Partner Article
Spring Term at New Street Towers
The first intriguing statistic of the year came across my desk yesterday – there are more Chinese citizens living in cities in China than in the countryside. According to figures published by the Chinese government, 51.3% of the population or 691,000,000 people or 11 times the size of the UK population now live in cities. Attracted away from the countryside by the prospect of job opportunities in these rapidly growing urban areas, the balance in favour of City dwelling has shifted rapidly . Only a few years ago only 20% of the Chinese population lived in cities.
Incidentally, the equivalent milestones were reached in the UK in 1851 and in the US in 1920. Interestingly, both milestones occurred following times of financial crisis and were a pre cursor to the commencement of economic growth.
1851 also coincided with the Wall Street Journal going into print for the first time. In the first edition a market collapse on Wall Street was chronicalled. It reported that market panic “is not a serious interruption of the ordinary channel of prosperous enterprise, but a threatened stampede of terrified stock holders, operators and directors”.
Despite this market panic, the Wall Street Journal also had the time to report upon the progress with laying the first transatlantic telegraph cable, “the establishment of an electric telegraph between Old and New continents is enterprise which has no precedent in the annals of mechanical engineering, the object proposed being nothing less than the annihilation of distance in respect of one of the great gulfs which has been placed between the East and the West – opposite halves of the habitable world”.
So the year in which the majority of the UK’s population was recorded as living in urban areas, there was a background of financial distress. Against which can be set the optimism of technology which sought to change the established order.
From 1851 equity markets recovered and by 1920, the year in which the US urban population exceeded its rural population, economies around the world were growing as nations rebuilt following the First World War. Wages and savings increased and together drove equity markets to higher levels.
Therefore, is it the case that the moment the urban population exceeds the rural population in a major high growth economy, but this is seen as an indicator of worldwide growth?
If the theory works this time, then this weeks news from China could signal that the last quarter of 2011 was the “darkest hour” and we can look forward to a one-way street of economic prosperity from here on. What is today’s equivalent of the electric telegraph cable? Look no further than the agreement reached on Monday between the UK Government and the Hong Kong Monetary Authority regarding London becoming the first off-shore centre for trading Chinese currency. Such global trading activity linking capital around the world and “annihilating” the distance between financial centres.
So there is light at the end of the tunnel if the urban population/economic growth theory does hold-up this time then we have the Olympics to look forward to in any event.
2012 will be the year of opportunity and the challenge is to spot the opportunity and then go for it!
This was posted in Bdaily's Members' News section by Tim Stocks .
Enjoy the read? Get Bdaily delivered.
Sign up to receive our daily bulletin, sent to your inbox, for free.