In a world that is facing unprecedented increases
in population and with larger and larger cities, you could wonder... do cities have limits? Well... The truth, folks, is yes. That’s why in some countries, they’re
opting for a much more drastic solution than usual. I’m referring to the so-called “cities
from scratch”. But, what exactly are cities from scratch? Well..., with “cities from scratch” we’re
talking about cities created, constructed and populated where there used to be absolutely
nothing more than a vast expanse...of land or sea. Take for example Songdo, in South Korea. Songdo, which was also turned into a Special
Economic Zone, is one of the world's greatest examples of what a city built from scratch
should be. A true example of success. Because, some of the others didn’t do so
well, and some were a complete failure. But let’s pause for a second. Some of you may be thinking that this is crazy,
that it’s too expensive to build a city from scratch, right? Well, folks… you’re absolutely right. China, for example, has used more concrete
in the last three years than the United States did throughout the 20th century. But, why are so many new cities being built
right now? Is it just about offering more housing to
the people coming from the countryside? Or are there more reasons behind it? Let's take a closer look. (THE POWER OF CITIES) Folks, it's a fact that power is concentrated
in cities. And I’m not only talking about political
power, I’m also talking about economic power, industrial power, artistic power, cultural
power... Cities are something of a cocktail of elements
that lead to a prosperity explosion. And it’s precisely beneath all that prosperity
that we find the reasons to create new cities, cities from scratch. But, you may be wondering, where the hell
are all these new cities being built? Well... let's see, in Europe I can think of
very few examples that fit. In America there are some but they are on
a smaller scale... So... Where can they be? Any ideas? Exactly, you got it! Asia is the greatest proponent of new cities
in the world. And within Asia there’s one country that
has taken it to the extreme. China has built more than 600 cities from
scratch since the Chinese Communist Party came to power in 1949. And not all of these cities were built with
the same function in mind. For example, some are centers of state or
regional political power, others are oriented towards logistics, others are technological,
many others seek to be trade and finance centers, and of course some are chiefly residential. However, the bottom line is that the purpose
of the city doesn’t really matter, they’re all built with a common ambition: to be engines
of long-term economic growth. China plans to build new city nearly three
times the size of New York. The Guardian.) Yes, we’re talking about an extreme case
of urban planning... but market-targeted planning. Which doesn’t necessarily mean it’ll go
well… but we’ll see more of that a bit later. The point, folks, is that the relationship
between cities and economic development isn’t only being pursued by China, but also by other
developing countries that are experiencing a fiercel transfer of people from the countryside
to the city. Oh! And I can already tell you that this is something
we’ll be talking about in the future on VisualPolitik. Because it isn’t only happening in Asia. In Africa, there are projects such as Eko-Atlantic
in Nigeria, Hope City in Ghana, Konza in Kenya or the New Administrative Capital – yes,
that’s its name – in Egypt. Of course, in order for this to be a success,
we need to know how to build a city from scratch, and for that we must take many important things
into account such as location, water supply, capital investment, public transport and waste
management among many other things. And let’s not forget to create a city identity
within which people feel comfortable and integrated. As you can imagine, all this is very expensive,
that’s why not all the new cities have worked as planned. Even considering all the risk, new city fever
is very common in several developing countries. So, before we go on, we need to consider something: Do all cities follow the same model? Are they all driven in the same way? Listen closely to the answer because it may
surprise you. (THE PARADIGM OF PUBLIC AND PRIVATE CITIES) Yes folks, you heard that right. Private cities As with everything, there isn’t just one
way of doing things, and therefore there isn’t a single city management model. Okay, it’s true, most new cities are driven
and managed by the public sector, that is, by the State, by governments ... But, folks,
a small number of them have been created and managed by the private sector. And some more successfully than others. But... let me ask you a question, what do
you think are the main differences between the two models? When we talk about private cities, you may
imagine a huge wall with security guards at the doors controlling who can or cannot pass,
or charging a fee for entry. Well... Nothing could be further from the truth. Private cities are ordinary cities whose only
peculiarity is that they have been designed, built and later managed by one or more private
companies. That is, instead of receiving services from
the public administration through the municipality and taxes, these services are provided by
private companies through a kind of general service contract that the residents sign when
they move in and that is paid annually. Perhaps one of the best examples of this is
Reston. See, Reston is a private city in Virginia,
in the United States. It belongs to Fairfax County. Founded in the early 1960s, it was conceived
as a set of company-created owner communities. And it more or less continues to be so to
this day. These communities have their own private security
service, garbage collection and public transport. And it looks like things have gone quite well… The city has had a huge population growth. Between 1970 and 1980 alone, the population
