning of the Cold War, America remains a country of enormous sokojikara or “reserve power,” as Japan’s Fuji Kamiya pointed out decades ago. We seem deeply divided, poorly organized, but possess a far more fertile land mass, enormous technical and potential industrial capacity that have not yet been fully deployed.

The demographic dilemma — Democrats’ opening?

China’s greatest weakness lies in demographics. The “one child” policy helped produce an economically convenient confluence of fewer children and more working-age people. Now China’s workforce is already shrinking, and suffers a birthrate lower than Japan’s. China will lose 60 million people less than 15 years of age by 2050 and gain nearly 190 million people 65 and over.

The United States also suffers from aging demographics, but immigration has helped maintain some vitality largely. Trump, in his craven desire to appeal to his more nativist base, fails to recognize this factor. He is correct that the current chaos on the border is unacceptable, and the country clearly cannot allow in millions of largely unskilled people, which would threaten the still fragile gains of our own, highly diverse working class.

Yet anyone who visits a tech company, an industrial facility or a research lab knows the enormous overall value that many immigrants bring to this economy. It’s not just brainiacs but the skilled blue-collar workers that the country desperately needs. The immigrants may also be critical for taking care of our growing elderly population, building our houses and starting new businesses.

If they wish to take power, the Democrats need to integrate Trump’s economic nationalism with an immigration policy designed not as a version of global affirmative action but something that makes the country more competitive. They should not, in their fury about Trump, go back to becoming pawns of the investment banks, tech oligarchs and others who get rich exporting jobs across the Pacific. Leaders in both parties need to recognize that the moment to press the advantage with China is now.

This piece originally appeared on The Orange County Register.

Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book is The Human City: Urbanism for the rest of us. He is also author of The New Class Conflict, The City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

Photo Credit: US Embassy Canberra [Public domain], via Wikimedia Commons

Ultimate City: Guangdong-Hong Kong-Macao Greater Bay Area (with Photographic Tour)

Wendell Cox — Tue, 06 Nov 2018 15:00:13 -0500

The Pearl River (Zhujiang) Delta has developed into the world’s ultimate city (Figure 1). More people live in the urbanization there than in any space of similar size in the world (Figure 2). Once home to separate urban enclaves comprising 9 million residents in 1980, the now adjacent urban areas of the Pearl River Delta are home to 55 million residents, nearly one-half more in either the Yangtze Delta adjacent urban areas (which have undergone a similar development process) or the Tokyo-Yokohama urban area with 38 million residents (Note 1). The population density is slightly above that of the Yangtze Delta urbanization and Tokyo-Yokohama (Figure 3), well below others, such as Jakarta, Seoul and Mumbai, and far above that of New York (which covers nearly a third more land area).

This article provides summary information on the adjacent urban areas of the Pearl River Delta. There is also a photographic tour, following the text comprised of Figures 10-56.

Geography of the Pearl River Delta Adjacent Urban Areas

The Pearl River Delta urbanization extends, about 130 kilometers (75 miles) south along the west bank of the Pearl River from Guangzhou, through Foshan, Jiangmen, and Zhonghsan, Zhuhai to Macau, and about 160 kilometers (100 miles) south along the East Bank through Dongguan and Shenzhen to Hong Kong.

The Guangdong-Hong Kong-Macau Greater Bay Area

This urbanization is at the core of a cooperative effort to integrate these adjacent urban areas (the Guangdong-Hong Kong-Macau Greater Bay Area) into an integrated economic region. The Greater Bay Area Plan combines planning for China’s Hong Kong and Macau Special Economic Regions including the Guangdong province municipalities of Guangzhou, Shenzhen, Dongguan, Foshan, Zhongshan, Zhuhai Jiangmen, Huizhou and Zhaoqing. Overall, including the areas beyond the adjacent urban areas has a population approaching 70 million.

The opening last month (October 2018) of the Hong Kong-Zhuhai-Macau Bridge (Top photograph and Figure 4) was both a important and symbolic step toward economic and cultural integration. The South China Morning Post (Hong Kong), posted a video of a trip across the bridge just before it opened. Road travel between Hong Kong International Airport and Zhuhai has been reduced from more than four hours to under an hour. Before the new bridge opened, the southernmost crossing (Humen Bridge) was more than 70 kilometers (45 miles) farther north.

Strong Growth in All of the Adjacent Urban Areas

The growth of the Pearl River Delta has been overshadowed in attention Shenzhen’s, legendary for growing rapidly to a megacity since its designation as a special economic zone in 1979 (under the leadership of Deng Xiao Peng).

In 1980, Shenzhen had the smallest population of the now adjacent urban areas (60,000, according to the United Nations estimate). In 1979, Shenzhen was designated as a special economic zone under the leadership of Deng Xiao Peng. Since that time Shenzhen has grown to 13.5 million residents, an increase of more than 13.4 million.

