DAVID ZHU: Ladies and
gentlemen, friends of MIT,
welcome to the MIT ILP webinar,
"Urban Economic Vibrancy."
As you may know, the
rapid development
of urbanization trend has
reshaped the global economy
as the cities, enabling
workers in firms
to interact in close,
physical proximity,
allowing specialization, and
nurturing entrepreneurship.
So urbanization in Asia has
generated more than one third
of world's total GDP.
So today, I would like to
introduce our speaker, Miss
Zhengzhen Tan.
Zhengzhen Tan is a research
scientist and a lecturer
at MIT Department of
Urban Studies and Planning
and MIT Center for Real Estate.
She is also the executive
director of Sustainable
Urbanization Lab.
Zhengzhen taught
three graduate courses
at both MIT School of
Architecture and Planning
and the Sloan School
of Management,
including Urban Tech
Venture, China's Growth,
and Digital Cities.
She directs the
China Future City
Program, which initiated
the Future City Innovation
Connector.
Zhengzhen's expertise is focused
on transitioning urbanization,
digital innovation,
and the transformation
in urban development industry.
She is the author of Digital
Tech in Urban Systems.
Prior to joining MIT,
Zhengzhen was the urban planner
with extensive practice in
both public and private sectors
in Shanghai, Singapore,
London, and Vancouver.
Let me welcome
Miss Zhengzhen Tan.
ZHENGZHEN TAN: Hi, good morning,
good evening, good afternoon,
everyone.
Thank you for joining
me today at ILP webinar
of developing Asia and new
cities-- the "Urban Economic
Vibrancy."
I'm Zhengzhen.
I'm the research
scientist and executive
director of MIT Sustainable
Urbanization China.
So our theme today is the
rapid urbanization in China.
Urbanized-- sorry,
urbanization in Asia.
Urbanized Asia has become a
global economic powerhouse.
It generated one third
of the world's GDP.
And one significant
urbanization trend across Asia
is the widespread prevalence of
the new planned cities, where
public and the private
sectors collaborate
to generate growth engines.
Let me pull up my point.
So this-- the new city--
the Asia, this new planned
city, has been [? projects ?]
has more concentrated
in regions where
public and private sectors
have the power to assemble
large areas of land
for development,
such as in Asia, the Gulf
Coast State, the Middle East,
and Africa.
So this trend of
building new cities--
however, this new trend
has been hotly debated.
Opponent of the new
cities criticize
that developers seek only to
buy green field land at lower
price, and then later
sell luxury property
at a much higher
price, which give rise
to the land speculation.
And they also criticize
that technology firms only
care about selling their
product while the smart city
trend is hot.
They also criticize
local governments--
capture onetime windfalls
in fiscal revenue
by selling land to
the highest bidder,
and politicians to stimulate
constructions booms that
temporarily improve their
political standing, no matter
the actual utility of
what they are building,
and eventually lead to the
many aptly called ghost towns.
And if some of you have
watched the 2013 60 Minutes,
there are whole series
about China's ghost town.
And as according to them,
they said an entire city-- all
the building and the
roads, schools, hospital,
that was empty
except the people,
and they say there's
not a soul to be seen.
Well, on the other hand, we also
see proponent of the new cities
as a choice to move out of
the congested city core area
and provide affordable space,
higher quality of city life,
and a vibrant economy.
Professor Richard
Peiser and Ann Forsyth
from Harvard
University just recent
published a new book on the
new towns for the 21st century.
They mention that most new
towns are financial failure,
but we see most successful
new towns in Asia.
So how they were--
how they made it in--
why Asia cities
was be able to make
such a gigantic and
financial risky undertake
to a successful outcome?
Yale professor, also former
chairman of Morgan Stanley
Asia, Stephen Roach, writes
that China doubters are
wrong about its ghost
city, and Professor Roach
has said that China's
modernization is the greatest
urbanization story the
world has ever seen,
and that these ghost town
cities will soon become
thriving metropolitan area.
So that was in 2012
that he say that.
And here I want to show a
picture of my hometown, where
I grow up in Shanghai.
The Pudong area is
a classic example
of how an empty
urban construction
project in the late
1990s will become
a fully occupied urban center,
and Pudong continue to thrive--
a sustained prosperity
when it rise
as the global financial center.
So Pudong today has a population
of nearly six million people.
I still remember that when
I was in my teenage years,
my grandma always, always say
that they would rather people
would rather get a bed in
[INAUDIBLE] instead of house
in Pudong.
