The Growth of Cities

What was the dominant model over the past decade? Urbanization—primarily central cities absorbing populations from surrounding areas, or in other words, provincial capitals drawing people from non-capital cities.

What’s the absorption model for the next phase? It’s about strong second-tier cities attracting each other’s residents, with provincial capitals competing directly for talent.

Most domestic cities have relied on housing prices, but industrial upgrading never happened internally—only branch offices and factories were set up. That means high-income workers never flowed in, so there’s no pool of well-paid professionals to drive the next round of price growth. Put simply, nobody’s emerged who can afford to step up and buy at higher levels. (Housing prices are already so high that a modest per-square-meter increase translates into hundreds of thousands or even millions in total price.)

As a result, cities outside the first tier can’t upgrade their industries or attract high-income talent, so their property markets can’t hold up. (The opposite is true: high earners are desperate to挤into first-tier cities.)

In the next phase, competition will hinge on industrial upgrading and the race to capture high-income talent.