In 2010, China’s urban-dwelling population surpassed its rural population, marking a monumental demographic milestone in the country’s history.
Just three decades prior, China looked markedly different. Only 20% of Chinese citizens lived in urban areas, and many of today’s metropolises were still small villages.
Since then, huge swaths of the population have moved from farmland into cities, a shift that is still causing many urban areas to swell in size. Case in point is the growth of Guangzhou, which lays just north of Hong Kong. From 1980 to today, more than 18 million people moved into the city. A 40-year-old born in Guangzhou will have seen their small, regional city mushroom into one of the largest urban amalgamations on Earth.
Of course, this is just one example of a process that has been altering the landscape of cities from the coast of the South China Sea out to the Eurasian Steppe.
The One Million+ Club
According to Demographia’s World Urban Areas report, there are now 113 urban areas in China that surpass the one million population threshold. In comparison, North America and the EU combined have 114 urban areas that surpass one million people.
Below is a full breakdown of China’s one million+ club:
The massive scale of rural-to-urban migration isn’t just a major development within China, it has no parallel in modern history.
Since 1980, over half a billion people have moved from the countryside to an urban center. The construction of these new cities took a staggering amount of raw materials. Few data points highlight the scale of construction better than China’s cement production in recent years.
In 2018, Chinese construction used about 8x the amount of second place India, which has a similar population size.
Megacities on Megacities
Cities with over 10 million inhabitants are defined as megacities. China is already home to six megacities, with another three urban areas well on the way to achieving that status.
In fact, some megacities within close proximity have grown so large that they are merging into contiguous urban areas. The most prominent example of this phenomenon is in the Pearl River Delta region of China.
The Pearl River Delta region is not only home to the megacities of Guangzhou and Shenzhen, but also a number of other sizable cities that are quickly merging into a unified continuous entity containing up to 50 million people. Demographia still considers most of these cities to be separate labor markets — but as more connections form across the region, the Pearl River Delta could be poised to become the largest unified urban area in human history.
As megacities like Shanghai and Shenzhen have grown and developed, they’ve also become more expensive places to live and do business. The economic evolution of these cities has created opportunity for smaller, less developed cities to woo both residents and businesses.
This natural reshuffling has led to impressive growth in cities further inland like Zhengzhou, which sits 350 miles (630 kms) east of the coastline where many of the country’s largest cities reside.
Using the “build it and they will come” approach, the city converted a 160 square mile (410 sq km) patch of empty land into the Zhengzhou Airport Economy Zone (ZAEZ). The project has proven wildly successful, and the city even has the nickname “Apple City” thanks to the presence of Foxconn (which produces the iPhone) and a cluster of other smartphone manufacturers.
This airport-centered zone was developed with the full political and economic backing of Beijing as part of a broader effort to increase economic activity in China’s interior cities. Zhengzhou has nearly tripled in size over the last decade, a powerful testament to the shift in economic momentum.
China’s Inland All-Stars:
|Urban Area||Population 2010||Population 2019||Change (2010-19)|
Compare the numbers above to fast-growing cities in the U.S., such as Las Vegas or Phoenix, which managed 33% and 12% growth respectively over the last decade.
If this trend continues, China’s one million+ club will most likely expand once fresh census data is released in 2021.
Charting the Rise and Fall of the Global Luxury Goods Market
This infographic charts the rise and fall of the $308 billion global personal luxury market, and explores what the coming year holds for its growth
The Rise and Fall of the Global Luxury Goods Market
Global demand for personal luxury goods has been steadily increasing for decades, resulting in an industry worth $308 billion in 2019.
However, the insatiable desire for consumers to own nice things was suddenly interrupted by the coming of COVID-19, and experts are predicting a brutal contraction of up to one-third of the current luxury good market size this year.
Will the industry bounce back? Or will it return as something noticeably different?
A Once Promising Trajectory
The global luxury goods market—which includes beauty, apparel, and accessories—has compounded at a 6% pace since the 1990s.
Recent years of growth in the personal luxury goods market can be mostly attributed to Chinese consumers. This geographic market accounted for 90% of total sales growth in 2019, followed by the Europe and the Americas.
Analysts suggest that China’s younger luxury goods consumers in particular have significant spending power, with an average spend of $6,000 (¥41,000) per person in pre-COVID times.
An Industry Now in Distress
The lethal combination of reduced foot traffic and decreased consumer spending in the first quarter of 2020 has brought the retail industry to its knees.
In fact, more than 80% of fashion and luxury players will experience financial distress as a result of extended store closures.
With iconic luxury retailers such as Neiman Marcus filing for bankruptcy, the pressure on the luxury industry is clear. It should be noted however, that companies who were experiencing distress before the COVID-19 outbreak will be the hardest hit.
Predicting the Collapse
In a recent report, Bain & Company estimated a 25% to 30% global luxury market contraction for the first quarter of 2020 based on several economic variables. They have also modeled three scenarios to predict the performance for the remainder of 2020.
- Optimistic scenario: A limited market contraction of 15% to 18%, assuming increased consumer demand for the second and third quarter of the year, roughly equating to a sales decline of $46 billion to $56 billion.
- Intermediate scenario: A moderate market contraction of between 22% and 25%, or $68 to $77 billion.