However, by the time that
I graduate from college,
my classmate--
Pudong was become one
of the favorable area
for settling down among
my classmates because
of its housing
affordability, newer amenity,
and most important of all,
a more immigrant-friendly,
open-minded community.
Last year, my close colleague
Professor [INAUDIBLE]
and I have started a book
project on Asia's new city.
We want to contribute to this
evolving debate of the new city
trend in Asia and
across the world.
We study Asia because
Asia relatively
started its experiment earlier.
And it has been 30 years.
The 30 years, we
accumulated enough data,
empirical evidence to
give a full evaluation
about all the success and the
failure of such undertake.
And we seek to understand
from the perspective
of economic vibrancy which
newly built cities in Asia
were successful and what are the
key mechanism of such success.
We wanted to address
question about what
those criticizing view of Asia
new city does not consider--
that is, whether
there are also ways
in which the new
planned city can create
new border, economic,
and societal value
through coordinated
concentration
by solving market
failure, generating
positive externality, and
locking innovation and opening
up new sectors.
So among all those research
questions, one we feel--
one of the most relevant
quest is how successful
public-private partnership
is necessary to produce
such a desirable outcome
for both public and private
benefits.
When they argue that
new cities approach
is just one of the many
other alternative approach--
that a city can achieve
economic development,
and the public/private
partnership is nice to have.
However, we feel for
national, global scale
systematic challenges that
we are facing right now,
such as climate change,
environmental crisis,
cybersecurity, and even
now the current pandemic
that we are in, a working
public-private partnership
is a must-have.
So what we can
learn from those--
Asia's political and
business leader--
how they were able
to build a mechanism
and execute this process
to produce outcome.
So we think that new cities'
lessons are influential far
beyond the real estate
development and industry
policy itself.
And this tremendous
opportunity will offer us
valuable insights on the
public-private partnership
design and execution.
And what's the
challenge to align
the government and private
enterprise in multidimensions,
and how can we align there--
not fill in the knowledge gap
so that knowledge gap
between the business
strategy versus public
administration so communication
can go smoothly?
And how can we break the
cultural and the language
barrier between the private
and the public sector
so that trust and rapport can
be established in this aspect?
How can we learn from this
past 30 years' experiment
from these Asia countries such
as China, Korea, Malaysia,
and India, et cetera?
So we examine the
performance of the new city
with a particular focus on
China, just purely given
the huge volume and high density
intensity of the new cities
that has boomed.
China has the greatest
urban population,
and we also have accumulated
enough research foundation
to understand such a phenomenon.
And we feel that
the success/failure
of this government-led,
top-down, proactive initiative,
coupled with bottom-up
market forces,
will have a long-lasting effect
not only in China's economy,
but also beyond.
So we think there are
four knowledge pillars
for the new cities making.
Most of the current
academic research
is on the physical planning.
As you can imagine, the new city
provide a fantastic blank slate
for the futuristic
visionary architect
to build and design
a future city.
And so our--
however, our angle is
more from the economic
development viewpoint.
The reason is because one,
it's relatively understudied,
and also it's
because it's easier
to define based on the objective
function of the new city
planners.
So in our book of the new
cities, Asia's new city,
we also talk about finance,
as that's an important pillar
to make sure that such a huge
investment from the government
that they need to--
the huge influx of money upfront
that both public investors
and the city
government will need
to finance this project using
various financial vehicles,
including land sale, land
finance, leasing, loans,
and bonds, and failure to
create a vibrant economy
will mean not generating
enough cash flow
to repay their heavy debts.
So there's one chapter we talk
about these different vehicles
for those and the pros and
cons of different approach.
However, for today's talk, I'm
mainly focused on two part.
The first part is the economy
and the second part is--
the second perspective is from
the technology advancement.
So I will start--
first talk about my colleague,
Professor Siqi Zheng
and her co-authors' research
on the economic foundation
perspective of the
Asia's new city.
So in Professor Siqi's past
decade's research, there are--
she's studied more
than 1,500 new towns
that China has built
since the 1990s.
And through the
study, they found
that those industrial
parks which
is in the older
version of the new city
generated significant
positive productivity
gain within the parks,
as well as the spillover
benefits to their local regions
in about 70% of the cases.
So firms in the
vicinity of the parks
tend to be more productive
and the residents
tend to consume more, leading to
the development of the new edge
cities surrounding the
initial industrial cores.
And industrial parks
are also associated
with 20% increase in the
municipal GDP 10 years
after their launch.
