The daunting challenges of urbanization

But huge opportunities also beckon for Chinese and European companies

China is witnessing a huge surge in urbanization as millions move from rural areas to bustling urban centers. Although the rise of mega-cities is a phenomenon across Asia, the speed and scale of China's urban development is unprecedented in human history.

Migration to urban centers and the physical expansion of cities and metropolitan areas in China is putting immense pressure on energy resources, environment, health, public funds and basic facilities' services. Many Chinese cities are now battling with congestion and pollution, while rising real estate prices and lack of access to affordable housing are becoming a source of instability.

Urbanization in China still lags behind Europe, where more than 70 percent of the population lives in cities. The challenges of China's unparalleled urbanization will not only affect its growth but also have important implications for other countries.

The European Union and its 27 member states have faced or continue to face some of the similar challenges of city management. The EU-China Partnership on Sustainable Urbanization, launched at the EU-China summit in Beijing in February last year, is a response to these pressing common challenges, and offers new opportunities for expanding and reinforcing EU-China relations.

The EU-China Urbanization Partnership fits with the strategic development targets included in both the Europe 2020 Strategy and China's 12th Five-Year Plan (2011-15).

With an emphasis on "higher quality growth" and "inclusive growth", urbanization is clearly a main feature of the 12th Five-Year Plan.

China's urban centers offer huge development potential and market opportunities for both domestic and European companies.

During China's 11th Five-Year Plan, many European companies demonstrated their comparative advantages in a number of industries and services related to urbanization, such as transport and mobility projects by Germany (Siemens) and France (Alstom), water treatment (Veolia and Suez of France; Thames Water Utilities of Britain), and Scandinavian companies have excelled in energy (Vastas of Denmark) and air purification (Blueair of Sweden).

New urbanization-relevant industries identified by the 12th Five-Year Plan where Europe can play an important role include: green cars, energy-efficiency technology and services, landscape gardening and sewage treatment.

There is a clear strategy to "propel green development and to construct a resource-conserving and environment-friendly society" that covers different aspects of urbanization and provides opportunities for Sino-European partnerships in areas such as resource conservation and management; environmental protection such as the targeted carbon emission per unit of GDP (carbon intensity); and ecological economy such as in increasing the industrial solid-waste comprehensive reuse rate.

Europe can offer a great deal in terms of expertise in urban development. Europe's green-tech companies are especially well placed to provide technological solutions needed to tackle many of China's urbanization challenges.

To reach the urbanization targets within the 12th Five Year Plan, EU-China cooperation will be needed in areas such as water treatment, sewerage, waste management, design (green architecture and so on), landscape gardening, gas purification and energy efficiency technology.

To attract maximum European expertise, China should adopt a truly green culture. Greening cities not only requires advanced technologies, but also enhanced cultural understanding of the importance of sustainable development and the adoption of a green-mentality, holistic approach toward urban planning.

It is important, therefore, to exchange expertise on the urban economy and governance on issues related to urban services, cultural preservation, e-governance and other best practices. There have been many mistakes in Europe concerning urban development, which includes industrial pollution (in cities such as Manchester and London), social segregation, as in the Zones Urbaines Sensibles in France, and enclaves of poverty in major cities' suburbs resulting from geographic and ethnic segregation.

Of course, the volatile real estate markets in a number of European countries also should provide useful lessons for the management of the real estate industry in China.

Last, but not least, Europe's real estate development should focus on affordability, quality of buildings and maintenance, rather than simply look at the quantity of newly built space.

European companies should focus on product innovation and dedicated teams to meet the technical requirements and make more tailor-made or purposefully adapted products for the Chinese market. For instance, cooperation on green buildings and eco-cities should not be a one-way street. In the area of building materials, China has caught up very rapidly and switched from over-reliance on imports to becoming a market leader in quality products.

Many European architectural firms now have a strong presence in China, as well as a China team at their headquarters, to meet Chinese customers' needs and cultural preferences. European enterprises should prepare to adapt to the local demand and business environment in China, explore business opportunities in the country's rising second and third-tier cities and emerging new city clusters in the central and western parts of the country. The EU should also ensure a level playing field in China for European and local companies which can take part and contribute their expertise to ensure successful urbanization in China.

The Joint Declaration on EU-China Urbanization Partnership is an ambitions plan. To be successful, it must be based on a two-way exchange and involve multiple levels of stakeholders such as government, business and civil organizations. European and Chinese institutions can facilitate this exchange by funding joint research initiatives and joint educational programs.

It is important to raise the awareness of a green lifestyle among European and Chinese populations. Setting up pilot projects on green eco-cities twinning partnerships, and other dialogue and training among mayors and public servants on urban management and public services, could help foster these learning processes. The EU and China can work together constructively in tackling the challenge of urbanization by helping to make Chinese cities greener and more sustainable, and by adding fresh dynamics to EU-China bilateral relations.

The author is the associate dean for China and professor of International Affairs at the Essca School of Management based in France.