In 1980, more than half all of the nine million population in the urban enclaves was in Hong Kong, which had about five million residents, while Guangzhou had approximately two million (Figure 5). Guangzhou-Foshan, not Shenzhen has grown the most, adding 16.3 million since 1980 (Figures 6 and 7). Percentage growth ranged from over 200 percent in Macau, to 600 percent in Guangzhou-Foshan and 22,000 percent in Shenzhen. The slowest growth was nearly a respectable 50 percent in Hong Kong, which accounted for only 5 percent of the growth since 1980.

Wide Range of Population Densities

While the Pearl River Delta adjacent urban areas are well below the highest urban densities in the world (Dhaka, Bangladesh is at least 7 times denser), they include the two densest urban areas in the high-income world. Hong Kong and Macau. Their above 25,000 per square kilometer density (65,000 per square mile) is far greater than the overall 5,000 (13,000 per square mile) in the other urban areas.

Commercial Centers

The Pearl River Delta has some of the strongest commercial centers in the world. Astoundingly, more than one quarter (13) of the 50 tallest buildings in the world are located in the Pearl River Delta (excluding telecom towers). The Pearl River Delta has more “supertall” buildings (300 meters or approximately 1,000 feet) than any single urban area, and more than three times as many as New York. This is an incredible turnaround, since in 1970, 9 of the 10 tallest buildings in the world were in New York (Figure 8). The Pearl River Delta also has a commanding lead among buildings of 150 meters (approximately 500 feet) nearly as many as the next three areas, New York, the Yangtze River Delta adjacent urban areas and Dubai (Figure 9). The Canton Tower (Figure 13), across the Pearl River from Guangzhou’s Zhujiang New Town is the second tallest free-standing tower in the world (not classified as a building) and the tallest structure in the Pearl River Delta.

These dense centers belie a significant dispersion of employment and commercial activity. In addition to the large historic commercial districts, there is a plethora of edge cities (see: see “Edge Cities in China: Suzhou,” note 1), such as in Figures 20, 26, 28, 29, 30, 40 and 41. This dispersion shows no signs of slowing down. For example, ground was recently broken on the Shimao Shenzhen-Hong Kong International Centre in Shenzhen, which will be located appositely 15 kilometers (10 miles) away from the largest commercial areas, and will be the tallest building in the Pearl River Delta and would rank second in the world by today’s rankings, after the Burj Khalifa in Dubai

Integrating the Adjacent Urban Areas

Transportation is a critical element of integrating the urban areas of the Pearl River. The area has long had a comprehensive toll motorway (freeway) system, though automobile ownership rates are not yet high (Note 2). Additional bridges are being planned. The eight-lane Second Humen Bridge will link Dongguan and Nansha District in Guangzhou. The planned Shenzhen-Zhongshan bridge will reduce travel between these municipalities to 20 minutes, from the present two hours. Also eight lanes, the bridge will be the critical link in a cross-town motorway from Huizhou through Shenzhen and Zhongshan to Jiangmen.

Rapid commuter rail connections are being established between the municipalities in the Greater Bay Area and Guangzhou South (Guangzhounan) Station. The intention is to reduce travel times between the cities to one-hour or less. Such travel times are now achieved between Guangzhounan and all of the Greater Bay Area municipalities, including Huizhou and Zhaoqing.

Three of the world’s 10 most patronized Metro (urban rail or subway) systems are in the Pearl River Delta. The Guangzhou Metro is reported to rank fourth and is connected to the Foshan Metro, helping to advance the economic integration of those two municipalities. There are also plans to connect to the Dongguan Metro, which has begun construction. Hong Kong’s MTR ranks 9th among the world’s most patronized Metros. The Shenzhen Metro, already carrying nearly as many riders as Hong Kong, plans to extend its system to be the longest in the world by 2030, and will link up with the Dongguan Metro. These three largest Metros would overwhelm the ridership figures for any other urban area in the world, as well as the Yangtze River Delta adjacent urban areas.

Connecting to the World

The Pearl River Delta has three of the top ten seaports in the world, including Guangzhou, Shenzhen and Hong Kong. Two of the area’s international airports rank in the top 20 in passenger usage, including Hong Kong International (8th) and Guangzhou Baiyun International (13th).

The Future

The various initiatives outlined above, and others promise to improve the economic performance of the Greater Bay Area. There are, however challenges, not the least of which is a potentially transient population. Much of the growth of the east coast urban areas, and especially those in the Pearl River Delta derived from temporary migration to staff the manufacturing and construction that fueled China’s rapid economic advance and poverty reduction. The South China Morning Post report that more than 60 percent of the residents of Guangzhou, Shenzhen, Dongguan and Foshan are temporary residents, without permanent residency permits (hukou).

Sustaining the present population levels, especially with China’s low fertility rate, will require turning temporary residents into permanent ones. It seems likely that the Pearl River Delta will continue to be the world’s ultimate city in the years to come.

