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Asia Forecast Medium-Term Forecast on Asian Economies (December 2018 Issue/ 2018-2030)

Emerging cities, sinking cities in Asia by 2030

Masashi UEHARA
  Principal Economist
Eriko TAKAHASHI
  Senior Economist
Tamaki SAKURA
  Economist
Akihiko YOKOO
  Economist
Kazuya MANABE Economist
   
Motohiko KITAHARA
  Principal Economist
Go YAMADA
  Principal Economist

2018/12/05


The Japan Center for Economic Research on Dec. 5 released its fourth Medium-Term Asian Economic Forecast for 2018 through 2030, titled “Emerging cities, sinking cities in Asia.” Our forecasts project the populations, nominal gross regional product and per capita GRP of 77 major cities in 13 key markets: Japan; the U.S.; China; India; the Newly Industrialized Economies of South Korea, Taiwan, Hong Kong and Singapore; and the ASEAN5, which includes Indonesia, Thailand, Malaysia, the Philippines and Vietnam.

In nominal GRP per capita, a measure of income and wealth, U.S. cities will continue to dominate the top positions. San Francisco, with its heavy concentration of tech companies and startups, stands out as No. 1. In Asia, after Singapore and Hong Kong, four Japanese cities were clustered at the top in 2015, but by 2030 Osaka and Fukuoka will decline while Seoul, Shenzhen and the Yangzte Delta cities of Nanjing and Changzhou will move up behind Tokyo and Nagoya.

In particular, Shenzhen, a hub for smartphone-related industries, will close in on Tokyo and Seoul. This shows how catching the wave of the digital economy can propel a city up the ranking. A closer look at the significant changes among the 77 cities shows Jakarta and other Southeast Asian capitals making leaps, while Fukuoka, South Korea’s Busan and Taiwan’s capital of Taipei decline. As for China, there is a clear divide: Inland cities such as Hefei, Wuhan and Chengdu will rise while cities in the northeast such as Shenyang and Dalian will fall. Harbin and Changchun, both of which are also in the northeast, will also decline relative to their domestic peers.

In the northeast, old-style state-owned enterprises are concentrated, and cities there face a dilemma between promoting growth through reform and maintaining employment. In terms of economic scale, as measured by nominal GRP, large Chinese cities are on the rise. In contrast, Japanese cities are destined to fade. Four Chinese cities — Beijing, Shanghai, Shenzhen and Chongqing — will crack the top 10 by 2030, but Osaka will slip to 11th from 4th in 2015. Tokyo will maintain second place, but its edge over Shanghai and Beijing will shrink to double in 2030, from quadruple in 2015. On the middle and lower rungs, occupied by many Indian and Southeast Asian cities, Delhi and Manila are rising rapidly as their infrastructure development progresses.

Asia’s urban populations will soar. The region will have 30 “megacities” of at least 10 million people in 2030, versus 19 in 2015. The U.S. will have only two, just as it does now. Indian and Chinese cities will continue to rise as the countries’ overall populations surge, while cities in mature economies like Japan and the U.S., as well as industrial cities in northeastern China, are expected to fall.

This Asian Economic Forecast was reported on the Nikkei Asian Review on December 5, 2018.

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