The nation needs a new prescription for growth: Cram even more people into the pollution-ridden megacities of Beijing, Shanghai, Guangzhou and Shenzhen.
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While this may sound like a recipe for disaster, failing to expand and improve these urban areas could be even worse. That's because the biggest cities drive innovation and specialization, with easier-to-reach consumers and more cost-efficient public transport systems, according to Yukon Huang, a former World Bank chief in China.
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He estimates China's leaders' seven-month-old urbanization blueprint, which aims to funnel rural migrants to smaller cities, will slice as much as a percentage point off gross domestic product growth annually through the end of 2020.
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"China's big cities are actually too small," said Huang, a senior associate at the Carnegie Endowment for International Peace's Asia program in Washington. "If China wants to grow at 7 percent for the rest of this decade, it's got to find another 1 to 1.5 percentage points of productivity from somewhere."
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A strategy that supports the biggest cities' expansion would add $2 trillion to China's output in 10 years - more than India's 2013 GDP - according to Shanghai-based Andy Xie, a former Morgan Stanley chief Asia-Pacific economist.
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