PHOTOGRAPHIC TOUR OF THE PEARL RIVER DELTA URBANIZATION

Figure 1: Pearl River Delta Adjacent Urban Areas superimposed on Google Earth

Figure 4: Hong Kong-Zhuhai-Macau Bridge western approach (aerial photograph)
The bridge from Hong Kong enters from the middle-right of the picture and enters the customs facility on the island. Access to Macau is to the bottom of the picture. Access to Zhuhai is along the lower portion of the picture (just to the north of Macau towers at the bottom) reaching Zhuhai just to the east of Zhuhai Railway Station, a white rectangular structure partially shown near the bottom left corner of the picture.

The Apex: Guangzhou-Foshan (Figures 10-28)

Figures 11-17: Zhujiang New Town: One of the world’s largest “edge cities” (substantial new tside the central business district) Like Atlanta’s centrally located Mid-Town edge city, Zhujiang New Town is located near Beijing’s historic central business district. For a more detailed description of edge cities, see “Edge Cities in China: Suzhou,” note 1.

Figures 18-19: Older Central Guangzhou

Figures 20-23: Baiyun New Town edge city and motorways (freeways)

Figure 24: Suburban villa development

Figure 25: Xiqiao Mountain (Foshan)

Figure 26: Edge city development at Guangzhounan

Figures 27-30: By train from Guangzhounan to Zhuhai
There is also direct access to nearby Macao from Zhuhai Station

Figures 31-32: Zhuhai

The East Bank: Shenzhen, Dongguan and Hong Kong (Figures 33-55)

Figures 33-40: Shenzhen Futian CBD

Figures 41-43: Shenzhen Huaqiangbei (China’s “Silicon Valley”)

Figures 44-48: Shenzhen Luohu CBD

Figure 51: Dongguan

Figures 52-56: Hong Kong

NOTES

Note 1: The Yangtze Delta adjacent urban areas include Shanghai, Kunshan, Suzhou, Wuxi and Changzhou. Like the Pearl River Delta, these former enclave urban areas have grown into adjacent urban areas.

Note 2: China is now the world’s leading producer of automobiles. Automobile ownership, while still low compared to high income nations, is rapidly increasing.

Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

Top Photograph by N509FZ [CC BY-SA 4.0 ], from Wikimedia Commons

America Keeps Winning Regardless Of Who Is President

Joel Kotkin — Mon, 01 Oct 2018 01:33:38 -0400

Ever since the election of Donald Trump, many of our leading academic voices, like Paul Krugman, predicted everything from a stock market crash to a global recession. Slow growth, mainstream economists like Larry Summers, argued, was in the cards no matter who is in charge. That was then. Now the United States stands as by far the most dynamic high-income economy in the world.

In such areas as economic growth, the U.S. is generally outperforming other rich countries — such as Japan, Germany and the rest of the EU — by roughly two to one. Meanwhile our most serious global rival, an increasingly overextended China, as well as much of the developing world, are seeing drops in once rapid growth rates.

Donald Trump, being a braggart by nature, of course claims this success for himself. Even President Obama, who presided over the tepid recovery but can claim he pulled the economy “out of the ditch,” wants to take a bow. Yet the real hero here is neither president, but America itself, whose phenomenal advantages over its competitors have gotten stronger with time.

Sources of greatness

Perhaps nothing reveals fundamental insecurity in America than the debate over the issue of American “greatness.” Trump, of course, thinks he can bully the country into being great “again” while New York Gov. Andrew Cuomo suggest the country was “never that great.”

During her disastrous campaign, Hillary Clinton noted America was “already great” and in this case, she’s proving to be right. Despite the awful fools in both parties in Washington, and a press compromised by its own politics, the United States remains unique due to a three factors — our enormous natural endowment, innovative culture and more youthful demographics.

Our competitors may possess some of these things, but not all. Germany and Europe, for example, lack strong tech companies to drive growth or a great resource base. Many of these countries are far too dependent on merchandise trade, which is one reason why Trump holds the better hand in trade negotiations than his opponents. Exports of both goods and services, for example, account for less than 12 percent of U.S. GDP compared with over 16 percent in Japan, nearly 20 percent in China and a remarkable 46 percent for Germany. Trump can threaten to expand tariffs with all these countries, because they buy so much less from the U.S.

The continental edge

Unlike its European or Japanese competitors, America is a huge country with enormous natural resources. It not only can feed itself, but also much of the world. As China is learning, there’s no real substitute, at least at low prices, for American produce.

Perhaps even more critical are energy and natural resources. Japan, China and the EU remain largely dependent on such dicey countries as Iran, Saudi Arabia and Russia for their oil and gas. The U.S., already the world’s largest producer of oil and gas, has achieved what analyst Walter Russell Mead has called an “oil and gas boom that has sent geopolitical shocks through world affairs.”

Ultimately energy will prove critical to the manufacturing economy, the sector that Trump has most targeted. Lower energy costs offer U.S. firms unique advantages against their prime competitors. Industrial employment has reversed declines from the end of the Obama years, growing by 327,000 jobs over the past year, the best performance since 1995, producing the strongest output in August in 14 years. Retailers, home-builders, business service firms are all hiring, and, for the first time in over a decade, wages for the lower half of the labor force are actually rising and even the long-term unemployed are returning to the workforce.

