2. Beijing, Monday, 2 July 2018

Outline of the Day

The day began with a briefing by HE Jan Adams AO PSM, Australia’s Ambassador to the People’s Republic of China. The delegation then held a meeting with the National People’s Congress Financial and Economic Affairs Committee. This was followed by a meeting with representatives of ride-sharing company Didi Chuxing. The delegation met with representatives of three peak NGOs at a lunch hosted by Elizabeth Peak, Acting Deputy Ambassador. The delegation then met with representatives of the China City Development Academy, before attending a reception hosted by Ambassador Adams.

National People’s Congress Financial and Economic Affairs Committee

The first meeting undertaken was with representatives of the National People’s Congress Financial and Economic Affairs Committee. Present at the meeting were Xu Shaoshi (Committee Chair), Yin Zhongqing (Committee Vice Chair), Ouyang Chanqiong (Committee Member), Wang Wenyue (Director, General Office), Gong Fanrong (Director, Proposed Law Office), Li Mingzhi (Director, Economic Affairs Office), and Hou Jibin (Deputy Director).
Mr Xu welcomed the delegation to China.

Figure 2.1:  Meeting with the NPC Financial and Economic Affairs Committee

The delegation being introduced to Xu Shaoshi, Chair of the Financial and Economic Affairs Committee of the National People’s Congress
Mr Alexander highlighted the purpose of the visit. It was, he noted, a celebration of the good diplomatic and trade relations between Australia and China, relations that warranted being taken to a new level. He observed that the delegation was in China to learn about infrastructure and cities, and especially High Speed Rail (HSR). Planning was the key, and China was very successful at planning. Australian had an imbalance of settlement and needed to learn how to rebalance the pattern of settlement. Mr Alexander noted that we would learn from greater engagement. He thanked Mr Xu for his warm welcome
Mr Xu emphasised the strong and growing relationship between Australia and China, highlighting the establishment of diplomatic relations in 1972, the visit of President Xi Jinping to Australia in 2014, the Memorandum of Understating (October 2011) between the National People’s Congress and the Parliament of Australia—which provides for the exchange of visits between the two parliaments—and the visit of the Speaker of the House of Representatives to China in 2017. Mr Xu emphasised that a friendly relationship serves the interests of both countries and urged the promotion of a friendly and cooperative relationship. He noted the close economic and trade relationship between Australian and China, observing that China was Australia’s biggest trading partner.
Mr Xu detailed the rapid expansions of China’s transport infrastructure in recent years, highlighting the growth in rail, road, air, and water transport. He observed that China had integrated planning of comprehensive transport networks. He highlighted China’s capacity to deliver trains, planes and ships of high quality in quantity, and the massive output of new cars—29 million in 2017. He also highlighted the challenges of introducing new technology—the Internet of Things—into transport systems and the problems inherent in increased use of car transport.
Mr Xu urged cooperation between the two countries in the development of Australian infrastructure. He noted the involvement of Chinese companies in the ports sector and highlighted the capacity of Chinese companies to invest in the rail sector. He saw a great opportunity for cooperation and observed that ‘the future is bright’.
In response Mr Alexander observed the strong links that already existed between the two countries and noted the ‘breathtaking’ achievements of the Chinese Government and people in the development of their infrastructure and cities. He highlighted the strong human bond between China and Australia through the significant Chinese-Australian population and observed that Australian businesses measure their success by how much time they spend in China. He highlighted the infrastructure needs of Australia and the lessons that could be drawn from the ‘inspirational’ success of China in the development of its infrastructure—especially the 25 000km of HSR built in a little over a decade. Mr Alexander emphasised the need to plan our infrastructure better, by planning it in advance, attaching it to land use, planning holistically and using value capture mechanisms to pay for it. Mr Alexander also highlighted the cultural diversity of Australia, its strong links to China through the Chinese-Australian community, and the opportunities this presented for both countries.
