An illustrious group of real estate industry leaders from China convened for a symposium on the research of future cities at MIT on November 16. The symposium was part of the activities organized for the launch of the MIT China Future City Lab (MIT-CFC), a new research and entrepreneurship education program that focuses on challenges in urban China.
The invitation-only event was attended by senior representatives of the eight founding industry members of the lab: Hongkong Land, CR Land, Chengyujituan, Tianyi Holdings, Fosun Property, Zall Development, Tusincere, and Nash Work. These founding partners have made an investment and commitment to support the work of MIT-CFC, and were eager to hear about the kind of work that MIT-CFC will facilitate for faculty and students with an interest in shaping the future of Chinese cities.
The symposium featured the presentation of cutting-edge research by faculty across and beyond the School of Architecture and Planning, including the Center for Real Estate, Department of Urban Studies and Planning, as well as the Media Lab. Participants heard from Professor Siqi Zheng on measuring how much Chinese households value environmental factors; Executive Director of MIT’s Industrial Performance Center Dr. Elizabeth Reynold s on analyzing the regional innovation system in the United States; Professor Cesar Hidalgo of the Media Lab on a new way to integrate and make sense of enormous but disparate datasets; and Professor Sarah Williams on an innovative tool to complete zoning analyses in New York City; Professor Carlo Ratti on the future of work, retail space; Professor Christoph Reinhart on the sustainable design practice; Professor David Geltne r on land value pricing index and Professor Brent Ryan on China's New town practices.
In addition to the the half-day symposium, the Chinese visitors participated in roundtable discussions of MIT-CFC’s mission, which is to mobilize the vision, research expertise, experience, talent, creativity, capabilities and academic resources of MIT and foster new research and education in science and technology to identify and develop innovative solutions to China’s unique urbanization challenges, priorities and opportunities. MIT-CFC is led by Faculty Director Professor Siqi Zheng, Samuel Tak Lee Associate Professor of Real Estate Development and Entrepreneurship, and by Executive Director Zhengzhen Tan.
By MIT News Office
September 19, 2017
MIT and Tsinghua University in China have signed an agreement establishing a new technology project, the Future City Innovation Connector (FCIC), which is designed to support research and startup teams applying ideas to China’s rapidly growing urban areas.
FCIC will draw upon the work of MIT professors and labs to identify innovative concepts and technologies that could be implemented in China. At MIT, FCIC will be formally hosted in the MIT China Future City Lab. Its founder and faculty director is Siqi Zheng, the Samuel Tak Lee Associate Professor of Real Estate Development and Entrepreneurship, in MIT’s Department of Urban Studies and Planning and its Center for Real Estate. Zheng also holds a visiting professor position at Tsinghua University.
The program will run in conjunction with the MIT School of Architecture and Planning’s entrepreneurship accelerator, DesignX. FCIC will also work extensively with Chinese municipal governments and industry leaders to support research and startup teams.
The agreement was formally signed on Sept. 16 by MIT Provost Martin A. Schmidt and Tsinghua University Vice President and Provost Bin Yang. Richard Lester, MIT’s associate provost for international activities, also participated in the signing ceremony.
“I am thrilled to see the launch of this new collaboration initiative,” Schmidt says. “Under the leadership of Professor Zheng, the MIT-Tsinghua Future City Innovation Connector will become the new starting point of a series of engagements between MIT and Tsinghua in entrepreneurship, education, and urban research.”
Zheng, an expert on urban economics, development, and real estate, says “FCIC aims to support city innovation ideas and startup teams involving MIT and Tsinghua University students, across all disciplines, to make our cities better.”
As Zheng also noted, FCIC can play a significant practical role by linking together researchers and entrepreneurs, on the one hand, with Chinese policymakers and industrial leaders. The project aims to establish collaborations with Chinese cities that face challenges such as urban resilience, urban health, housing, environmental sustainability, responsive urban management, and the development of “smart” cities.
“Urban-focused research teams and startups face unique challenges when they want to work on urban problems in China,” Zheng adds. “Partnerships with city governments are most critical to the success of these teams. The MIT-Tsinghua Future City Innovation Connector will help the innovative urban research teams and startups at MIT and Tsinghua engage with the Chinese market and government resources to realize their societal impact and economic success.”
FCIC is the first program of its kind that explicitly aims to apply the frontiers of urban research and technology to the immense urbanization occuring in China, which should be powered by technological innovation and new business ventures, FCIC leaders believe.
“The rich academic intellectual resources and active entrepreneurship ecosystem at both universities have huge potential to land its impact in Chinese cities,” Bin Yang says. “MIT-Tsinghua FCIC will build broad partnership with local city and industries to scale up its impact. It is of great meaning to MIT, Tsinghua University, local governments, and industry leaders.”
