Eliza Wong
A New Era in Chinese Urban Development
China’s urban development paradigm is undergoing its most significant transformation since the 1980s. The自然资源部 (Ministry of Natural Resources) has announced stringent measures to curb what officials term the ‘spreading pancake’ expansion model that characterized decades of rapid urbanization. This policy shift represents a fundamental reorientation from quantity-focused growth to quality-driven development, with profound implications for real estate markets, infrastructure investment, and regional economic strategies across China.
The End of an Expansion Era
During a recent State Council Information Office press conference,自然资源部 officials declared strict territorial space use controls and coordinated delineation of urban development boundaries. The ministry explicitly stated its intention to resolutely curb the ‘spreading pancake’ style expansion that has dominated Chinese urban growth patterns. This marks the official end to widespread practices of large-scale demolition and construction, new district development, and municipal mergers that previously drove urban expansion.
Understanding the ‘Spreading Pancake’ Expansion Model
The concept of ‘spreading pancake’ expansion refers to the disordered, leapfrog development pattern where cities expand outward in concentric circles without proper planning or infrastructure coordination. This approach created numerous isolated new towns and industrial parks disconnected from urban cores, leading to inefficient land use and substantial resource waste.
Historical Context and Economic Drivers
For decades, many local governments relied on what experts call the ‘land-debt-development’ model. Municipalities used land sales, real estate development, and financial leverage to stimulate economic growth while expanding their urban footprints. At its peak, statistics show China had planned over 3,000 new urban districts capable of accommodating 3.4 billion people—nearly half the global population—demonstrating the extreme scale of this expansion mentality.
The中央城市工作会议 (Central Urban Work Conference) last month introduced the ‘two transitions’ framework: urbanization shifting from ‘rapid growth’ to ‘stable development’ and urban development moving from ‘incremental expansion’ to ‘stock quality improvement.’ This represents the most substantial policy shift in Chinese urban development in four decades.
The Three Red Lines: New Constraints on Urban Expansion
The newly approved 2035 master plans establish three critical boundaries that will fundamentally constrain urban expansion patterns. These ‘three red lines’ comprise cultivated land and permanent basic farmland protection, ecological conservation red lines, and urban development boundaries.
Urban Development Boundaries in Practice
The urban development boundary specifically dictates the spatial limits for city expansion and determines the scale available for industrial, commercial, and residential land use. Regulations now prohibit concentrated urban construction outside these boundaries, banning development of various industrial parks and residential areas beyond designated zones.
Among state-approved cities, more than 20 have development boundaries exceeding 1,000 square kilometers, with nine cities surpassing 2,000 square kilometers. Beijing, Chongqing, Shanghai, and Tianjin lead in development area allocation due to their provincial-level administrative status. Among non-provincial-level cities, Suzhou, Chengdu, Guangzhou, Zhengzhou, and Qingdao all exceed 2,000 square kilometers in developable area.
Notably, Suzhou’s development boundary surpasses those of Guangzhou, Shenzhen, and Hangzhou, highlighting the city’s exceptional policy standing despite its non-provincial capital status. This preferential treatment reflects Suzhou’s position as China’s second-largest industrial city and its strong county-level and industrial park economies.
Urban Development Intensity: Measuring Land Utilization Efficiency
Beyond absolute development area, urban development intensity—measuring what percentage of land is available for construction—provides crucial insights into city planning strategies and economic priorities.
Regional Variations in Development Intensity
Among major state-approved cities, only six exhibit urban development intensity exceeding 30%, with just eleven surpassing 20%. These high-intensity cities are predominantly economic powerhouses or manufacturing centers. Shenzhen, Dongguan, and Shanghai all demonstrate development intensities exceeding 50%, while Foshan, Wuxi, and Suzhou surpass 30%.
Shenzhen presents a particularly interesting case. Despite ranking mid-tier in development boundary area, its development intensity leads nationally with over half its land allocated for construction. With less than 2,000 square kilometers accommodating 18 million people, Shenzhen has developed the Shenzhen-Shanwei Special Cooperation Zone 100 kilometers away as its ’10+1′ district while establishing industrial enclaves within its metropolitan area to expand development space.
