December 17, 2015

Chinese City Clusters Struggle to Curb Environmental Degradation, Finds Joint Study by Accenture and Chinese Academy of Sciences

“Internet Plus” holds the key to sustainable urban development

Beijing; Dec. 17, 2015 – China’s city clusters are struggling to prevent the spread of resource depletion and environmental degradation from mega cities to smaller urban centers, according to a new research report by Accenture (NYSE: ACN) and the Chinese Academy of Sciences (CAS). The study also shows how digital technologies can support sustainable urban development.

The New Resource Economy City Index Report 2015 assesses the sustainable development capabilities of 100 Chinese cities using a scorecard to measure economic performance, resource efficiency and environmental sustainability, and capabilities for supporting future development. The three factors form the basis of what Accenture and CAS call the New Resource Economy. The report follows the first Index which was published in 2013.

Shenzhen tops the rankings for the second time. Its high performance is helped by a rise from 10^th place to 1^st place in resource and environmental sustainability. Beijing and Shanghai, each with a population exceeding 20 million, rank 19^th and 18^th respectively in resource and environmental sustainability. While Taizhou, Guangzhou, Fuzhou and Shenyang have significantly improved resource and environmental sustainability, Yantai, Hangzhou, Dalian, Hefei and Changsha have declined in performance.

The report focuses on the sustainable performance of city clusters, a priority of regional economic development policy. It finds that although economic development has flowed from mega cities to smaller urban centers within clusters, so too has environmental degradation, contrary to policymakers’ expectations. The report notes that this is especially the case when mega cities have not yet completed their transition to New Resource Economy growth models and have insufficient capabilities that limit their environmental sustainability improvement to their own boundaries.

Of the five major city clusters, the Pearl River Delta area and Yangtze River Delta enjoy satisfactory overall performance but have the greatest gap between the economic growth and their resource and environmental sustainability; the Chengdu-Chongqing area and the middle reaches of the Yangtze River need to further develop high value-added industries while attaching importance to environmental protection; and the Beijing-Tianjin-Hebei area face the most pressing resource and environmental challenges.

The report recommends that city authorities can make the transition to a New Resource Economy through more effective integration of social, environmental and economic capabilities, including infrastructure, technology, institutional and managerial innovations, and digital applications. Accenture and CAS suggest that the Chinese government’s Internet Plus strategy, which aims to drive the adoption of digital technologies and business models throughout multiple sectors, could contribute to more resource efficient and environmentally sustainable urban development. The report found that cities that are more capable at applying the Internet Plus are also better at combining economic performance with resource and environmental sustainability and future development potential.

“The emergence of city clusters in China does not naturally alleviate ‘urban diseases’,” emphasized Shi Minjun, assistant director of CAS’s Research Center and professor of Renmin University of China. “The central cities in a region should, based on their strategic positioning, join forces with neighboring cities to achieve transformation. In doing so, they should step up efforts to be innovative and resource efficient in achieving sustainable economic growth.”

“The rapid application of digital technologies helps to introduce innovative business models that turn energy and resource efficiency into innovative growth drivers in many sectors,” said Li Guanghai, managing director of Accenture Strategy, and Sustainability Services lead, Greater China. “China’s 13^th five-year national development plan has, for the first time, included improved ecological civilization as one of its ten major goals. We urge both cities and business leaders to attach equal importance to the Internet Plus and to the New Resource Economy as they work jointly to improve the liveability and competitiveness and sustainability of Chinese cities.”