MIT and Tsinghua University have developed extensive formal collaborations in recent decades, across a range of areas involving their shared commitment to research, education, and the support of entrepreneurship.
By Peter Dizikes | MIT News Office
August 17, 2017http://news.mit.edu/2017/industrial-edge-cities-helped-china-grow-0818
China’s massive investment in industrial parks has paid economic dividends while reshaping the urban areas where they are located, according to a newly published study co-authored by an MIT expert on urban economics.
The study finds the creation of industrial parks does not just add to growth within the areas designated for manufacturing; it significantly increases economic production and consumption of many kinds for more than a mile in all directions from the boundaries of industrial parks.
Indeed, as the research shows, productivity, wages, employment, home sales, and retail activities all increased, even beyond the boundaries of the planned industrial parks. This carryover was striking enough that the study’s researchers say the industrial parks created “edge cities,” places that generate their own hubs of diverse economic activity and residential life.
“This kind of place-based policy can produce significant gains,” says Siqi Zheng, an associate professor in MIT’s Department of Urban Studies and Planning (DUSP) and Center for Real Estate (CRE), and co-author of a new paper detailing the findings.
The results speak to questions about the value of place-based industrial policy, while also providing valuable new data about economic spillover effects — the extent to which the presence of industries creates additional economic activity.
Indeed, as the new paper states, the typical industrial park “creates a spatially concentrated increase in local market potential as well-paid workers who seek nearby housing and retail opportunities.” For this reason, the researchers conclude, “The new parks lead to sharp improvements in worker quality of life.” Notably, the presence of significant new home construction around these “edge cities” reduces commute times, among other benefits.
The paper, “The birth of edge cities in China: Measuring the effects of industrial parks policy,” appears in the Journal of Urban Economics . The authors are Zheng, who is the Samuel Tak Lee Associate Professor of Real Estate Development and Entrepreneurship in DUSP; Weizeng Sun of the Institute for Economic and Social Research at Jinan University in China; Jianfeng Wu of the School of Economics and China Center for Economic Studies at Fudan University in China; and Matthew E. Kahn, a professor of economics at the University of Southern California.
The study examines the effects of 110 industrial parks near eight cities in China: Beijing, Shanghai, Shenzhen, Tianjin, Dalian, Wuhan, Xi’an, and Chengdu. That encompasses almost 10 percent of all industrial parks in the country. The researchers drew on several kinds of economic data to conduct the study, including plant-level data from the National Bureau of Statistics of China, and extensive data on local consumption. Most of the parks were built over the last quarter-century, and the study focuses on effects during the period from 1998 to 2007.
While building the industrial parks themselves clearly jump-started a considerable amount of economic activity, the spillover to the surrounding areas was also notable in multiple respects.
The researchers measured the areas two kilometers (1.2 miles) outside the industrial park zones and found that on average, in these neighboring places, employment increased 41 percent, total factor productivity increased 8 percent, and wages increased 3 percent.
“We found a multiplier effect,” Zheng says.
To be sure, that was not a universal outcome for all 110 industrial parks in the study. The researchers found that for about 70 percent of the industrial parks they examined, there was also an increase throughout the surrounding area in productivity, or, the ability of firms to create goods efficiently.
As the research showed, those increases have a lot to do with human capital investment: A 10 percentage-point increase in the number of industrial park workers with college degrees corresponds to a 26 percent increase in the total factor productivity of incumbent firms located near the parks. The underlying reason, it seems, has to do with the synergies at work in the successful industrial park areas. In places where the industries in the newly created parks had clearly defined connections with existing firms — such as a relationship between a supplier and manufacturer — more positive outcomes resulted.
But in places lacking these kinds of synergies, the industrial parks did not fare so well.
“One size does not fit all,” Zheng observes, noting the “heterogeneous effects” of the Chinese industrial parks in the study.
As the researchers note, the question of how broadly the results could inform policy around the globe remains open. The study’s results on spillover effects provide data that could be relevant to a wide range of economic conditions. In essence, industrial parks, among other things, solve what Zheng terms “a land assembly problem and a cross-firm coordination problem” and let firms “cluster together in a timely fashion” outside cities.
“Apparently, China’s unique political system grants city mayors with powers that far exceed their Western counterparts,” Zheng says. “They can easily convert agricultural land at the edge of cities into urban use, and allocate a large parcel of land to build an industrial park and engage in land assembly in a very efficient way. On the downside, if city leaders made a wrong decision, it would cause resource misallocation.”