What Trump misses — but America still has

Physical advantages or innovative companies are not the only things that makes America great. What matters as much, or more, is our demographics that remain considerably healthier than those of our prime competitors. This largely reflects the impact of immigration, something that Trump and his minions miss. By 2050, according to Pew, the U.S. population will be much younger and will still be growing, while our three major competitors — Japan, Germany and China — all will suffer more rapid aging as well as stagnant or even shrinking populations.

Immigrants are critical at almost every level of the economy, from low-wage service workers to the most elite technology researchers. They also have higher levels of entrepreneurship, now accounting for one in four businesses. Asians, now the largest group of new legal immigrants, boast both higher income and education levels than the general populace. To be sure, the country needs to modify its laws, and cut off illegal immigration, but moves by Trump allies to reduce legal immigration threaten to undermine our long-term economic future.

America needs political and media figures who actually understand our fundamental strategic advantages. We should not employ xenophobia to make ourselves feel better about ourselves, nor do we have to embrace the fundamental anti-patriotism increasingly characterizing the left. America deserves a political class that understands the roots of the country’s greatness and how best to press that advantage in the coming decades.

This piece originally appeared in The Orange County Register.

Photo: Gage Skidmore from Peoria, AZ, United States of America (Donald Trump) [CC BY-SA 2.0 ], via Wikimedia Commons

Edge Cities in China: Suzhou

Wendell Cox — Wed, 26 Sep 2018 01:33:38 -0400

Nearly three decades ago, journalist and educator Joel Garreau coined a new term, “Edge cities,” to describe the rise of commercial centers outside the downtowns (central business districts or CBDs) largely of the United States (Note 1).

The Spread of Edge Cities

Many earlier edge cities followed the higher CBD building density model that reached its zenith in New York’s Manhattan and Chicago’s Loop. Before the automobile became dominant, as early as the 1920s, there was a premium on minimizing distances for commuters between their transit stops and work places. Some of the earlier edge cities followed this model, such as Clayton in St. Louis and Avenida Paulista in Sao Paulo (Image 1), where buildings literally rise from the sidewalk. Most later edge cities such as La Defence in Paris or the Energy Corridor in Houston, however, either have the broad expanses of a US suburban office park or have considerably lower building densities than the CBDs built for mass transit.

The trend that Garreau identified has spread to major urban areas around the world. Many of the edge cities are located in other high income world cities, such as La Defence (Image 2, in the distance from the Eiffel Tower) in Paris, Canary Wharf in London, North York in Toronto, Oeiras in Lisbon (Image 3) and the newly developing Quarry Park in Calgary. But edge cities have also been built in middle income and even lower income countries. Mexico City had one of the first, Reforma and then added Santa Fe. There have been many more, such as Providencia in Santiago (Image 4, Note 2), Avenida Paulista and Luis Berrini in Sao Paulo, and Bandra Kurla in Mumbai. Manila might be called the Houston or Atlanta (even though it is much larger) of the Orient for its edge cities like Makati (Image 5), Ortigas (Image 6) and Filinvest City.

Edge Cities in China

Edge city development has been prodigious in China. This should come as no surprise, with China’s monumental use of concrete and steel in building an urban fabric unprecedented in history. Bill Gates notes in a book review that China used nearly 50 percent more cement in just three recent years than the US used from 1901 to 2000.

I have visited at least 25 office or mixed use based edge cities in China over the last decade or so. As elsewhere, edge cities have grown up in a wide range of urban areas, from the largest, like Shanghai, Beijing and Guangzhou-Foshan to much smaller Xining (Qinghai), with only 1.4 million residents. However, industrial edge cities, not considered here, may have contributed as much or more to China’s economic advance (Note 3).

The Suzhou Urban Area

This article reviews two of the most significant office or mixed use edge cities in China, in Suzhou. Suzhou is a large municipality (prefecture) that borders Shanghai on the west. It is on the Yangtze Delta (home to more than 100 million people) and is a well-known tourist center for its canals, picturesque bridges, Tiger Hill Pagoda and UNESCO world heritage gardens (See: “Suzhou: All of China in One Place” 2008). Suzhou has more than 10 million residents and covers 6,100 square kilometer (2,350 square miles). This approximately the same population as Los Angeles County, with a land area one-half as large.

The Suzhou municipality includes four large, continuously developed urban areas, Suzhou (6.2 million), as well as three other urban areas with more than 1,000,000 population, Zhangjiaggang, Kunshan, and Changshu. The core of Suzhou (Suzhou station) is as little as 25 minutes by frequent high speed rail service from Shanghai Station, adjacent to the CBD. The 100 kilometer trip (60 miles) costs approximately $6 one way second class (recommended) or $9 first class.

Two edge cities are examined in the Suzhou urban area, both of which can be reached by Suzhou Rail Transit from Suzhou Station (or the more distant Suzhou North Station, built on the new Shanghai to Beijing high speed rail main line). These centers are among the world’s most impressive edge cities, separated by a lake by about 1.6 kilometers (one mile), both along Suzhou Avenue (Image 7). The Suzhou municipality has other edge cities, both in the Suzhou urban area, and other urban areas.

