CASS (NAES) andUN–Habitat Jointly Release Global UrbanCompetitiveness Report 2017-2018

The Global Development Pattern and Trendfrom the Perspective of Cities

The Annual Report Focuses on Global RealEstate Market and Competitiveness

The annualreport has measured the economic competitiveness index of 1,007 global citiesthrough the urban economic density index and the economic increment index fromthe perspective of display by adopting creative theories and methods. Theresults have refreshed people's cognition of the city rankings and verifiedthat technology innovation center cities and central cities of emergingeconomies are breaking the original global urban pattern and entering the rankof most competitive cities.

While comparing the competitiveness ofcities, this report further views global economic and social developmentpatterns and trends from the view of cities, with the following new findings:First, information technology is increasingly becoming the primary engine of urbandevelopment. Second, three longitudes have divided the differentiatedagglomeration of global urban population and economy. Third, soft ties betweencities are gradually dominating the global urban system. Fourth, new globalcities are taking shape.

The report is themed on "theHousing Price: Reshaping World Cities", including the four parts -overview of global real estate market, new discoveries and new theories,empirical analysis of global cities, global city stories. Empirical analysis isconducted from such five levels as the global region, different tiers ofcities, areas within major countries, urban agglomerations, typical cities,with the main findings as follows: The city's relative housing price and its competitivenessshow an inverted U-shaped changing trend, and too high or too low prices arenot conducive to the enhancement of urban competitiveness. The higher therelative housing price is, the stronger the competitiveness is. When thehousing price gap between big cities and small cities in a region is too large,the overall competitiveness of the region is low. When the housing price gapbetween big cities and small cities is narrow, the city's housing price isnegatively correlated to the competitiveness of other cities.

In order torealize urban sustainable development, in the process of urbanization, localgovernments should pay attention to: First, the urban planning should followthe five main principles for the urban design by the UN-HumanSettlements Programm(UNHabitat) (2014) - sufficient space, high density,compound use of land, social integration, and avoid functional simplification.Second, with respect to the financial framework and governance, a soundfinancial plan including reasonable budget, revenue generation and expendituremanagement should be developed. Third, as to the legal framework, laws andregulations help shape good urban forms and characteristics and play animportant role in the implementation of urban planning.

On October 30,2017, the World Cities Day - Global UrbanCompetitiveness Forum will be convened at Baiyun International ConferenceCenter in Guangzhou, and the National Academy of Economic Strategy (NAES) -Chinese Academy of Social Sciences (CASS) and the UN–Habitat will jointlyrelease the Global Urban CompetitivenessReport 2017-2018 – The Housing Price: changing World Cities (hereinafterreferred to as the "Report"). It took more than one year toaccomplish the report which was led by Professor Ni Pengfei, Director of Centerfor City and Competitiveness, CASS, chief city economist of CASS- UN-HABITAT jointproject group and Marco Kamiya, Coordinator of Urban Economy and Finance Branchof UN-Habitat, chief city economist of CASS- UN-HABITAT joint project group andpooled the efforts of many global urban competitiveness experts. The conferenceis organized by the UN–Habitat, undertaken by Guangzhou Academy of SocialSciences, and co-organized by Center for City and Competitiveness, CASS, GuangzhouUrban Strategy Academy, GASS and Guangzhou Radio Group.The report authorizes the first publishing of its English abstract to South China Morning Post and the firstpublishing of its Chinese abstract to the NationalBusiness Daily.

Wang Weiguang (Presidentof the CASS) sends a written address. Joan Clos (Under Secretary-General of theUN and Executive Director of UN-Habitat), He Dexu (Director of National Academyof Economic Strategy, CASS), Zhang Yueguo (Party Leading Group Secretary ofGASS), Bernadia Irawati Tjandradewi (Asia-Pacific Secretary-General of UnitedCities and Local Governments) attend the conference and gave speeches. JoanClos delivers a keynote speech, Professor Ni Pengfei and Marco Kamiya introducethe research results on behalf of the research team. Well-known experts andscholars attending the conference have indepth research and discussion on therelationship between housing prices and urban competitiveness around the themeof the report. Noted entrepreneurs and media elites hold roundtables on keyfactors affecting urban prosperity and development.

Through the long term research, following the principleof index minimization, the research team has built the index system of urbaneconomic competitiveness and sustainable competitiveness in the report. Theeconomic competitiveness refers to the city's capacity of creating value and obtainingeconomic rent. The research team has measured the economic competitivenessindex of 1,007 global cities through the urban economic density index and theeconomic increment index from the perspective of display by adopting creativetheories and methods. The sustainable competitiveness refers to the conditionsof urban elements and environment, and the sustainable competitiveness indexesof 1,035 global cities are measured with the following indicators from theexplanatory perspective: human capital potential, economic vitality, technologyinnovation, social inclusiveness, ecological environment, business environment,infrastructure, and global connection. The sample cities for statistics in thisreport are mainly in metropolitan areas.

