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Last Updated: Tuesday, 11 May, 2004, 08:15 GMT 09:15 UK
The second industrial revolution
Shanghai has been the template for many of the developments
The biggest mass migration in the history of the world is under way in China, and it is creating what some are calling the second industrial revolution.

A massive building boom unparalleled anywhere is taking place - last year, half of the concrete used in construction around the world was poured into China's cities.

And the demand for these new apartments, office blocks and skyscrapers is coming from China's rural masses - people intent on heading to the cities along the eastern coastline of the country.

"In the next 25 years, 345 million people are going to move from the rural areas into the city areas, which is the biggest mass migration of people ever, anywhere," Guy Hollis, of international real estate agents Jones Lang LaSalle, told BBC World Service's Global Business programme.

"That's really what's driving the building boom. So when we focus on shopping centres and office buildings, it's actually residential that's the big driver, because they're urbanising.

"This happened during the industrial revolution in the last century in Europe, but we tended to do it over a 150 year period. Here we're trying to do it in 15-20 years."

'Release of repression'

One example of the extreme speed of this change is the new port at Qingdao, on China's north-east coast.

Four years ago it did not even exist. Now it is one of the biggest container ports in the world.

How China's cities are changing in the second industrial revolution

Every day ships unload vast quantities of raw materials such as iron ore and oil - materials that are going directly into the building boom - and fill up with exports from the country's ever-expanding manufacturing industry.

Meanwhile the capital city, Beijing, is changing before people's eyes, with each new building battling the next for attention.

The city, awaiting the 2008 Olympic Games, is undergoing an orgy of construction.

On just one building site, Jianwei Soho, no less than 18 towers are being built.

"Under the 50 years of Communist ruling, there had been very little construction - so you had this incredibly repressed energy. When you open the lid, it comes out," said Zhang Xin, the co-director of the Soho City project - a town that will eventually house 50,000 people.

"That's why we're seeing cranes everywhere. It's quite different to when you see cities, even new cities like Hong Kong and Singapore, where there has been a consistent pace of development.

"Here it really is the release of a repression."

Mr Hollis emphasised that the pace of construction work in China has little precedent.

But he stressed that it was not just in China's famous cities that work was under way.

"There's more development going on in China than anyone's ever seen anywhere else in the world," he said.

"When we come to China, we look at Beijing and we look at Shanghai - lots of people from the outside do that - but what's actually happening in the hinterland is even more interesting.

"There's probably more development in Suzhou, which is two hours to the west of Shanghai, than there is in Shanghai at the moment. But we aren't necessarily aware of that, because not everybody visits those places."

Olympic boom

China has 22 "second cities", with populations of over 2 million. They are mostly located in the coastal belt or within 200-300 miles of it.

Beijing Olympic logo
The Olympics have been the catalyst for Beijing's regeneration
In each of these cities are major developments, funded by both the government and foreign direct investment.

In Beijing, meanwhile, the Olympic Games - awarded to the city in 2008 amidst controversy over China's human rights record - has become the main focal point of redevelopment, although the decision to regenerate was taken before the Games were confirmed.

"All the development is targeted to modernise the city and basically have it ready for 2008," Mr Hollis added.

"The massive construction there is not just about the Olympics - which is of course a big part of it - but it's also about modernising the city and bringing it up to be a proper capital city."

The huge rise in demand for new buildings, fuelling the construction work, has been in part due to some changes in policy from the country's government.

Although China remains a Communist country, the pragmatic approach of its new leadership has led to, for example, a recently-declared policy allowing people to purchase a 70-year lease on their land.

Bank warnings

This has meant that people no longer have to worry about ownership of their property in their own lifetime.

"I would interpret that as transition - from the planned socialist economy to a market economy," Professor Wen Hai, of Peking University, told Global Business.

Blood donor bus in Beijing outside branches of KFC and Pizza Hut
The new Chinese government is considered more pragmatic in its approach to capitalism
"I believe soon we will touch the issue, becoming permanent ownership instead of a limited time."

But there are warnings that the boom may not last as long as some are hoping.

Indeed, the pace of development is so fast that the country's government has now warned that it should be slowed.

China's Premier Wen Jiabao has warned that Beijing is readying "forceful" steps to cool the huge surge in investment.

In particular, there are fears that local banks are lending out too much money, and may be plunged into crisis if the apartments they are funding are not filled straight away.

As a result, China's Central reserve ratio - the country does not use interest rates - has been increased from 7 to 7.5%.

"I think there's concern in the banking sector - and certain in the central banking authorities - with regard to the amount of money being lent to the property sector," said Barry Livett, an EU adviser on China's banking system.

"There is concern that there is a speculative boom in property going on, with too much property coming online that cannot be let."


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