Once the heart of the US auto industry, Detroit has filed for the biggest municipal bankruptcy the nation has ever seen.
This city has experienced rises and falls during its development path. The Ford Motor Company, founded in the early 20th century, and other automotive pioneers reinforced Detroit's status as a cradle for auto assembly lines and a symbol of industrial might.
As the auto industry and Detroit were synonymous throughout much of the 20th century, the city drew tens of thousands of new residents, creating many job opportunities. Nearly 80 percent of the locals worked in auto-related fields.
However, the economic downturn that swept all of the US and later the world in 2008 has led to a decline in the purchase of automobiles and therefore a decline in production volume. The auto industry was forced to a precipice. The drop in the employment rate and the exodus of workers meant that the city generated fewer and fewer tax revenues, exacerbating the city's financial woe.
In contrast, observe the US city of Pittsburgh. It used to be a city of smog, with steel being its primary industry. With most of the steel plants closed down and replaced by booming healthcare and tourism industries, it has successfully transformed into one of the most livable cities.
The tales of these two cities may offer some lessons for China during the transformation process of the country's industrial cities.
Since the founding of the People's Republic of China, many cities have relied on a single industry to boost the local economy and have contributed greatly to the country's overall development, such as the "steel city" Anshan, "coal city" Datong and a number of oil-producing cities across China. After decades of exploration and consumption, these resources may be used up sooner or later. These cities will eventually come to a crossroads and have to find a way out.
Those solely depending on a single resource represent a warning. The photovoltaic industry used to be pillar among local industries in places such as Jiangsu and Zhejiang provinces. As the global solar industry faces a grim outlook, Chinese photovoltaic giant Suntech Power in Wuxi, Jiangsu Province announced bankruptcy in March, impacting the prospects for development in the region.
China's urbanization is advancing at a fast pace. Many cities haven't experienced the pain of a decline. If a city simply pins its hope on a single enterprise or industry, when an economic downturn strikes, the city may risk falling behind.
Last year, Chinese Premier Li Keqiang stressed the importance for resource-dependent cities to speed up the transformation of their industries when he was the vice premier. The bankruptcy of Detroit shows that a sense of urgency is necessary.
Sunday, July 21, 2013
Detroit bankruptcy shows need for economic diversity
Once the heart of the US auto industry, Detroit has filed for the biggest municipal bankruptcy the nation has ever seen.
This city has experienced rises and falls during its development path. The Ford Motor Company, founded in the early 20th century, and other automotive pioneers reinforced Detroit's status as a cradle for auto assembly lines and a symbol of industrial might.
As the auto industry and Detroit were synonymous throughout much of the 20th century, the city drew tens of thousands of new residents, creating many job opportunities. Nearly 80 percent of the locals worked in auto-related fields.
However, the economic downturn that swept all of the US and later the world in 2008 has led to a decline in the purchase of automobiles and therefore a decline in production volume. The auto industry was forced to a precipice. The drop in the employment rate and the exodus of workers meant that the city generated fewer and fewer tax revenues, exacerbating the city's financial woe.
In contrast, observe the US city of Pittsburgh. It used to be a city of smog, with steel being its primary industry. With most of the steel plants closed down and replaced by booming healthcare and tourism industries, it has successfully transformed into one of the most livable cities.
The tales of these two cities may offer some lessons for China during the transformation process of the country's industrial cities.
Since the founding of the People's Republic of China, many cities have relied on a single industry to boost the local economy and have contributed greatly to the country's overall development, such as the "steel city" Anshan, "coal city" Datong and a number of oil-producing cities across China. After decades of exploration and consumption, these resources may be used up sooner or later. These cities will eventually come to a crossroads and have to find a way out.
Those solely depending on a single resource represent a warning. The photovoltaic industry used to be pillar among local industries in places such as Jiangsu and Zhejiang provinces. As the global solar industry faces a grim outlook, Chinese photovoltaic giant Suntech Power in Wuxi, Jiangsu Province announced bankruptcy in March, impacting the prospects for development in the region.
China's urbanization is advancing at a fast pace. Many cities haven't experienced the pain of a decline. If a city simply pins its hope on a single enterprise or industry, when an economic downturn strikes, the city may risk falling behind.
Last year, Chinese Premier Li Keqiang stressed the importance for resource-dependent cities to speed up the transformation of their industries when he was the vice premier. The bankruptcy of Detroit shows that a sense of urgency is necessary.
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