The top ten globalcities of urban economic competitiveness index in 2016: New York, Los Angeles,Singapore, London, San Francisco, Shenzhen, Tokyo, San Jose, Munich, Dallas. The UnitedStates has obvious advantages, with its cities occupying half of the totalcities. 3 cities are from Asia and 2 cities are from Europe. Cities withbasically equal economic competitiveness aggregate, which highlights theimportance of urban agglomeration. The economic development of urbanagglomerations in European and North American countries are balanced, while indeveloping countries, it is concentrated in central cities. The echelon effectof urban economic competitiveness is obvious, and there exists differentiationof differences at different tiers. Promoting economic competitiveness andnarrowing differences have become the key for BRICS to catch up with developedcountries. The indexes of local demand, infrastructure and technologyinnovation are the driving factors which have great effects on the promotion ofglobal urban economic competitiveness. Technology innovation center cities andcentral cities of emerging economies are breaking the original global urbanpattern and entering the rank of most competitive cities.

The research finds that in terms of the global urbaneconomic competitiveness, America has obvious advantages, and China is risingrapidly. The overall advantages of American cities are obvious, and thedevelopment level is more balanced. Among the top 10 cities, there are 5 citiesfrom America. Among the top 20 cities, there are 9 cities from America. Amongthe top 100 cities, there are 36 cities from America. China's top cities showgood performance with rapid enhancement of the overall competitiveness level,and some strong tier-two cities have conspicuous achievements. Shenzhen hasentered the list of top 10 global cities, Hong Kong, Shanghai, Guangzhou andBeijing are on the list of top 20 global cities. A total of 21 cities areshortlisted for the top 100 global cities, which reflects that Chinese citieshave developed from "central aggregation" to the higher stage of"dispersion and spillover". At the current development level, China’soverall urban competitiveness in the global urban system is excellent, but weshould see that, the gap between China's cities is large. This report, from thedimension of global urban system, verifies the great judgement made by the 19thNational Congress that China has entered the new era, but China's urbancompetitiveness is facing the problem of uneven and insufficient development.

The top ten global cities of sustainable competitivenessin 2016 are: New York, London, Tokyo, Boston, Singapore, Zurich, Seoul,Houston, Paris, and Chicago. Among the topten cities, cities from Europe, North America and Asia constitute a situationof tripartite confrontation. In the top 100 global cities of sustainablecompetitiveness, European and North American cities have an absolutequantitative advantage. From the view of urban agglomerations, the proportionof central cities in America, Germany and the UK entering the list of top 100global cities in sustainable competitiveness is high. By contrast, although theurban agglomerations in China, India, Brazil and Indonesia and other developingcountries is large in size, the shortlisted central cities are few. Viewingfrom the indexes of aggregation degree and connection degree, for cities withlower degree of agglomeration and connection, the size of the high-incomepopulation has a greater impact on the urban sustainable competitiveness.

The research finds that G7countries have obvious leading advantages in global urban sustainablecompetitiveness, and the growth potential of BRICS is huge. Cities in developedcountries represented by America are the most dynamic, and the BRICS are increasinglybecoming an important part of global connection, but their innovationcapabilities and government governance levels need to be enhanced. The urbaninfrastructure in emerging market countries represented by BRICS is catchingup, especially in China, the urban infrastructure has been on a par with thatof developed countries. There are 9 cities in China entering the list of top100 global cities in sustainable competitiveness, namely, Beijing, Hong Kong,Shanghai, Shenzhen, Guangzhou, Taipei, Nanjing, Tianjin and Xiamen.

According to theresearch, Technology, finance, ecology, culture and housing prices areinfluencing and changing today's urban world，information technology is increasinglybecoming the primary engine of global urban development. First, informationtechnology turns direct connection between global cities to indirectconnection, the connection of several cities to a full-scale connection, looseconnection to close connection, slow connection to instantaneous connection,and high-cost connection to low-cost connection. Second, information technologyis changing the focus of the global urban network system, which is transferringfrom coastal areas to inland areas, from Europe and North America to Asia.Third, information technology is changing the spatial pattern of global cities.

The research finds that, three longitudes have dividedthe differentiated agglomeration of global urban population and economy. Urbanaggregation is the first feature of a city, and global urban aggregation is acomprehensive reflection of the spatial differences and changes of globaleconomy. As to the population agglomeration: First, the population growth inmetropolitan areas is faster and the agglomeration in coastal areas is becomingintensive. Second, the population size in global high-tier cities grows continuouslywhile that in low-tier cities appear differentiation. In regard to the economicagglomeration: the new agglomeration of global economy shows the double-crescentdistribution and the distribution along three longitudes. The cities with thehighest economic density and higher income levels are concentrated in NorthAmerica and Eurasia, showing one small and one big crescent agglomerationareas. The distribution along three longitudes refers to that, global citieswith high economic density are mainly distributed on both sides of 20° east longitude, 100° west longitude and 110° east longitude in the shape of cliffof displacement.