Mr Xu made observations about the delegation’s program, highlighting China’s achievements in the development of the new Beijing airport, HSR, the development of the ports at Tianjin and Shanghai (which is being redeveloped as a fully automated smart port), and the redevelopment of the city of Chengdu as an accessible, liveable and attractive city. He noted the importance of PPPs for the financing and operation of infrastructure, observing that they were fast and efficient. He also noted the importance of the integrated development and use of land, especially use of airspace and underground space to reduce costs and maximise outcomes in urban development. He observed that China is still a developing country, especially in its rural hinterland, and welcomed the thoughts and opinions of the delegation on China’s future development.
Mr Xu discussed trade developments with the delegation. Both sides highlighted the importance of the China-Australia Free Trade Agreement, and the vital role of free trade to the global economy. Mr Xu noted the impacts of friction between the United States and other countries over trade, urging negotiation and communication rather than conflict. Protectionism was already impacting the international economic recovery. He also noted that while China did not seek a trade war with the United States, it was not afraid of a trade war and would respond to US measures. Mr Xu observed that globalisation was the trend and liberalisation of trade and investment was important.
The delegation highlighted the importance of Chinese investment in Australia and the need for reducing restrictions on trade. Mr Xu noted that China’s National Development and Reform Commission had just released a new policy looking at opening up the services sector, reducing those sectors still subject to restrictions. A timetable had been formulated for opening up finance and manufacturing, especially cars. Mr Xu observed that since opening up its economy forty years ago, China had been supporting foreign investment in its industries, gaining knowledge and expertise. He noted that China’s first free trade agreements were with Australia and New Zealand, that 98% of investment was already open and subject to simple approvals processes, and that China was preparing for a second tranche of the FTA. He observed that the Port of Darwin was an example of joint China-Australia enterprise and was important to the development of Northern Australia. He noted that other investments had not been approved, with the delegation observing that of 1100 foreign investment applications by Chinese entities in 2017, only two had been rejected.
Mr Xu also commented on progress under the 13th Five Year Plan, observing that it was currently under mid-term review. The review would emphasise a move away from high speed growth towards high quality growth, with an emphasis on 3 Walls—avoiding financial risk; lifting rural villages out of poverty by 2020; and dealing with pollution (land, air and water). Mr Xu stated that China would be establishing higher goals for the Five Year Plan under the review—it was not just a review of progress. He noted the need to slow growth to meet targets.
The Ambassador, who was also present at the meeting, thanked Mr Xu for the meeting and emphasised the importance of the bilateral relationship between Australian and China. She emphasised Australia’s support for free trade and multilateralism and welcomed the continuing liberalisation of trade and investment opportunities and the review of the FTA. She highlighted the importance of the complementarity between the two countries and observed Australia’s capacity to help with the 3 Walls—using Australian Liquefied Natural Gas (LNG) for clean energy and access to renewable energy technology and clean coal technology. She emphasised that there needed to be a lowering of size thresholds on financial companies to allow more enterprises to enter the Chinese markets, not just major global institutions. She expressed support for programs to alleviate poverty, highlighting the importance of economic growth, overcoming differences between city and country, and reducing inequality. She highlighted the need for Australia and China to work together for WTO reform. She noted that foreign investment review rejections were rare and involved important concerns. In one case a satisfactory compromise was subsequently negotiated. She also emphasised the strong bipartisan commitment within Australia for an open relationship between Australia and China.
Mr Xu observed that despite some tensions over foreign investment, China was fundamentally optimistic about the relationship with Australia.