Suzhou Center

The Suzhou Center edge city is around the Suzhou Center shopping center (Images 8 & 13). It is located approximately 8 kilometers (5 miles) directly east of the traditional urban core (Images 8-22). Served by two Suzhou Rail Transit stations (Xinghai and Dongfangzhimen, also called the Gate to the East), Suzhou Center is 1.9 kilometers long (1.2 miles), stretching from Central Park to Jinji Lake. The development covers approximately 1.1 square kilometers (0.4 square miles). This is about one-half the land area of the Tampa CBD.

The Suzhou Center edge city is anchored by the “Gate to the East,” with 450,000 square meters of space (4.8 million square feet). The Gate to the East is the 128th tallest building in the world, with 66 floors above the ground rising to 302 meters (990 feet). The building is on top of the Suzhou Center shopping center (Image 9). The Gate to the East is located across Jinji Lake from the Culture Center-Times Square edge city (Images 9-11, 13, 15).

The Gate to the East is a distinctive design that has been criticized by locals as the “giant underpants.” Its design is similar to that of an older building in the CBD of Wenzhou, in Zhejiang province (Image 12, a 2011 photograph).

The Gate to the East is flanked by skyscrapers of varying heights but similar designs (Image 13). Most of the development is along Suzhou Avenue, in a corridor a few blocks wide (Images 14, 16, 18 & 22).

Suzhou: Culture Center-Times Square

One subway stop east of the Gate to the East is the Culture and Education Center (Image), the western limit of the Culture Center-Times Square edge city (Images 23-40). This edge city is linear and is also along Suzhou Avenue. It has four subway stations, Culture and Education Center, Times Square, Xinghu Street, and Nansha Street. The Culture Center-Times Square edge city is 13 kilometers (8 miles) east of the urban core, and stretches for three kilometers (two miles) west to east. This edge city covers approximately 2.1 square kilometers (0.8 square miles), about the same land area as the Nashville CBD.

The Suzhou IFS building is the tallest in the Suzhou municipality, is located at the Times Square Station and will open in 2019 (Top photograph and Images 23, 25, 26, 28, 30). Already topped out, it is 450 meters tall (1,476 feet), about the same height as the Sears Tower (now Willis Tower) in Chicago which was the tallest in the world from for about 25 years. Suzhou IFS tops the Gateway to the East by 50 percent. However, Suzhou IFS will have considerably less floor space at 278,000 square meters (3.0 million square feet).

From Suzhou IFS to the east end of the edge city, there are a number of additional buildings, as well as a large plaza midway along the route. The distinctively designed Hilton Hotel is the eastern end of the edge city, at the Nansha Street station (Image 40).

Dispersion in China’s Urban Areas

Bumsoo Lee, now at the University of Illinois (Champaign-Urbana) and Peter Gordon (University of Southern California) showed that only a decade after Garreau’s analysis most US metropolitan employment was dispersed well beyond the CBDs and even the edge cities (see: Dispersed American Urban Form Yields Quick Work Trips). Similar research was not found for China, but from observing its urban form and noting the industrial edge city research (Note 3), China is clearly trending toward greater employment dispersion.

Photograph: IFS Building, Cultural Center-Times Square edge city, Suzhou (by author). All photography by author except Image 4.

Note 1: Garreau defined Edge cities has having (1) More than 5 million square feet (465,000 square meters) of leasable space, (2) More than 600,000 square feet (56,000 square meters) of leasable retail space, has more jobs than bedrooms, (4) “is perceived by the population as one place” and (5) “was nothing like “city” as recently as 30 years ago.” Garreau further notes that each Edge city is larger than downtown Portland, Oregon or Tampa. His four principal examples were (1) the Route 128 (now Interstate 95) corridor in metropolitan Boston, (2) Schaumburg in metropolitan Chicago, (3) Perimeter Center in metropolitan Atlanta, and (4) Orange County’s Irvine in metropolitan Los Angeles (Page 5, Edge Cities).

Note 2: Top photo by Gonzalo Baeza H (Panorámica de Santiago) [CC BY 2.0 ], via Wikimedia Commons

Note 3: There is an important research paper on industrial edge cities by Siqi Zheng of the Massachusetts Institute of Technology, Weizeng Sun of Jinan University, Jianfeng Wu of Fudan University and Matthew E. Kahn of the University of Southern California. They examine 120 industrial edge cities in just 8 Chinese cities that had developed more than a decade ago. The paper includes maps showing their locations.

The Value of All Things Crazily Rich and Asian

Joel Kotkin — Tue, 18 Sep 2018 01:33:38 -0400

Neither Kevin Kwan’s novel “Crazy Rich Asians” nor the movie based on it should win any prizes as literature or film. Yet the “Crazy” phenomena — both the best-selling book, its sequels and the smash movie — represent a critical moment not only in Asian, and Asian-American, history, but in how we look at race.

“Crazy Rich Asians” is about an on-again, off-again, on-again romance between a young Singaporean oligarch and a predictably plucky Asian American woman. Neither performance is particularly memorable, but the world they inhabit is wildly garish, entertaining and increasingly important, particularly here in California.