So these examples
and those studies
illustrated how
centralized the planning
and the public-private
collaboration
in both urban and
industry development
have the potential to trigger
positive externalities
and productivity gains that
would not have otherwise arised
on their own.
The new city we
see is an evolution
of the older industrial parks,
as China and the Asian economy
seeks to upgrading its industry
and moving up the global value
chain.
So under the new agenda
for the Asian mayors,
while the new city is a shift
away from the monofunctional
to a multifunctional,
and it become
a site for more than just
manufacturing production,
but also for consumption.
And it's become also a mixed
use to fit a live, work, play
lifestyle of the
new labor force.
As we move into the
knowledge economy,
those knowledge worker, they
tend to demand cities that
allow them to maintain a high
quality of life while they
raise their families in
clean, consumer-friendly--
in vibrant neighborhood.
So this shift in the
intended economic function
of the new city has provided--
has demanded a new public
and private planners
to use a new model
of city making,
and the older model
will not guarantee
that people would come.
And that this transformation
also calls for a new conceptual
framework that Professor
Zheng and her co-authors was
developed through
this new city--
through the second generation
of the industrial park.
So and here, we
want to understand
that the key role-- they
explain the key role
of the coordination by starting
with the market force, that
in planning and the
[? versus ?] market
spectrum, a new economic
engine in forming a new city
would not materialize
out of thin air,
and either if the market
were left on its own device.
So the new market force would--
such as the state power--
would need to utilize
the resource, which
in the development
economics, they
term the framework of the
place-based policy, as
in contrast to the
people-based policy.
So in the place-based policy,
they can bundle all this
subsidy, government subsidy,
to favor the desired outcome,
and they can also--
if the state has a
higher degree of state,
it can move and
concentrate resources
effectively and in
a timely fashion
using that place-based policy.
An analog of this mechanism
is best illustrated
through the coordination
of the shopping mall.
So being a mall producer--
so in the case of the
shopping mall, inside,
in particular a
small store would
benefit from the presence
of the large anchor stores
that draw many customers,
and yet no store
would volunteer to coordinate
all those stores in a mall
setting, or take the risk
of being the first store
to move into an empty mall.
So given the situation, the
owner of the shopping mall
is incentivized to solve
this first mover problem.
They are going to
negotiate a subsidized rent
to the large anchor store, and
then later negotiate a better
package for the smaller tenant.
So the result is that the
shopping mall's coordination--
thanks to the coordination, the
mall becomes more than the sum
of its part.
That is, the store enjoy
more sales in the mall
rather than if those still
were dispersed on its own.
So the owner is compensated
for their coordination service
via a premium in the rent.
So in order to build a
new successful new city,
one will also act as
a new economic engine.
Would also need to align--
would need to be a
convergence of many elements--
the state control of the
new market resources, which
the government can use for
the place-based policy,
and most importantly,
the coordination
among the market sources.
So the role of the
central coordinator
would provide a set
of valuable service
that either the state nor
the individual market actor
have access on its own.
So they would call for
a strong coordination,
a coordinator-led model that,
in the shopping mall analogy,
is have a delicate interplay
with the favored policy
and subsidy to generate
the market mechanism
for sustained success.
So in the central
coordination-- so this
is a framework developed
by Professors [INAUDIBLE]
and Angie Jo that they
delineated in order
to create the new planned
city economic outcome
and the market logic under
the coordination measure,
they can solve the assembly.
With this central
coordinator, they
can solve the land
assembly problem,
build out foundational
infrastructure,
and provide incredible signals
for the future prospects
of the new city, and
they can build out
also prominent public goods
such as the green space,
the schools.
Setting this expectation
and illustrating
the long-term vision
for the new city
is critical,
because the location
for these firms and
the knowledge worker,
high-skill knowledge worker,
are major decision involving
large sum cost and
the long-term horizon.
By recruiting productive
terms and meanwhile,
by recruiting the
central coordinator,
will recruit productive firm
from its prioritized sector,
starting with this big
tenant, anchor tenant,
to reel in the smaller tenant
or negotiation package,
move a deal between many
complementary entities
at once to maximize
this synergy.
So two example that they studied
using this central coordination
mechanism to understand
how the mechanism work.
So the central coordinator can
either be a government entity
or can be a private
enterprise, depending
on capability and expertise.
So in the case of
Gu'an, for example,
that is the Gu'an
New Industrial City,
which is planned through a
public-private partnership
between a weak government but
a strong private developer,
China Fortune Land Development--
CFLD.
And the government
can explicitly
structure this arrangement
into multidecade contracts that
tier the profit of
the private planner
to the long-term economic health
and the growth of the new city.