It is found thatthe soft ties between cities are gradually dominating the world urban system. Informationtechnology and mega cities dominate the soft connection ofglobal cities. As the soft link center, Europe dominates the internal andexternal connection of global cities. Africa has the lowest connectivity, farbehind the global level. There are significant differences in the number ofconnections at different city tiers. Tier-A cities dominate the internal andexternal connection of global cities while tier-B cities are more closely andwidely linked. Cities at the same level of economic development are moreclosely linked and information technology dominates the soft connection betweencities. Cities with the same function are more closely linked, and globalcities have formed the multi-center network. Soft ties are more extensive,unbalanced, and differentiated than hard ties.

The researchfinds that new global cities are taking shape. The currentglobal urban system is neither a hierarchical system determined by the verticaldivision of industry, nor a network system determined by the horizontaldivision of industry, but a chain system that is a combination of the hierarchicaland network systems. New global cities are taking shape, which is evidenced by:First, technology and finance are dominating the global economy, constitutingmain part of the global value chain. Second, from the influence of globalenterprises, information technology enterprises are becoming more and moreinfluential. Third, the status of technology center cities in the global urbansystem keeps rising. The higher the technological innovation index of a city,the higher its per capita GDP, and the stronger its sustainable competitivenessand economic competitiveness.

The thematicreport argues that, in terms of the conditions of global real estate market, the regionswith high housing prices are distributed in circum-oceanic "three centersand four zones", that is, high housing price cities show a clear circum-oceanicdistribution, concentrating in North America, Western Europe and East Asia, andextending along 120° west longitude, 80° west longitude, 20° east longitude and110° east longitude. The urban agglomerations near the boundaries of countrieshave developed into large transnational urban agglomerations, and the highhousing price area has restrained the cities far away, showing the Migration effect.Main urban agglomerations of the world still present the Siphon effect, and theurban agglomeration with stronger Siphon effect usually has higher housingprices in central cities. Economic geography is the basic impetus to thedevelopment of urban real estate: The main geographical driving force istransportation, which determines the upper and lower limits of the city realestate market; the economic and social driving force is highly related to thedifferentiation of the real estate market; the service driving force is thebasic guarantee of the real estate market. The Matthew effect of urban realestate continuously enlarges the differentiation degree of the real estatemarket between cities, and cities of the developing economies and the emergingeconomies cities see more significant Matthew effect. The effectiveness ofgovernmental real estate policies is based on long-term expectation and thedecentralization of policies.

The themed report deeply analyzes the effect mechanism ofhouse price on competitiveness. Housing is a necessity of human survival anddevelopment, with the dual attributes of consumer goods and investment goods.Housing and its price are always important factors affecting a city's economicgrowth and structural transformation. The theoretical model draws the followingconclusions: The city's relative housing price and its competitiveness show aninverted "U" changing trend, and too high or too low prices are notconducive to the enhancement of urban competitiveness. The higher the relativehousing price is, the stronger the competitiveness is. When the housing pricegap between big cities and small cities is too large, the overallcompetitiveness of cities in the region is low. When the housing price gapbetween big cities and small cities is narrow, the city's housing price isnegatively correlated to the competitiveness of other cities. The empiricalanalysis has verified the above inferences, analyzed the relationship betweenthe housing price to income ratio, house price, income and population from theoverall perspective, described the patterns and trends of global region,different tiers of cities, national regions and urban agglomerations, anddemonstrated the effect of housing prices on urban competitiveness andpopulation. And it is finally found that, the impact of housing prices on urbancompetitiveness wanes and waxes with the concentration force and dispersionforce, going through the stages of ascending to descending, namely, the invertedU-shaped trend.

The themed report suggests that, in order to achievesustainable urbanization, in the process of urbanization, local governmentsshould pay attention to the following aspects: First, the urban planning shouldfollow the five main principles for the urban design by the UN–Habitat (2014) -sufficient space, high density, compound use of land, social integration, andavoid functional simplification. Second, with respect to the financialframework and governance, a sound financial plan including reasonable budget,revenue generation and expenditure management should be developed. Third, as tothe legal framework, laws and regulations help shape good urban forms andcharacteristics and play an important role in the implementation of urbanplanning.

In the city story part of the themed report, centering onthe relationship between housing prices and urban competitiveness, from morethan 1,000 cities in the world, 11 typical cities of Silicon Valley,Pittsburgh, Singapore, Melbourne, Tokyo, Guangzhou, Taipei, Foshan, Madrid,Lima, Buenos Aires are screened out and their experiences and practices in developingthe real estate and enhancing the competitiveness have been summarized for thereference of global cities.

The report is jointly launched by the National Academy ofEconomic Strategy, CASS and the UN-Habitat, which is the second edition of theglobal urban reporting series. Through the indicator system and objective data,the report has evaluated in detail the competitiveness of 1,035 global cities. Besides,the report has measured the development pattern ofglobal urban competitiveness on the whole, as well as the gap from the idealstate in relevant aspects. The report is of crucial decision-making referentialsignificance and research referential value for global urban governmentdepartments, domestic and foreign enterprises, relevant research institutionsand the public.

For moreinformation, please visit the website of Center for City and Competitiveness, CASS. http://www.gucp.org/GUCP/Main/English

Appendix：Annualranking of general global urban competitiveness 2017-2018

（Top 200）