Didi Chuxing

The second meeting undertaken was with representatives of Didi Chuxing, a major ridesharing company with investments in Australia. Present at the meeting were, Mr Frank Pang (Vice president), Mr Dillon Ye (General Manager of Australia and New Zealand Region), and Ms Nancy Cheng (Director, Government Affairs).
The meeting focused on the benefits of ridesharing in relieving some of the problems of urban development, principally population, air pollution and congestion. Mr Pang noted that there were six million vehicles in Beijing and restrictions had been placed on vehicle purchase. He noted that China could not afford for everyone to have a car. Smart transportation was the solution.
Mr Ye noted that in China Didi was currently providing 30 million rides per day, had created some 21 million work opportunities, and was working with four thousand small and medium enterprise partners. The foundation of the business was using data and algorithms to match drivers to riders and rides to traffic to reduce rider cost and improve driver income. The key was data. Technology also improved safety through use of risk alerts, panic buttons and safe driving systems which monitor drivers. The system also provided for amber alerts, could utilise emergency equipment, and potentially have vehicles operating as ambulances.

Figure 2.2:  Didi Chuxing

The delegation with Mr Frank Pang, Mr Dillon Ye and Ms Nancy Cheng at Didi HQ
Didi used data to work with city governments to improve transport management, including predicting traffic and traffic management. Technology and infrastructure solutions included smart traffic lights, reversible lanes, smart traffic screens, and automated vehicle solutions. Didi was working with vehicle manufacturers on technological solutions to refuelling, auto care, vehicle renting and short-term leasing. Vehicles were also being customised to ride-sharing in preparation for the introduction of autonomous vehicles.
Didi was a company with global reach, with a focus on investment and involvement in a number of enterprises internationally. It was now working on overseas markets with its own brand and own technology and was looking to expand. Didi was already operating in Australia and was currently testing its product to ensure that the service was compliant with regulation and meeting the needs of the market.
In Melbourne, Didi was operating according to a long-term strategy of gradual and coordinated development. The start point was developing a viable service area centred on Melbourne’s CBD and airport, with a focus on regulatory compliance for long-term sustainability. The idea was to start with rideshare, but move to broader traffic management. Didi was working closely with the state Government in Melbourne. Didi was also looking at renewable energy and electric vehicles in the Adelaide and Sydney markets. Didi was looking to enter the Adelaide market with a large electric vehicle fleet, achieving economies of scale. The development of the smart city approach would ultimately extend to autonomous vehicles. Didi was also conducting a long-term project in Geelong involving the testing and development of their systems. It included opportunities for feedback and a 24 hour hotline. Didi had a long-term commitment to the Australian market and was moving towards a smart transportation model. Didi was involved in direct collaboration with Adelaide University.
In discussion with the delegation, Mr Ye noted that smart transport systems were dependent on big data—highlighting the importance of data security and regulation. Didi was working on local solutions to data requirements. Data access and use needed to be clearly defined and regulated. Limits on access and use were important decisions of government and required legislation. He also explained that the customisation of vehicles for ridesharing did not involve the creation of new vehicles but rather the redesign of security features, access, space and luggage capacity of existing designs to meet the requirements of ridesharing.
Mr Ye observed that Didi was ultimately interested in integrated solutions. Integrating of multiple transport modes, including electric vehicles and buses was already part of their long-term planning.
Mr Pang concluded by highlighting the approach that Didi was taking to urban development. It was focussed on city visions and city solutions, a global company focused on local markets. It was not just about transportation, it was also about technology, with the software as infrastructure.

Smart and Sustainable Cities Lunch meeting

The delegation met with, Barjor Mehta, Lead Urban Specialist, World Bank China Country Office, Qian Guoqiang, Deputy General manager, Sino Carbon, and Fu Xiaotian, China Water Director, World Resources Institute, at a lunchtime meeting to discuss issues around urbanisation, innovation and sustainable development. The lunch was hosted by Elizabeth Peak, Acting Deputy Ambassador. The guests made some specific observations in their fields of expertise before the discussion ranged more broadly over issues of urban development and reform.
Mr Mehta observed that China’s development is unique. China had embraced the global shift towards urbanisation and agglomeration, with the creation of mega cities, nineteen of which had been officially sanctioned. He highlighted the Greater Bay Area development in China’s south as having particular relevance to Australia.
Mr Mehta observed that HSR between major centres had the tendency to ‘hollow out’ the middle. The answer was subregional HSR. He indicated that HSR was about the development of land, commenting that the Chinese model leads to the overdevelopment of land. He indicated a preference for the Japanese model. He observed that compact urban development was vital and that urban sprawl should be avoided. He noted that the Japanese model involved private sector development financed through value capture around stations. He also noted that the Japanese were making cities more compact in order to manage the problem of an ageing population, and were undertaking the coordinated planning of social services.
Mr Qian observed that China was seeking to undertake the decarbonisation of the economy with a whole of government commitment to targets. There was a greater emphasis on renewable energy and reducing the proportion of coal powered generation. Regional development was increasingly focused on creating opportunities for new development in provinces relying on old industries. A greater proportion of energy production was coming from LNG.
Ms Fu noted that China is a water stressed country. One third of China, principally in the north, is subject to high water stress (where use exceeds 40% of available surface water). Moreover, some cities have too much water and are prone to flooding. Water pollution is a critical issue. High levels of waste water treatment are producing large amounts of sludge to landfill. The concept being developed to help combat these problems is the ‘sponge city’, where excess water is absorbed into the environment and used to recharge aquifers. Cities are planned as floodplains. Water diversions use natural landforms. She noted policies such as Ecological Civilisation and the Water Pollution Prevention and Control Action Plan (the Water Ten Plan) as instances of Chinese government initiatives in environmental management. The Ecological Civilisation initiative represents a long term effort to establish a legal and policy framework that facilitates green, low-carbon and circular development, promote afforestation, and strengthen wetland conservation and restoration. The Water Ten Plan is a comprehensive policy directed at controlling pollution discharge, promoting economic and industrial transformation, and saving and recycling resources; promoting environmental management; and clarifying responsibilities and encouraging public participation.
In discussion, Mr Mehta observed that achieving reform is about building consensus and creating a common policy framework. He observed that this was the Chinese approach to development, but that even democracies can build consensus. He gave the example of the New York Regional Plan Association as an example of successful consensus building around urban and regional planning.
Mr Qian noted that government policy in China is not just policy—it is a campaign. The government mobilises the resources of the people and the regions, providing incentives for action.