In the case of Zhengdong, it
shows that other scenario,
where the local, provincial,
or the national government
can launch and finance
coordination of its new cities.
And in the book, in chapter
6, Dr. Colleen [? Cho ?]
and her coauthors
talk about in the case
Zhengdong New District, the
economic development agency
of the Zhengdong government
directly interfaced
with desired firms
and anchor entity
to recruit them to its new city.
And also, in the case of
[INAUDIBLE] in Korea case,
we see that an expert
committee formed
by the provincial government
was responsible for negotiating
which IT, biotech,
or indie entities
would be brought in
at the first space.
So that's my first part
of the economic foundation
of the new Asian
new city practice.
David would like to take some
questions from the audience
if I move into the second part.
DAVID ZHU: Yes.
I'd like to share
some questions.
Thank you, Professor
Zhengzhen Tan.
And one question that
we have is on the PPP,
a public-private framework
that you discussed.
Now, you have
stakeholders and investors
from both the public side
and the private side,
where the government
provide-- incentivize
the land and the
various investment
to promote development
in the city, where
private investors, such as
developers and investors,
develop commercial
interest in those areas.
Now, the government and
the private investors
have different
return objectives,
where the government may want
to develop the local regions,
attract talents,
entrepreneurship
in this sector, where
the private investors may
be more looking at
the financial side
or return on investments for
that particular large project.
Can you talk about how to
manage such complex stakeholder
interests when there's
both public interests
and private interests involved?
ZHENGZHEN TAN: Totally,
that's a very good question.
That gap is very obvious.
For the private sector,
they want low-hanging fruit,
because all they care
about is to get the cash
flow in a shorter horizon
as soon as possible,
while the government, when they
phase out their new city plan,
they are more looking for
the signature project,
like the landmark project,
which not necessarily generate
immediate cash flow.
So here, I think
that the government
and the private entity really
need to align the interest--
in the median, work out
a trade-off or compromise
model in the short term,
median term, and the long term,
and they need to be in constant
negotiation and communication
to work out this arrangement.
So among this interaction
between the private enterprise
and the government--
although they speak totally
different languages,
so the independent
interest really
will bring them together.
And so I won't have time
to go into the detail,
and actually, in our case study
of both Zhengdong and Gu'an,
it's a 10 years' undertake.
It has been over 20 years
that achieve its prosperity
as planned, while in
Zhengdong's case, like 10 years
after it was built, it was
criticized in the 60 Minutes
about the ghost town.
So the process is involve
thousands of agent and actors
to coordinate that.
And I would suggest if
you are interested more
about the detail, maybe
you can read our books,
and in our case
study chapter, we
lay out the detailed talks
and the meetings arrangement,
and also the way how
they organize a 10 years,
a decade-long engagement.
DAVID ZHU: Thank you.
Second question
may be about the--
as you were saying,
aligning the interests
of the government
and the developers.
Government provides
significantly subsidized land,
sometimes to the developers,
and that certainly
provides incentive for developer
to take on a large investment
over a long duration of time.
And also, because-- so
this is the positive side,
but the other side may be
because the land is purchased
at such discount that
also provides developer
to think about other
incentives, you
know, maybe looking
for intermediate exits
while offloading such
assets to someone
else at a short-term profit.
ZHENGZHEN TAN: Mm-hmm.
DAVID ZHU: In your
interaction with the city,
how did you manage that?
How do they make sure the
developers are involved
in this for the
long term, not just
look for a short-term profit?
ZHENGZHEN TAN: Mm-hmm.
So this is mostly seen when we
see in the Western new towns,
like in the US or
American or European,
that developer dump a
huge amount of properties
in the recession area.
And in China, because
they have to go
through the economic
circle, when we see
the horizon is 10
years to build out.
So here, the government
support is a must-have
in bearing the market risks
and also weather the storms
of these market conditions.
And in terms of how
they can work closely
to make sure that the whole
horizon, I think that will,
thanks to a peculiar political
economic system of China.
And of course, there are a
lot of allocation problems,
such as--
that the study author,
Professor [INAUDIBLE]
mentioned that there
is a misallocation,
or another term can be a bribe
or this corruption, government
corruption.
But our study demonstrated
that 70% of the case--
in the majority of the case,
that it's a positive sum
game, not a zero sum--
that the private and government
align only personal interest.
And actually, this
economic model
was proved to be
successful, not to mention
the example of Shanghai,
Pudong, and even Zhengdong.
They are long gone, this
initial starting up page,
and become a success on its own.