The study was conducted with backing from the University of California at Los Angeles Ziman Center for Real Estate, the National Science Foundation of China, and Fudan University.
By Joanne Wong | School of Architecture and Planning
May 19, 2017
Zheng holds a bachelor’s degree in civil engineering from Tsinghua University, where she also earned a PhD in urban economics and real estate and taught for 10 years after doing postdoctoral work at Harvard University. On her approach to research, she says, “I realized that just studying the housing market is a bit narrow, and we need to understand housing from the urban perspective. People come to the city for good jobs, or amenities like schools, health care, museums, and other public services. In cities with cleaner air or in areas with big parks, housing prices tend to be higher, all else being equal. That was my starting point to look at environmental topics.” Zheng spoke with the School of Architecture and Planning about "Blue Skies" and today's environmental and economic realities in China.
Q: Your book uses stories about individuals to demonstrate the impact of pollution on the urban population in China. Why did you and your coauthor use this as a technique to understand advances in sustainable development and environmental planning?
A:My coauthor and I have written many papers together, published in academic journals. When we decided to write a book, we wanted to generate impact not only for academics but also for policy makers and the general public. That’s why we chose to use individual stories. The basic logic of the book builds on our papers, but we don’t have regression tables in there. We want Chinese policy makers to read this and change their minds. I also rewrote this book in Chinese and it generated some impact.
We also considered the readers here in the United States. Many Americans only hear about carbon emissions from China and how that will have negative impact for the United States, but they don’t care about local pollution in China because it has nothing to do with them. We want to change that thinking. We can’t only care about global-scale climate change; we also need to consider the local quality of life because these two things are closely related. If you want to know more about China’s future, you need to understand its local life.
Q:The debate between economic growth and sustainable development is a contested one here in the United States and in China as well. What do you think is a good way for us to think about these seemingly incompatible priorities and how to reconcile them?
A:There are two ways to think of this. One way is spatial. There is a huge variation in economic growth among Chinese cities, with rich ones on the coast and poor ones inland. Richer cities now have reached a stage where they care more about the environment because they are transitioning from the old manufacturing-dominated model to new, human-capital-driven economic growth. They need to improve quality of life in the whole city to attract highly skilled workers.
Cleaning the air is not throwing money away; it’s actually an investment to generate a return through the arrival of new human capital and its contribution to the economy. Poor cities, however, have no choice. They still need those dirty factories for tax revenue and GDP growth. They have to receive the incoming dirty factories that may be driven out of rich cities. That is the spatial perspective, and it may be one cause of inequality.
The other perspective is temporal. When China has high economic growth and everything is booming, the central government really wants to push local governments to go green and regulate the dirty industries. But when there is a downturn in the macro economy, they become hesitant because they still need those heavy industries to generate jobs. It’s like a policy cycle. Now that we are in economic decline, the central and local governments are once again investing a lot in the manufacturing sector, and you will observe that air quality in some cities has started to worsen again.
Q:The rising Chinese middle class wants a lifestyle similar to that of the middle class in other developed countries, but they are being told that they cannot have the material things that others may take for granted, because of environmental concerns. Does that makes it difficult for the environmental cause?
A: We need to acknowledge the reality that China is very big, and major Chinese cities have extremely high density. And with rising income, private car ownership has experienced a sharp increase in China, so in Beijing and Shanghai there are driving restrictions and license auctions.
Urban planners need to consider how to reconcile people’s demand for better quality of life with other constraints. Environmental constraints are one, land constraints are another. We cannot convert all farm land to urban use. That’s a special challenge for urban planners in China. We need to make more trade-offs between people’s private demand and ways to mitigate the negative externalities they create.
Let me give you three examples from the transportation sector. If we build enough public transit—especially a subway system—that would encourage people to use the subway instead of driving. In my research, I found that when a subway station opens, nearby households do increase their subway rideshare, at the expense of driving. Our suggestion for planners is to change the zoning in areas close to subway stops to increase residential density, so that those areas can accommodate more housing units.
Another of my papers demonstrates that high-income and low-income people actually have a similar willingness to pay for a square meter of housing in those good locations around subway stations. But because the size of those houses is large, low-income households cannot afford to live there. But if you build small units in high density in those places, it will help lower-income people afford those units and have a convenient commute.
The third example is about traffic management. Current urban traffic management in China is inadequate, meaning that given the same number of cars, Chinese cities experience more congestion than, for example, Tokyo. If we have more efficient traffic management, we can effectively reduce congestion and other negative externalities, with the same number of cars on the road. We cannot just restrict cars without considering our management skills and people’s driving habits.