Over the past thirty years, China has recorded remarkable economic performance through steady integration with the global economy. This change has been inextricably linked with intense urbanization. In 1979, 18 percent of Chinese lived in cities, but this had surged to 54 percent by 2013, while the official number of cities (shi) increased from 193 to 9000. However, the virtuous circle of urbanization-economic growth has also created severe environmental problems. In 2010, China became the largest global energy consumer, and, with coal accounting for 69 percent of its consumption, is also the biggest energy-related CO2 emitter in the world (US Energy Information Administration 2014). As a response to ecological issues, the Chinese central government established a set of environment protection standards at national and local levels — amounting to over 800 standards by the end of 2005. The 11th five-year plan (2005-2010) also introduced for the first time a target ratio (20% by 2010) aimed at reducing energy consumption per unit GDP.

In this regard, local governments have been encouraged to develop ‘eco-cities’ or ‘low carbon cities’ as a means to achieve energy-saving and emissions-cutting (Wu 2012). By the end of 2010, China accounted for 230 eco-city projects proposed, or partly or fully implemented (Chien 2013:177), with 80 percent of prefecture-level cities having at least one project (China Society for Urban Studies 2012). Some of these schemes have been successful, such as those carried out through bilateral collaboration with prominent foreign design and architecture firms (Sino-Singapore Tianjin Eco-city and the Sino-German Yangzhou’s Eco-city park). While scholars promote the concept of the eco-city as a viable solution to the problem of achieving urban sustainability (Guo, 2004; Li, 2014), empirical research on ongoing projects has revealed several shortcomings. Some authors have underlined a lack of local government support in terms of regulations and technologies, as well as an insufficient concern for local needs (Poo and Neo 2010, Ying and Xian 2012). Others (Chien, 2013, Poo and Neo 2013) stress the fact that most eco-city projects take place in the outskirts of cities, which does not improve the situation of existing built-up areas and may even cause further consumption of energy resources.

In parallel to eco-city projects, the state has actively promoted urban sustainability in the form of ‘green’ technological advancement to alleviate the ill effects of industrialization whilst creating new pathways of economic development. Although the benefits of these policies are becoming apparent in terms of air quality, coal consumption and vehicle emission control, further improvement is hampered by institutional blockages. Moreover, the strong belief in technological innovation to provide solutions to any problem (i.e. the Innovation ideology, see INSITE CA project: http://www.insiteproject.org), too often bypasses deeper reflection — followed by correspondent actions — on the side effects (negative externalities) that these might provoke and the unexpected cascades of consequences that can even create additional problems. Indeed, complex processes such as those concerning the transition to sustainability require new approaches to project design (from their conceptualization to implementation and monitoring) that can make government authorities aware of the cascades of transformations these might trigger. Thus, the project’s design must set and integrate proper conditions to have, in the long-run, scaffolding structures, procedures, approaches and tools that allow a project to cope with unexpected consequences by enhancing its resilience (i.e. its capacity to dynamically adapt and re-direct goals).

In China, local governments bear 80 percent of budgetary expenditure responsibilities, which is not commensurate with the tax revenue-sharing mechanism and intergovernmental fiscal transfers (World Bank, 2012). To provide vital public services, city governments rely on revenues from land lease sales (Li and Ma 2009), typically accounting for 50 percent of their resources. Therefore, local governments are encouraged to prioritize infrastructure investment with the aim of enhancing land values (Yeh et al. 2005) rather than spending funds on intangible commodities such as environmental improvement or social welfare. Pro-growth policies also boost the chances of promotion for city level Party and government cadres regardless of their commitment to urban sustainability, since the merit-based carrier system primarily depends on GDP growth (Wu et al., 2013).