So our goal is really to
study why the success works,
not to say that all this
negative aspect can be avoided.
DAVID ZHU: Thank you.
Professor Zhengzhen
Tan, I'm sure we'll have
more questions for you maybe.
You can continue with
your presentation.
We'll have more
questions later on.
ZHENGZHEN TAN: Yeah, sure.
So I want my second part--
sorry, I probably
only have 15 minutes
left-- is to really talk about
the technology component.
So cities old and new,
and since the early days
of human civilization,
city has depended
on the advance in the technology
of our urban infrastructure
to enable economically,
culturally, socially
vibrant place.
That include electric
grid, street lighting,
subway systems, smartphones,
as well as the cellular network
that powered them.
So each new generation
of technology
empowers our urban
infrastructure
to meet city's
growing concentrations
of people and activity.
So why do people think that
this generation of technology--
what's so different about
this generation of technology
that people in media, and
also thought leaders, say we
are entering a forced
transformational age
of the city, thanks to
the digital technology
in which [? bringing ?] by
the stream of technology
such as GIS, information
communication technology, IOT,
data analytic, artificial
intelligence, machine learning.
So why is this state of
innovation transformation
to the urban growth?
Does the digital
technology really offers--
make our urban economic
will achieve a higher
vibrancy faster than
the traditional urban
infrastructure?
So to understand
this, I would like
to differentiate two
viewpoint of understanding
the digital city.
One is the city as
in the older term,
we say that it is
when we call city,
we are referring to the
urban information system,
like the housing,
the transport, that
enable a clustering
of the activities
and make people live
together in mixed use.
So this is city in
terms of the service.
And whereas the new reality
of the economic development
that I think if you attend
all the previous ILP seminars,
there is a huge discourse
about the digital economy that
is with the rise
of the gig economy,
the breakdown of the
traditional innovation ecosystem
that is based on
the big corporation,
to a more regional
city-based economic,
and city become the most
relevant economic unit.
And the end of the
city is competing
with each other for
the quality of life
so that it can attract business
and the talents to the city,
and this will form a
positive reinforcement
to make the city even a
more desirable social,
political, economic
performer, such as the livable
city, the responsive
city operation, and more
efficient city management.
So here in the
economic terms, we
say the city as economic unit.
The digital city become economic
unit for the competition
that we--
when we move around
the old economic engine
that is manufacturing-based
to an economic engine
that is innovation-
and knowledge-based.
So that's the city in
the economic terms.
And here, actually,
today, we are more focused
on the city in terms
of the service, which
is infrastructure, right?
All this system, how
it enable the place.
And talking about
this trend, I have
to borrow a term that is
very popular in the business
literature-- it's the
digital transformation.
If you understand the
city as economic unit
and as the
infrastructure, which has
a public benefits and
a private incentive,
it's like a city going through
the digital transformation,
although the term is always
used in the organization part.
But when we use this
framework to understand,
then we can see the
smart city trend,
which started more than
10 years ago by ICT vendor
like IBM and Cisco.
It started as a
market terminology
to sell the digital product
to the city government.
And later, the
smart city movement
realized that they are going to
provide social value, and not
just social value, but
also business value.
And so that the digital
transformation can be
can be delivered-- not just
the technology deployment,
but also achieve a balance-- the
social value and the business
value.
So the research also suggested
that the next generation
of 5G wireless network
infrastructure,
for example, can transform
the local economy.
With 5G smart city
solution applied
to manage vehicle traffic
and the electric grid,
it would produce i
more than $160 billion
US in benefits and savings.
So here we see the new entrants
into the new city arena.
It used to be the--
in the Asian city, we used
to see city government
and also the private sector
is more like a real estate
conglomerate.
Now more and more, we start to
see the technology firm enter
into this sphere, for example,
Alibaba, the world's biggest--
among the 10 of the world's
most [INAUDIBLE] tech firm.
They all have their smart
city initiative on the play.
Alibaba among them
launched City Brain project
more than 10 years
ago, and it has
happened to connect the
city traffic-- it started
with connecting city traffic
lights to solve the traffic
congestion, which
caused a huge cost
for the economic
development of the city.
And in 2018, Malaysia adopted
Alibaba smart city technology,
and will further use starting
from the traffic control
to the public safety
and the energy utility,
and continued to unlock
the potential of this data
and also automation.
So although most of
the current smart city
was deployed in
the existing city,
we start to see around
three years ago, in 2017,
we see a new trend in
emerging new planned city
across the world
that was designing
the digital technology
at the same time
with the physical building.