The Young family portrayed in the movie has ridden the rise of East Asia itself as the world’s emerging economic center to phenomenal wealth. Much of the film is shot in glittering parts of Singapore, a global hub for Asian trade. The leading families portrayed in the film are no longer meek former colonials but people increasingly believing in their culture’s intrinsic superiority.

The world of Asian Americans portrayed here is not so glittery, but important for other reasons. In contrast to the well-born elites in east Asia, many, like the female protagonist in the movie, have excelled through hard work as well as dedication to family and education.

The Asian ascendency — here and there

The rise of the Asian economies represents the great economic success story of the last half-century. First Japan rattled the West’s cages with its meteoric rise, followed by the ascendency of the “Tiger” economies of southeast Asia. Today Asia rides on China’s current ascendency — its share of world output has been growing dramatically from 4 percent in 1990 to a projected 21 percent in 2022.

Asia’s rise represents a new day in capitalist development, even though the Communist officialdom continue to insist it’s really “socialism with Chinese characteristics.” Deng Xiaoping, the committed Communist and architect of China’s revival, was certainly no liberal or democrat. He pushed modernization for nationalist and pragmatic reasons, but in the context of maintaining the primacy of the Party, remaining firmly opposed to what he considered “bourgeois liberalization.”

Yet despite the Marxist rhetoric, Asian capitalism is hardly egalitarian; a third of China’s wealth is held by 1 percent of citizens. This may explain why China’s image managers are so embarrassed by “Crazy”’s garish materialism, and they may prevent the movie being shown there. What Asian entrepreneurs have done is create a form of capitalism that operates on what Lee Kwan Yew, Singapore’s founding prime minister, called “Confucian” values, centered on family, tradition and hierarchy.

Why Asians matter so much to America

Here in the U.S., one of the first, and utterly predictable, reactions to “Crazy” came from the Asian media, academic and political circles. Always resentful of any association with being a “model minority,” they immediately attacked the movie for promoting strong “success” to Asian Americans. They laid out their arguments by using the logic that because a handful of relatively small communities — Hmong, Laotians, Cambodians — lag far behind the larger groups such as Chinese and Indians, who constitute the vast bulk of the Asian population, Asian success is ephemeral.

Asian success undermines the whole discussion of “privilege” that dominates discussion of racial issues, particularly in the media and academia. Many leading Asian intellectuals would wish to regard their community as just another discriminated-against racial minority. The real danger, they maintain, is “whitening,” essentially a code word for following the successful model of other immigrants, notably Irish, Italians and Jews.

The facts are a problem for the victimization crowd. Overall, Asians, according to extensive research done by Pew, make on average $73,000 annually, well above the national average of $53,600. Roughly 50 percent have a college degree or more, compared to 30 percent for the entire country. They have so overperformed that Asians are the first racial minority to be actively discriminated against under affirmative action policies.

It’s just beginning

We are likely just in the beginnings of our integration with all things Asian. Chinese real estate investors are critical to propping up many of our most expensive markets, notably here in Southern California. China’s government has taken steps to slow this investment, but it’s not clear they can stop it entirely. In tech areas, Chinese venture firms are looking feverishly to fund new ventures, buy companies and hire local technical talent.

But perhaps the best result from Asian immigration is what it tells other Americans about both race and success. First, despite a sordid history of discrimination, Asian values have been more than enough to power their communities upward, a critical lesson for other groups. Second, they demonstrate race is no longer an insurmountable barrier to making it here; the biggest restraints on ethnic success may as much be those imposed internally as opposed to the depredations of racist institutions.

We clearly are entering a new, Asian-oriented epoch. Our economic prospects may depend on how more Crazy Rich Asians, including those not yet rich, choose to invest or live here. We don’t just need their money, but their values and work ethic, too.

This piece originally appeared in The Orange County Register.

Photo: Via The Mary Sue.

Ten Years After Lehman Collapsed, We’re Still Screwed

Joel Kotkin and Wendell Cox — Mon, 17 Sep 2018 01:33:38 -0400

The collapse of Lehman Brothers 10 years ago today began the financial crisis that crippled and even killed for some the American dream as we had known it. Donald Trump might be starting to change that, at least for Americans who aren’t determined to remain in our bluest and priciest cities.

Overall an estimated nine million jobs and nearly $20 trillion in household wealth were lost. Job levels finally recovered but most of those who suffered from the Great Recession—and particularly current and former middle-income homeowners—did not see their wealth restored when the economy turned around.

Perhaps worst of all, the recession undermined our traditional belief in a better day ahead. Just one in five Americans is confident that life for today’s children will turn out better than it did for their parents, according to a 2014 survey conducted by NBC News and the Wall Street Journal. Nearly three in five Americans expect today’s children to be worse off, according to a 2017 Pew survey.

Some of this pain was self-inflicted, to be sure, as buyers seeking to catch up and get ahead of the market—they thought prices would just keep rising—drove up the home-ownership rate with dodgy loans many could not afford to repay. After approaching 70 percent, the rate is now back in the 63-to-65-percent range of the quarter-century preceding the housing bubble.

