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Abu Dhabi, UAEFriday 14 December 2018

One of the defining features of our century will be the rise of the Asian city

We are witnessing a historic migration to urban centres and explosive growth in major Asian cities, writes Afshin Molavi

Shanghai residents celebrate the arrival of 2018. The city is one of the largest in the world. Chandan Khanna / AFP
Shanghai residents celebrate the arrival of 2018. The city is one of the largest in the world. Chandan Khanna / AFP

If you were a newly married couple in China in the early 1980s, there were three aspirational items on your wedding list: a bicycle, a radio and a sewing machine. Today, replace the bicycle for a car, add a couple of upgraded smartphones, and possibly a foreign travel honeymoon. The wedding will also likely be live-streamed. Welcome to the new China.

As we consider the rise of China over the past three decades, it can be easy to get caught up in the eye-popping numbers from its GDP growth to the massive infrastructure spending across the country. As Evan Osnos, a former Beijing-based correspondent for the New Yorker put it, China’s transformation over the past three decades has been at 100 times the scale and 10 times the speed of the industrial revolution that created modern England.

It can also be easy to forget China was an overwhelmingly poor country, which it was in the early 1980s. Not so any more as a startling 800 million people have been lifted from poverty. But the story is bigger than China alone. While China stands out due to the scale and speed of its transformation, it is not alone. All across Asia dramatic transformations have been taking place over the last three decades, creating opportunities for human advancement and creating a revolution of aspiration from Kuala Lumpur to Karachi, from Manila to Mumbai.

To be sure, tremendous challenges remain and far too many have been left behind, but in historic terms, from west Asia to east Asia, we are experiencing an economic renaissance that should be seen for what it truly is: a seminal moment in our global history. In a world where nearly two out of three people on earth will live in Asia by the year 2030, the Asia economic story is vital to our collective future.

Asia’s economic transformation is centred on three major trends: urbanisation, growing middle classes and unprecedented connectivity. All across the emerging world, but particularly in Asia, we have seen the rise of cities as powerful economic nodes. A city like Seoul, for example, accounts for roughly half of South Korea’s economic output, Jakarta accounts for nearly a quarter of Indonesia’s GDP and some 50 per cent of all of Pakistan’s trade passes through Karachi. Meanwhile, west Asian cities like Dubai and Abu Dhabi take their place in this world as geo-economic hubs that transcend their regions, linking entire continents in flows of goods, services and people.

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It’s no wonder then that we are witnessing a historic migration to urban centres and explosive growth in major Asian cities. In the year 1995, for example, New York was the second largest city in the world, surpassed only by Tokyo. Today, New York has slipped to sixth, overtaken by New Delhi, Shanghai, Mumbai and Beijing. Our world today is more than 54 per cent urban and growing, headed for two-thirds by 2030 and a large percentage of that is in Asia.

We will add another billion people to our cities in little more than 10 years. By 2030, there will be more than 40 mega-cities with populations of ten million or more. The vast majority of those mega-cities and that urban growth will come from Asia. One of the defining features of our century will be the rise of the Asian city.

Now, consider this: we are also witnessing a profound shift in the growth of middle classes worldwide, driven again by Asia. There are currently some three billion people in the global middle class, according to Brookings Institution scholar Homi Kharas. By the year 2021, another billion will be added to the global middle class, and the vast majority of those new entrants (88 per cent) will come from Asia. Thus, by the year 2030, Asians will represent some two-thirds of the global middle class.

Middle class consumption is a key driver of the global economy, and the infrastructure needs of urbanised middle classes is partly why the Asian Development Bank notes that developing Asia will need to spend US$1.7 trillion per year on infrastructure through the year 2030. This also helps explain why Asia surpasses the United States and the EU in terms of global imports of goods, accounting for 36 per cent of all imports, according to the WTO. Growing middle classes in large urban centres also helps explain why companies from all over the world are chasing the holy grail of the Asian consuming middle class.

Telecoms companies are on the frontlines of the third major trend: connectivity. Never before in human history have we as a species been so connected, both virtually and physically. An Asian air travel revolution has reshaped the commercial geography of the region, and container shipping lines from Asia are the unglamorous mules of globalisation. Meanwhile, smartphones, increasingly ubiquitous across Asia, are changing how we consume, connect, live and even love.

The Asia economic renaissance is still in its infancy. India has a long way to go as do several populous southeast Asian states. Their fates are not entirely clear, but of this, there should be no doubt: as goes Asia, so goes the rest of our world.

Afshin Molavi is co-director of the emerge85 Lab, an initiative that explores change in the emerging world and its global impact. He will be a keynote speaker at the World Future Energy Conference during Abu Dhabi Sustainability Week, which begins on Saturday