Among them-- and we see
it across the globe,
not just in Asia cities, but
also we see in North America--
Google Sidewalk Labs
Toronto waterfront project,
for example, and also in
Netherland, the Brainport
Innovation Smart District,
although at a much smaller
scale.
But the instance and also the
idea behind this innovation
district is very similar to
the new planned city, which
is to solve the big city
problems like affordability
and the deteriorating
environment for quality
of living, and to
create more innovation
and attract more young
entrepreneurs to create
a new growth engine.
Of course, in Asia, we see
like in XiongAn and also
Korea, Songdu, that the city
was built simultaneously--
that the digital technology
was built simultaneously
with the physical change.
Here, I want to mention one of
the observation that we see--
that although the timeline is
very short, only three years,
we won't have enough data
and empirical information
to really judge the
success and failure
of this digital city that
was built simultaneous
with the physical city.
But we feel some of--
as you know, our study
of the Gu'an new city
and the Zhengdong other new
city has more than 20 years'
empirical information.
But this research is really to
lay a future research agenda
to really understand what
is the added complexity
and also needs to make
such an endeavor work?
So in the case of
the signature poster
child of the digital city
vision, we see two years--
two months ago,
that Google actually
announced that they are going
to quit the Toronto waterfront
project.
And the reason
given by the CEO is
that the financial viability--
that it just couldn't work.
And there are major reasons
claimed by the Sidewalk Lab.
Of course, one is
the COVID-19 outbreak
and the economic recess,
political wrangling,
and the pushback, really,
from the citizens.
And we also compiled all the
reasons and the media from--
the reasons for their
failure in this experiment
also include that.
So our preliminary thinking
is that the lessons
for Google's Toronto
waterfront-- we start
to see the importance
of a working
public-private partnership
is just indispensable.
Google is the world's
most innovative company,
so it won't lack any
capability for innovation.
And that even when
they launched this,
they think this will provide
a hotbed for innovation
and taking an
integrated approach
towards a more inclusive, a
more affordable, and a more
resilient future city.
However, even
there, they couldn't
be able to deliver, to
execute such a vision
due to the lack of the PPP.
And imagine the financial
upfront spending
that it would have required
for such an undertake
is just way beyond for the
world's biggest tech firm.
Even a firm like a Google
has a really deep pocket--
it just wouldn't be
possible without a working
public partnership.
So on the other side, we
would look into Xiong'an.
Xiong'an is launched at the same
year as the Toronto waterfront,
and also, we feel that's
demonstrated a digital city
version in which the
urban system are not based
on a single system framework,
as seen in the architectural
design of most smart city.
It's not just a
project-based approach,
but instead, it will provide
a test bed, an experiment
for both place-based policy
and also the market innovation
ecosystem.
So here, what we see--
because we feel the digital
transformation of our city
would require city to deal
better with change overall,
not just to keep building the
IT project that will create
more data and service solo.
So to realize this
human-centered vision
for society, including
values such as livability,
sustainability, and justice,
a user-centric strategic
transformation requires
a city administration's
organizational
change, and as well
as implementing the
digital technology.
So here, I will just
[? reorder ?] from what
Xiong'an has been doing
in the past three years.
And also, I want to mention that
the Toronto waterfront is about
three kilometers and the
Xiong'an-- the first phase
of Xiong'an is more than 10
times the size of the Toronto
waterfront.
That's a 100 square kilometers.
So under such scale
and intensity,
we see that the new
city administration
is adopting a brand new
approach in both public-private
partnership and also the
overall systematic design
to enable such a vision.
So we would summarize
its current [INAUDIBLE]
in three aspects.
So here is the picture of
the Xiong'an railway station,
and this is the first phase,
the starting phase of the first
phase of the Xiong'an
that they set up--
the public service
bureau and experimenting,
a lot of the 5G deployment and
also the autonomous vehicle
public transit.
And here, we want to summarize
that in the short three years,
what they have done
and done differently
than a traditional
physical new city is first
the institutional organization.
Comparing to the traditional
public service, in this water,
sewage, waste, and all
this functional section,
Xiong'an would set up a
public service bureau,
aims to break the functional
[? silo, ?] and integrate
planning, construction, and
the governance of different
infrastructure department to
enable a user-centric approach
to the services.
And second is the data
governance and infrastructure.
How can they make sure that the
legal framework was provided
to ensure a safe and favorable
data framework, as well
as building the
data infrastructure?
So that also closely related
to the innovation ecosystem,
because the past decade's
practice of China's smart city
has taught them that without
a valid business model
that we call them, the market
mechanism is not sustained.