But there are two key reasons that most Americans still haven’t recovered their wealth or position from a decade earlier, and that most young adults find themselves starting the race far behind: slow wage growth across the nation and increasingly unaffordable housing prices in the most expensive and often most desired markets.

Wages for working and middle class people, at least until this year, have stagnated. Overall, only upper-income households have recovered financially from the Great Recession, while the vast majority of middle-income and lower-income households have yet to recover their pre-recession wealth, according to Pew.

In the meantime, housings costs have kept climbing, driven by conscious but misguided policies, particularly in coastal states, that have restricting new building. National Association of Realtors second quarter data shows median house prices in many deep blue enclaves areas have shot past their 2008 bubble peaks. In Portland, Seattle and San Francisco, prices are up 30 percent over the decade. In Denver, prices are up more than 80 percent. They have risen 60 percent in San Jose, where the median price for houses is now a staggering $1.4 million.

Rents are also rising substantially in some coastal markets, leaving many Americans in markets including Los Angeles, New York and Miami doubling up, retreating to family homes or struggling to just make each month’s payment. The biggest losers have been millennials and African Americans. A recent St. Louis Fed survey titled A Lost Generation? (PDF) found that the lingering effects of the Great Recession has been greatest on people in their thirties, who have the highest indebtedness of any age cohort and who may never recover the financial ground they lost.

The double hit of high rents and college debt has put home ownership out of reach for too many Americans just entering their prime marriage and home-buying years. The problem is particularly pronounced in California, where barely 25 percent of people 25 to 34 own their own home, compared to 37 percent of their peers nationally.

The percentage of African-American homeowners nationally fell by more than 10 points between 2000 and 2016, by far the largest drop of any racial group. Far fewer African-Americans now own homes in Los Angeles, San Francisco or San Diego than in Dallas, Houston or Atlanta.

The Great Recession and Obama’s New America

It may have been a tragedy for most Americans, but the recession was a blessing for many in the planning, media and academic clerisy who saw the vast numbers of suburban foreclosures—they tended to ignore the equally bad numbers in inner cities—as a sign that the century-old American shift to the suburbs was over. Rather than home to dreams of upward mobility, new urbanists like the Atlantic’s Paul Leinberger now proclaimed that suburbs were destined instead to become ”the next slums.”

That, in turn, was supposed to usher in a new urban golden age. In his book The Great Inversion, Alan Ehrenhalt predicted that educated and skilled workers would finally wise up and leave supposed suburban dystopias and return to core cities. That hasn’t happened, at least to the extent predicted, but the narrative continues to enjoy strong support in the national media centered in New York City.

In this first phase of the Recessionary period—2009 to 2011—big cities also had a big friend in the White House in Barack Obama. His recovery policies were tilted, not unexpectedly, towards the urban interests that elected him. Obama bailed out the big banks, also linchpins of the core city economy, as well as governments; four dollars in new subsidies flowed to big banks for each dollar that flowed to Main Street. The first urban president since the nation became majority suburban, Obama’s vision, and increasingly that of his party, embraced urban containment and densification, while seeking (unsuccessfully) to convert drivers to transit users.

Although the president could reasonably claim he took the economy “out the ditch” the Republicans had sent it into, Obama’s recovery was arguably the most unequal in American history, with 95 percent of all gains through 2013 going to the top one percent. Silicon Valley, Hollywood and Wall Street prospered, and cheered on the president as ultra-low interest rates and a massive fiscal stimulus buoyed capital markets and inflated venture capital pools.

The big banks that caused the recession have increased their share of deposits by 50 percent since 2007. Not a single big banker went to jail for nearly collapsing the world economy.

Generally pleased with Obama, few progressives noted that while the elites loved these policies, much of the hoi polloi generally did not—even as voters deserted Democrats in droves in 2010 and 2014 and again in 2016, leaving Republican with decisive control on Washington as well as an unprecedented number of state offices.

The Tea Party-led 2010 revolt may have been associated with opposition to Obamacare, but its cultural and economic roots were far deeper. For large parts of the country—including Texas, the Great Plains and the Intermountain West—Obama’s “green” economic policies threatened key local industries like energy, manufacturing and home-building. As Democrats left their labor and working-class roots to become the party of the coastal elites, blue-collar workers had genuine reasons to fear Democratic dominance.

Equally important were new demographic trends that paralleled long-standing patterns progressives had insisted no longer applied. As millennials began to hit their 30s, the “back to the city” movement started to slow as early as 2011. Even with the improved performance of core cities, domestic migration continued to favor the suburbs as Americans left expensive coastal core cities for more affordable metro areas including Houston, Dallas-Fort Worth, Orlando, Nashville, Charlotte and Raleigh.

By 2017, New York’s population growth rate had dropped from its 2010 level. In that same span, a million net residents moved out of metropolitan Los Angeles. In San Francisco, nearly half of respondents now tell pollsters they want to leave.