- Worst-case scenario: A steep contraction of between 30% and 35%, equating to $92 billion to $108 billion. This assumes a longer period of sales decline.
Although there are signs of recovery in China, the industry is not expected to fully return to 2019 levels until 2022 at the earliest. By that stage, the industry could have transformed entirely.
Changing Consumer Mindsets
Since the beginning of the pandemic, one-quarter of consumers have delayed purchasing luxury items. In fact, a portion of those who have delayed purchasing luxury goods are now considering entirely new avenues, such as seeking out cheaper alternatives.
However, most people surveyed claim that they will postpone buying luxury items until they can get a better deal on price.
This frugal mindset could spark an interesting behavioral shift, and set the stage for a new category to emerge from the ashes—the second-hand luxury market.
Numerous sources claim that pre-owned luxury could in fact overtake the traditional luxury market, and the pandemic economy could very well be a tipping point.
The Future of Luxury
Medium-term market growth could be driven by a number of factors, from a global growing middle class and their demand for luxury products, as well as retailers’ sudden shift to e-commerce.
While analysts can only rely on predictions to determine the future of personal luxury, it is clear that the industry is at a crossroads.
The New Energy Era: The Impact of Critical Minerals on National Security
The U.S. finds itself in a precarious position, depending largely on China and other foreign nations for the critical minerals needed in the new energy era.
In 1954, the United States was only fully reliant on foreign sources for eight mineral commodities.
Fast forward 60+ years, and the country now depends on foreign sources for 20 such materials, including ones essential for military and battery technologies.
This puts the U.S. in a precarious position, depending largely on China and other foreign nations for the crucial materials such as lithium, cobalt, and rare earth metals that can help build and secure a more sustainable future.
America’s Energy Dependence
Today’s visualization comes from Standard Lithium, and it outlines China’s dominance of the critical minerals needed for the new energy era.
Which imported minerals create the most risk for U.S. supply chains and national security?
Natural Resources and Development
Gaining access to natural resources can influence a nation’s ability to grow and defend itself. China’s growth strategy took this into account, and the country sourced massive amounts of raw materials to position the country as the number one producer and consumer of commodities.
By the end of the second Sino-Japanese War in 1945, China’s mining industry was largely in ruins. After the war, vast amounts of raw materials were required to rebuild the country.
In the late 1970s, the industry was boosted by China’s “reform and opening” policies, and since then, China’s mining outputs have increased enormously. China’s mining and material industries fueled the rapid growth of China from the 1980s onwards.
Supply Chain Dominance
A large number of Chinese mining companies also invest in overseas mining projects. China’s “going out” strategy encourages companies to move into overseas markets.
They have several reasons to mine beyond its shores: to secure mineral resources that are scarce in China, to gain access to global markets and mineral supply chains, and to minimize domestic overproduction of some mineral commodities.
This has led to China to become the leading producer of many of the world’s most important metals while also securing a commanding position in key supply chains.
As an example of this, China is the world’s largest producer and consumer of rare earth materials. The country produces approximately 94% of the rare earth oxides and around 100% of the rare earth metals consumed globally, with 50% going to domestic consumption.
U.S.-China Trade Tensions
The U.S. drafted a list of 35 critical minerals in 2018 that are vital to national security, and according to the USGS, the country sources at least 31 of the materials chiefly through imports.
China is the third largest supplier of natural resources to the U.S. behind Canada and Mexico.
|Rank||Country||U.S. Minerals Imports By Country ($US, 2018)|
This dependence on China poses a risk. In 2010, a territorial dispute between China and Japan threatened to disrupt the supply of the rare earth elements. Today, a similar threat still looms over trade tensions between the U.S. and China.
China’s scale of influence over critical minerals means that it could artificially limit supply and move prices in the global clean energy trade, in the same way that OPEC does with oil. This would leave nations that import their mineral needs in an expensive and potentially limiting spot.
Moon Shot: Building Domestic Supply and Production
Every supply chain starts with raw materials. The U.S. had the world’s largest lithium industry until the 1990s—but this is no longer the case, even though the resources are still there.
The U.S. holds 12% of the world’s identified lithium resources, but only produces 2% of global production from a single mine in Nevada.
There are a handful of companies looking to develop the U.S. lithium reserves, but there is potential for so much more. Less than 18% of the U.S. land mass is geologically mapped at a scale suited to identifying new mineral deposits.
The United States has the resources, it is just a question of motivation. Developing domestic resources can reduce its foreign dependence, and enable it to secure the new energy era.
In the clean energy economy of the future, critical minerals will be just as essential—and geopolitical—as oil is today.
Chart of the Week1 month ago
The Road to Recovery: Which Economies are Reopening?
Misc1 month ago
How People and Companies Feel About Working Remotely
Technology2 months ago
Zoom is Now Worth More Than the World’s 7 Biggest Airlines
Technology2 months ago
The COVID-19 Impact on App Popularity
Misc2 months ago
How Many People Die Each Day?
Misc2 weeks ago
When Will Life Return to Normal?
Politics2 months ago
11 Cognitive Biases That Influence Political Outcomes
Technology2 months ago
The Future of Supply Chain Automation