China needs a larger number of first-tier cities to stabilize rocketing property prices in existing top-tier cities and fuel the development of their peripheral regions, according to Yao Yudong and Guan Qingyou, chief economists of Dacheng Fund and Minsheng Financial Think Tank respectively, writing in a joint article for
21st Century Business Herald.
In the short run, infrastructure expansion will create a greater demand for construction materials and soak up the excess capacities of various industries, the article said. In the longer term, it said, the rise of new first-tier cities and their surrounding regions will generate greater consumer demand.
To encourage more people to settle in the new first-tier cities, the article argued, the government needs to make sure that house owners and tenants enjoy an equal right to public services.
The central government also needs to delegate more authority to regional governments when it comes to urban management and environmental protection and offer more preferential policies in foreign investment, land and taxation, the article said.
After evaluating six aspects of economics, finance, population, innovation and property price, the article named six cities as first-tier candidates: Hangzhou, Tianjin, Nanjing, Suzhou, Chengdu and Wuhan.
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