Although some price increases might have been a natural occurrence given the boom, for example in San Francisco, local policies have made things worse. Strong opposition by the Brown administration to suburban development shifted construction, where allowed, towards small, usually expensive apartments that rarely appeal to older people, particularly those with children, and are generally not affordable for lower income households. The kind of natural outward movement that created the original Silicon Valley in the 1960s and 1970s and affordable suburbs around the world was stopped in its tracks.

The restrictive approach to development in California and some other states—including Washington, Colorado, Oregon, New York and Massachusetts—has greatly raised prices. Since 1970, California’s major metropolitan area housing prices, relative to incomes, have increased at three times the national average. An entire generation of young adults has been encouraged to leave for somewhere else or accept lifetime rent-serf status.

The Trump Era: Cause and Effect

Just as they did in 2010 and 2014, the urban and coastal dominated media are failing to register changing opinions elsewhere. Convinced that we are on our way to a “green” urban future, progressives still have not recognized that many industrial workers, suburban homeowners, small business people and others didn’t want to emulate the urban elites but to get away from them in suburbia.

Herein lies the true secret of Trumpism. Many Americans did not want to see the continued erosion of industries that offered decent wages to middle and working-class people. Trump promised to reverse this, and, to date, his policies have ignited broad-based domestic growth in an otherwise struggling global economy. Small business, for example, now enjoys the highest confidence level on record.

For now, at least, the economy of Middle America is making a major comeback, a sharp contrast to the period right after the housing bust. Industrial employment reversed declines that were hitting at the end of the Obama years, growing by 327,000 jobs over the past year, the best performance since 1995. The sector has reported the strongest output in August in fourteen years. Retailers, home-builders, business service firms are all hiring, and, for the first time, in over a decade, wages for the lower half of the labor force are actually rising and even the long-term unemployed are returning to the workforce.

Perhaps most important, Trump may have shifted the geography of economic growth. The share of growth now taking place in non-metropolitan area America has increased fourfold. The most recent data from the Bureau of Economic Analysis shows that state GDP growth is highest in Washington state, but most of the other leaders are in the Intermountain West (Utah, Colorado and Wyoming), states in the middle of the country (Iowa and South Dakota) and Texas. New York and California aren’t leaders in either category.

Much of this comes growth from a revived industrial and energy sector. Meanwhile the states of the Resistance, New York and California, are now experiencing increasing domestic out-migration. The rate of population growth in California is among the country’s lowest—less than half that of Texas.

A Better Tomorrow?

Despite the good news, we are a long way from correcting the displacement caused by the Great Recession. Housing production remains well below historic norms—a full one-third below the 1980 to 2000 rate, population adjusted, as state and local government policies continue o discourage suburban growth in favor of dense inner-city housing have helped limit supply and drive up prices.

To fix that problem, state and local governments are returning to policies like rent control and “inclusionary zoning”mandates sure to raise prices for everyone else while slowing the rate of construction. California’s mandate for “zero emissions” houses is expected to raise prices, already high, by at least $20,000 — and without doing much for the environment, warns environmentalist Mike Shellenberger.

While prices are rising nationally, it’s highly regulated markets like California are seeing home sales fall—down over 12 percent in the largest market, Los Angeles-Orange County.

This urban-centric focus could prove costly. Retail space in big cities, once hot, is now seeing a erosion of rents. Office and industrial space rents are also falling, according to CBRE.

Another potentially damaging trend for many cities, particularly on the coasts, may be the retreat of the foreign investors—most notably the Chinese who invested $40 billion in foreign real estate in 2017—that helped keep prices high, particularly in California, where they’ve sent a third of their money here, Washington State and New York. Chinese investors have placed millions in luxury apartments in New York and downtown L.A., some hardly marketed to locals but instead offered to buyers in China.

Other Chinese investors have also bought single-family homes, particularly in heavily Asian suburbs in the Bay Area, Orange and suburban LA. Now, for the first time in recent memory, there are more sellers than buyers as sales falter. Worried about financial problems looming over its own domestic real estate market, and battling a trade war, China’s government is working to send strong signals to both individual investors and companies to tamp down on new real-estate projects.

That money river may dry up even as the higher interest rates we’re finally seeing will mean rapid increases in mortgage costs for buyers. Higher interest rates tend to undermine the viability of high-priced markets in particular—such as New York, which hardly saw a little recession, let alone a great one, as artificially low interest rates kept the banks the city relies on humming and massive foreign investment propped up real-estate prices. As investment slows and interest rates rise, New York’s financial sector could suffer, dragging the city’s economy down.

Nationally, we could be setting the stage for a new kind of housing debacle, a reprise no one much wants to see. There are already disturbing signs, such as the rising percentage of buyers paying 45 percent of their income or more on mortgages, up four-fold from 2010. Then there’s the return of the home-equity loan market back to its pre-recession level.

As we begin to recover from the damage done a decade ago, a new housing crisis may be bubbling just under the surface.

This piece originally appeared on The Daily Beast.

Photo: Jorge Royan / http://www.royan.com.ar