Although the government
has a strong will,
has all the favorable subsidy,
but without a market force,
the sustained growth
cannot be achieved.
So in Xiong'an's case, they have
been working to establish these
innovation ecosystems
with a overall design
for the government, for
the data, legal framework.
So here that we see
the city government is
act as an ecosystem
builder, the planner,
the central coordinator
to bring together
the expertise of
these tech firms
in the digital technology, as
well as the urban development
and administration expertise
from the traditional city
developer, like the real
estate conglomerates.
And another aspect in achieving
this sustained business model
is that we also see what the
Sidewalk Lab has been doing,
is that because Google,
as a private-led new city
initiative, they are very savvy
in building a working business
model, and which we see
some commonality between
Xiong'an and Toronto waterfront,
that is that the digital
transformation has to
happen in all three layers.
The traditional-- the first
generation of the smart city
was heavily focused on
the city subsidized equal
infrastructure, which is
very hard for the financial
sustainability,
and a lot of effort
started to look into the
community and the building
level.
The building level, they worked
closely with the smart building
vendor and developer,
and the community level,
Xiong'an is building a data
block platform that will enable
the municipal level of data
will be shared in the community,
so that the commercial service--
that service for profit--
will be able to
generate future cash
flow for the initial investment
at a municipality level.
My final takeaway for my
presentation is that China--
the first is finance related,
which I didn't really spent
much time today
to talk about, is
that China is shifting way
from land-based financing
to project financing,
so to enable
a more close, intimate
dance between the market
force and the market resources.
And it's a crucial role
for the central coordinate
to evaluate the
development project
and draw a roadmap for
the future development.
It can be a private enterprise.
It can also be a public-led,
or in some cases,
we see public entity-- they hire
a private service firm which
has the expertise to [? let ?]
this long-term and median-term
implementation of the firm.
And besides this
coordination, it's
very important to
build a cultural bridge
so that they can-- willing
to talk to each other.
And in this case,
there are further study
will need to be--
we start to see
further study in Asia
and in North America
that, besides the
expertise knowledge part,
the cultural alignment
would be also
very important between the
public and private sector.
As we see in the
COVID-19 outbreak,
the culture really
play a big role,
besides the
technology deployment,
when we see different
nation to come out
with this plan to cope with
this crisis, public health
[? practices. ?]
And also in the
digital part, we see
that the city as a coordinator
role and a container role
would need to totally design
the whole digital city
vision in the institution,
in its legal framework,
and also the new
ecosystem design to enable
the new business model.
And besides these
three aspects, they
are dimensional in the place--
in the building level,
the community level,
the municipality level
that each government entity
have to establish
the credibility,
to enable a different level,
to enable such a vision.
And that's all for today.
Thank you.
DAVID ZHU: Thank you,
Professor Zhengzhen Tan.
We have some more questions
from the audience.
One question is about the
socio-political aspect of these
projects, but with more
inclination on the politics
of the government's side--
the person's
interested in politics
impact on the urbanization and
whether that has a heavy impact
or not.
Could you talk about
the government side,
or the political side of the
impact on the urbanization?
ZHENGZHEN TAN: China is
a policy-driven market,
and probably most
people knows that.
Our study is not really--
the purpose of our
study is not really
to provide a
prescription, because we
know every economy
is very different
in the political system.
But what we can learn from the--
like in the Asians'
cases, or in some
of China's new
cities cases, is how
the government will be able
to align this interest, right?
There's a fine line between
personal interest work, which
may lead to corruption,
and misallocation,
because they may favor their own
personal political connection
with the economic.
So here, that's why we feel
the market mechanism is also
as important, right?
China-- there is research
about the China state.
Very strong state-owned.
But if you look at over 1,000
new towns, all over China
and all over Asia, the
market has a choice, right?
It's not like you
build a city where
people will come automatically.
Although from the demand
side, we have an advantage,
because China has another
250 people need to urbanize,
but they have choices.
They don't have to
come to your new city.
So here, the
government also need
to work very
diligently, not just
with the place-based policy.
They can't ensure or
guarantee a success
like in the industrial park age.
In the new economy,
the digital economy,
they have to work very
closely with a market force,
like these private firm,
to make sure the growth is
self-sustained and can
generate a positive sum
for both economic value
and society value.
So we didn't get time to talk
too much about society value,
because that's another aspect,
a huge aspect, of the new city.
But we feel through the
quantitative and qualitative
study of the economic
development side
that we can offer some insights
about how this mechanism work.