As a result, urbanization tends to expand with sprawling patterns and ensuing over-consumption of agricultural land, away from the ideal of ‘smart’, compact cities. Land finance strategies also contribute to driving up housing prices (Dua at al 2011). In spite of full public control over land, insufficient mechanisms have been developed to finance housing for low-income households. The situation is particularly acute for rural migrants, who are denied urban welfare coverage. About 250 million people live and work in urban areas but lack administrative recognition as urban citizens through the household registration system (hukou) (Yeh and Wu, 2014). Not only are they excluded from social housing provision, but also from other welfare services such as pensions, health and educational services (Chan, 2012).
Against this background, it is clear that the future of sustainable urban development in China does not merely lie in green technology. It depends critically on the capacity of local authorities to adopt an appropriate system of governance based on long-term fiscal planning and coordinated organizational structure, seeking to achieve social cohesion, efficient land-use and integration of environment principles. It is all the more important to take such aspects into consideration given that China’s city-building process is about to undergo major structural change.
In March 2014, the central government acknowledged the undesirable effects of China’s urban growth since 1978, and reoriented its urbanization policy. ‘China’s New Urbanization Plan 2014-2020’, issued by the State Council and the Central Committee of the Communist Party of China, sets out to achieve more balanced urban development by shifting the urbanization-economic growth virtuous circle inland, with the support of high-speed railway networks and the gradual deregulation of the hukou system. Future urbanization will take place in medium-sized cities, where the largest number of rural migrants is expected to become urban hukou holders. According to the plan, permanent urban residents will account for about 60 percent of the population by 2020, while residents with urban hukou should account for 45 percent, against 35.7 percent in 2013.
Meanwhile, China will seek to escape the ‘middle-income trap’ (Gill and Kharas, 2007) and move up towards the high end of the value chain, shifting from a labor-intensive model to a more balanced, competitive economy whereby the service sector is called upon to play a growing part. As stressed by the World Bank, SMEs should be seen as an important source of innovation, and effort should be made to ensure that they are not disadvantaged by regulations (World Bank, 2012). New opportunities to foster economic growth and the resource efficiency of Chinese cities are also provided by recent digital infrastructure policy. China is currently undergoing the development of a nationwide smart grid development that will help optimize electricity consumption. Broadband services are also improving, and by 2020, all urban households should have broadband access, with a speed reaching 1GB per second in some developed cities. Local governments will be able to use ‘Big Data’ analytics to handle complex information (Lacy at al. 2014).
If managed well, urban growth in medium-sized cities may allow innovative ideas to emerge and so give rise to new job opportunities and alternative models of urban development. Therefore, medium-sized cities should not replicate the experience of megacities but turn instead towards new governance approaches and instruments to achieve a smart, sustainable and socially inclusive physical environment in accordance with their size and distinctive demographic transition. They must also develop in accordance with their local assets and territorial capital and not recreate the disconnection between city and region that often affects mega and global cities. On the other hand, while the drawing power of China’s eastern megacities will remain strong, medium-sized urban centers will have to compete with each other to attract people, as they will seek to boost their economies, expand their fiscal coffers and soak up the property supply. In the rush to compete with other urban centers, the possibility of offering better, more “human-centered” lifestyles will be highly valued.

Thus, there is an urgent need to go beyond the current technology-focused framework to address the sustainability issue from a broader perspective and with a more inclusive approach to stakeholder interests. Sustainability instruments such as environmental risk and impact assessment can assist in the realization of this aim to address the full range of economic, social and environmental issues. An area-based approach that pays attention not only to greenfield development, but also to brownfield regeneration would be preferable. The contamination of extensive areas of derelict land poses great challenges to sustainable urban development. Managing environmental problems and reducing negative impacts such as contamination and related risks to human health, or reducing urban sprawl, as well as regenerating these areas, would facilitate opportunities at numerous levels by improving urban health and quality of urban life, and enhancing urban competitiveness.
Medium-sized cities in China are equivalent to large regional or small national capitals in Europe. As such, they can fully benefit from the experience of socio-technical innovations tested in Europe, in countries where cities have been confronted with industrial structural change and foreign migration, but also with other phenomena such as rurbanization or, more recently, the return or movement of populations to rural areas. However, Chinese cities should avoid importing ready-made solutions, and instead seek to use existing resources as a basis for development. This presupposes that local policy-makers and urban stakeholders acquire a thorough knowledge of their own city’s key characteristics, development potential and structural challenges, but framed in a “broader”, regional, knowledge, that also includes the characteristics of rural areas. This is because medium-sized city migrants often come from these, and also because rural areas — which have their own characteristics, assets, potential and know-how — could contribute to the design of more sustainable territorial (rural/urban) development strategies.