skyrocketed from less than 6,000 to more than 36,000, a 536% increase in ten years. Today more than 60,000 people live in Reston. And it makes sense, Reston, for example, has
been cataloged by a CNN study as one of the best small cities in the United States to
live in. And that isn’t the only example… Lavasa, in India, is a private city in development
that will have an area of 100 square kilometers and 300,000 inhabitants when completed. Today it’s one of the best places to live
in India thanks to its services. In any case, we’ll need to see if this way
of making cities takes off in the upcoming years. Because, the truth is, most cities don’t
follow this private model. And folks, let's not kid ourselves. A new city being public or private doesn’t
define its success or failure. Several factors come into play to make cities
as we want them to be: true hubs of growth and prosperity. And among them the most important one is urban
planning, with a vision of the future, but also remaining realistic and thinking about
the people. Well, there is a country where these basic
concepts have gotten quite out of hand. Listen up. (THE DANGERS OF BECOMING AN ADDICT) Cities, cities and more cities... We told you at the beginning, China has a
clear idea in mind: the future is in the cities. But, to what extent? When should a country say STOP, we don’t
need more new cities? Well... folks, the Chinese government doesn’t
seem to want to see what the rest of the world sees: that they have a problem, they’re
going to need a lot of people to inhabit their mammoth cities built from scratch. China’s shrinking cities are still addicted
to building despite population slump. South China Morning Post.) And, of course, building a city with everyone
else's money leads to a huge illusion of economic prosperity. A lot of players become involved, and whole
economic sectors continue to work thanks to the new city’s construction. For example, Chinese local governments have
covered a lot of their budget for years thanks to real estate developments in these new cities. You see, in the year 2000, land sales accounted
for 9.3% of municipal revenues in China. Well... listen to this, in 2011, after more
than 10 years of new city booms, this amount reached a whopping 74.1% of total revenues. Basically, they thought they’d found the
goose that laid the golden eggs. According to a joint survey done by Landesa,
Renmin University and Michigan State University, Chinese municipalities earned 40 times more
money selling land for urban development than they had paid to expropriate them. And in the case of land reclaimed from the
sea, this ratio could increase up to 100 times more. With these numbers, it doesn’t seem like
bad business, right? However, folks,hold on a second before we
start ringing the bells. On the one hand local governments spent all
that money and much more building infrastructure and projects of all kinds. After all, it seemed like the money was always
going to fall from the sky and when the apartments were full of people... they’d get more and
more money. There was such euphoria that several local
governments even ended up becoming developers. Which led them to accumulate a huge amount
of debt. But, of course, this model is enormously short-sighted
and is quickly losing ground in China. Come on, if you extend the process too much...
you’ll end up with dozens of completely empty cities full of abandoned or half-built
residential blocks because nobody is living in them. And forget about new taxes and all that. Of course, the debt won’t disappear. Well, that’s exactly what is happening. As you can see in the graph, at the national
level, the square kilometers built have already surpassed the units of 10,000 people living
in urban areas. And 10,000 inhabitants per square kilometer
is considered a good measure of population density for the new Chinese cities. Basically, this means that the rhythm of construction
is already much quicker than the urban population growth required to occupy those cities. That is, the perfect recipe for building empty
cities... or as they’re known in China, ghost cities. China local governments' hidden debt could
total $5.8 trillion: S&P. Reuters) October, 16, 2018 Folks, we could say that the local Chinese
governments have been affected by something like the Dutch disease, the curse of natural
resources. Although in this case, instead of natural
resources, we have real estate promotions financed and promoted by China’s own public
banks. Even so, Chinese President Xi Jinping has
a very, very different opinion. President Xi himself has promoted the construction
of another new city from scratch.His personal project, the New Area of Xiongan, is
an area 120 kilometers from Beijing that is connected by a 20-minute trip from the Chinese
capital by high-speed train. Xi wants it to become a hub for the technology
industry. We’re talking about a completely ecological
city for which so many trees are going to be planted that the forest cover in the area
will expand from 11 to 40%. With all this, folks, we can assure you of
something: China plans to continue building new cities despite having many empty or clearly
underpopulated ones. So we must ask ourselves... Will the Chinese new city bubble definitely
explode? And if so, how will this affect their economy? We’ve already told you that one of China’s
features is its enormous level of savings, which may, indeed, finance all these... Wasteful expenses? But... Is it really reasonable to waste soooo much
money on cities that are often ending up empty? Will real estate developers and banks go bankrupt? What could happen to the global economy if
this true addiction to building new cities expanded to other developing countries? Is it bread today and hunger tomorrow? Leave your answer in the comments. So I really hope you enjoyed this video, please
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We should give up trying to understand real estate development companies... It seems they just build...