DAVID ZHU: Thank you.
Thank you.
And about the digital
transformation
adoption by the cities,
do you see a trend forming
in certain parts of the world?
Are certain parts
of the world more
inclined to work
on these projects
than other parts, let's say?
ZHENGZHEN TAN: Mm-hmm.
For sure.
I think here, I have to say
the developed-- the developing
country definitely has
an advantage for that,
because that's also where the
developing economy, like China,
India, would be able to
leapfrog the developing
country because they don't
have much legacy system
to deal with.
And so for sure,
they are more brought
in technology deployment.
But again, tech-- the
digital technology literature
all told us tech is
just a small part
of the whole transformation.
It is more about the data--
the legal, our institutional
redesign, right,
at organization
level, and that can
be borrowed to the city level
as well, the city government
level.
But it's more complicated than
the digital transformation
in the company level, because
there is a public benefits
that we need to ensure.
Otherwise, the public
health, the crisis-- we
already start to see
the public health crisis
like pandemic, climate change.
So that's why we
feel these lessons
we learn will be so important
to all the other scenario,
like need a global, even
cross-regional, cross-national
collaboration.
How can we learn
from this mechanism?
How did they implement
this plan and make sure
that the market mechanism
and the policy mechanism
can work in parallel, right?
Just like the
shopping mall owner--
how can they work together
to create such a synergy?
It's extremely important.
DAVID ZHU: Thank you.
Another question
from the audience
is, what's your take on
the intelligent community
basically sharing space and
the facilities in the future
after this pandemic?
Yeah, I can think of
companies like perhaps WeWork
and companies that allow us
to share space and facilities,
but after this pandemic?
ZHENGZHEN TAN: Oh, you mean
the projection of this sharing?
DAVID ZHU: Yeah.
ZHENGZHEN TAN: So I think there
is a opportunity and a threat.
We see on the media, like a
lot of this sharing tech firm
was hit very badly
for this pandemic.
But on the other hand, we also
see winner in this scenario,
like the digital-- it
accelerated our digital thing.
For example, this is--
the webinar-- that I feel that
will accelerate the knowledge
flow across the globe.
Without pandemic,
probably our talk
won't be shared at such
a wider global audience.
DAVID ZHU: OK.
Thank you.
Those are all the questions
we have from the audience.
And thank you so much.
Oh, maybe I just see
another one popping up.
OK, there's one more question.
What is the-- this is more
of a general question.
So what is the next most
promising real estate
sector to invest in Asia?
This is more of a
general question
from the audience about
what sector of real estate
is promising to investors.
ZHENGZHEN TAN: Mmm.
I think China is
heavily shifting away
from the residential
model and is entering
into a city operation age.
But it's important to notice
that the speed of China's
urbanization would maintain
for the next 20 years.
So there's still--
China still need to enter
into a new normal that
was more sustainability
conscious
and offer new quality-focused
development instead of quantity
and a speed-oriented
urbanization model.
And the digital technology
play a huge part
in that, that will enable this
social value and business value
synergizing.
In terms of the specific
sector to invest in,
that there is and probably would
be another talk that we can
organize in the
future-- industry,
logistic is definitely--
so obviously everyone talk
about it's a boom, right?
Thanks to the e-commerce,
everybody now must shop online.
And the commercial
real estate has been
suffering, like the office--
in the commercial real estate,
in the office, apartment,
and retail sector, we start
to see in hotel, hospitality
sector, we start to see a
tremendous shift of wealth
in the next [INAUDIBLE].
And there are some studies
shows that we are actually in--
another of our future research
is focused on office building,
like the house-oriented office
building, which hopefully we
can share with you
in the near future.
In that, we are going
to talk about how
the house accelerated, together
with the digital technology,
accelerated the whole industry--
the value shift from
asset to the service.
DAVID ZHU: Thank you
very much, Professor Tan.
In the interest
of time, we would
like to close this
webinar, and I
invite all audience
who have more questions
to reach out to ILP.
You may find our contact
information at ilp.mit.edu.
You may also find the
recording of this session being
posted in the next few
days on our website.
My name is David Zhu.
You can find my email and
contact information also
on the ILP website.
We will always be
happy to connect you
with the professors
and the researchers
at MIT to help you
with your business.
Please feel free
to reach out to us.
And thank you so
much, Professor Tan,
for a very informed and helpful
session on the urban vibrancy.
And we all learned a great deal.
We look forward to see you
again in the near future.
ZHENGZHEN TAN: Thank you, David.