Conversely, cities like Lanzhou, Kunming, Nanning, Harbin, and Shijiazhuang show development intensities below 10%, reflecting challenges faced by extensive administrative-area cities where urban cores represent small portions of total territory.
Population Ceilings: Defining Urban Capacity Limits
The 2035 master plans establish population ceilings based on resource carrying capacity, economic development considerations, and population mobility patterns. These ceilings serve as basis for public resource allocation and infrastructure planning.
Two-Tier Population Metrics
Cities must now plan around two population metrics: permanent resident population上限 (upper limits) and actual management and service population. The latter includes permanent residents plus temporary populations such as business travelers, tourists, and visiting relatives, providing a more comprehensive measure of resource demands.
Chongqing leads with a 2035 permanent population ceiling of 36 million, followed by Beijing, Shanghai, Guangzhou, and Chengdu at over 20 million. Shenzhen’s ceiling stands at 19 million, while Zhengzhou, Suzhou, and Tianjin approach 18 million. Wuhan, Xi’an, Hangzhou, and Changsha all exceed 15 million.
When considering actual service population—typically calculated as permanent population plus 20%—over ten Chinese cities will join the 20-million population club. Guangzhou and Chengdu project 25 million actual service populations by 2035, Shenzhen anticipates 23 million, while Hangzhou, Wuhan, Zhengzhou, Xi’an, and Tianjin all approach 20 million.
Remaining Population Capacity: Growth Opportunities and Constraints
Analysis of remaining population capacity under 2035 ceilings reveals significant regional variations with important implications for future development and investment patterns.
Megacity Capacity Constraints
Shanghai shows virtually no remaining population capacity, while Beijing maintains strict controls. Shenzhen has approximately 1 million remaining capacity, compared to Guangzhou’s 300,000+. Second-tier cities generally maintain more substantial growth capacity, with most showing over 2 million remaining population space.
Chongqing, Tianjin, Zhengzhou, Changsha, and Suzhou all maintain over 4 million remaining capacity. Nanjing and Hefei exceed 3 million, while Wuhan, Xi’an, and Hangzhou all maintain over 2 million. Adding 3-4 million people over 15 years implies annual growth of 200,000-300,000 people—a challenging target given China’s declining birth rates and slowing urbanization.
As officials emphasize, urban development space doesn’t automatically translate into development potential, nor does population capacity guarantee demographic attraction. Only through industrial strength can cities develop fundamental and sustainable competitiveness in China’s new urban development paradigm.
Strategic Implications for Investors and Developers
This policy shift creates both challenges and opportunities for market participants. The era of extensive land development and property-led growth has conclusively ended, replaced by more nuanced, quality-focused urban development models.
Investment and Development Considerations
Investors should focus on cities with sufficient development capacity and strong industrial fundamentals rather than simply pursuing geographical expansion opportunities. The new urban development model favors cities that can achieve intensive, efficient land use while maintaining sustainable population growth within ecological and resource constraints.
Market participants must recognize that future growth will come from quality improvements rather than quantitative expansion. This means prioritizing projects that enhance existing urban infrastructure, improve resource efficiency, and create sustainable living environments rather than pursuing greenfield development opportunities.
The遏制“摊大饼”式扩张 (curbing the ‘spreading pancake’ expansion model) policy represents both a constraint and an opportunity. While limiting traditional expansion-based development, it creates new possibilities for urban regeneration, infrastructure upgrading, and quality-focused real estate development that aligns with China’s new urban development paradigm.
Navigating China’s New Urban Reality
China’s urban development policy shift marks a fundamental transformation in how cities grow and develop. The遏制“摊大饼”式扩张 (curbing the ‘spreading pancake’ expansion model) initiative reflects broader recognition that sustainable urban development requires quality improvement rather than quantitative expansion.
For investors, developers, and policymakers, success in China’s new urban environment will require understanding these constraints and opportunities. The cities that thrive will be those that maximize their development intensity within established boundaries while building competitive industries that attract population within their allocated ceilings.
The transition from expansion-focused to quality-driven urban development represents both challenge and opportunity. Those who adapt to this new reality—focusing on efficient land use, sustainable development, and quality improvement—will find significant opportunities in China’s next chapter of urban development.