China City Development Academy

In the afternoon, the delegation met with representatives of the China City Development Academy, a think tank operating under the auspices of the National Development and Reform Commission (NDRC), focussed on urbanisation and smart city research. From the delegation’s perspective, the meeting highlighted the common challenges facing planners in China and Australia. The problems and solutions concerning urban and regional development facing both had many common themes, albeit that in China everything is on a much larger scale.
Present at the meeting were Yan Fengtian (Executive Vice Chairman and Secretary General CCDA; Executive President, Planning and Research institute, International Cooperation Centre, NDRC), Liu Guili (Chief Engineer CCDA; Vice President, Urban and Regional Planning Institute; Vice President, Planning and Research institute, International Cooperation Centre, NDRC), Zhao Xiaosong (Vice Dean, City and Regional Planning Institute CCDA), Shi Yan (Assistant to the President CCDA), Luo Dezhong (Deputy Director, Cooperation Department CCDA), Song Zhihui (Director, Office of City and Regional Planning CCDA), Wang Yuhao (Deputy Director, General office, Planning and Research institute, International Cooperation Centre, NDRC), and Xu Yuxian (Secretary, General Office CCDA).

Figure 2.3:  Meeting with the CCDA

The delegation with staff of the China City Development Agency
In discussions with the delegation, Yan Fengtian, the head of the CCDA, explained the role of the CCDA in the national planning system in China. The CCDA was the national research institution looking at the planning, design and construction of cities and regions, and the gateway institution for the real estate industry in China. The CCDA had 700 technical personal and 120 technicians. The CCDA was originally formed to advise the central government and remained the foremost planning and development think tank in China. It was responsible for much planning work, with a focus on the sustainable and integrated development of cities and regions. The CCDA was also involved in regional planning, such as the master plan for the Greater Bay Area, encompassing the cities and hinterland of the Pearl River Delta. Liu Guili noted that the CCDA provided services for the central and local governments, and private enterprise, and had an early involvement in projects, providing guidance and design.
Yan Fengtian noted that there had been a mix of success and failures in the development of China’s cities and regions. Hard lessons had been learned. He noted, however, that Chinese researchers and planners were able to access knowledge and technology from other parts of the world and that the current generation of planners was now able to focus on modern technology and practice. The CCDA had established the ‘gold standard’ in research and planning in China. He highlighted the importance of international experience—for example, lessons learned from development successes and failures in Japan. The CCDA was part of the International Economic Exchanges Centre, which provided opportunities for exchange of ideas and methods. Yan Fengtian indicated that the CCDA was keen to attract international expertise to assist in China’s development.
Liu Guili discussed trends in regional development including building a cohort of small townships whose development would be focused on local characteristics and industries; reforming rural areas; and making rural areas more attractive to city dwellers—all issues familiar in the Australian context. She also highlighted the development of the Xiong’an New Area, to the southwest of Beijing, which will involve the development of a model city based on modern design principles and smart technology, including the development of smart agriculture.
Luo Dezhong highlighted the importance of technology to the development of China, with an increasing emphasis on smart cities and secure technology based on indigenous and imported technology. The Belt and Road Initiative, China’s major global trade initiative centred on the revival of the Silk Road and maritime trade routes, involved the export of mature technology and the export of entire projects and methodologies. It also created a platform for ‘Global Thinking’—drawing in global experience and expertise.
Discussion turned to the concept of Mega City Disease—the problems inherent in the development of mega cities. Yan Fengtian noted that Mega City Disease was an acute issue affecting Chinese society, and that many of China’s cities were ‘ill’. Beijing’s population exceeded 35 million, although Beijing had only 40% of the GDP of Tokyo. Investment had attracted population, but there had been a substantial lag in the development of infrastructure. Fixing the infrastructure deficit was a key to future development. A new airport at Daxing was under construction, and a major expansion of the city Metro was planned—more than doubling the length of track. Under the 13th Five Year Plan, the central government was developing the Xiong’an New Area. The Beijing City Government was looking at moving people out of the city and greening the city centre. Manufacturing had been moved out of the city and tertiary industries were now 80% of the city’s domestic product. The increasing importance of domestic consumption and private investment was highlighted; as was the focus on regional solutions. Zhao Xiaosong emphasised the importance of rejuvenating rural areas—creating ‘beautiful villages’ and stimulating ecotourism. It was important to play to the strengths of localities including improving infrastructure, greening regions, and creating industries to attract population. Yan Fengtian expressed the view that Beijing’s traffic problems were complex and required government action at a range of levels to resolve.
Liu Guili discussed the NDRC’s regional development plan. The plan had three priorities—industry, environment and transportation. The plan puts Beijing within the context of its region. It proposed to lift the region out of poverty while curing Beijing’s problems. The plan involved moving CBD functions out of the city centre and creating a second city centre. No further land was to be made available for development in Beijing. Ten satellite cities were planned, linked to the capital by rail or metro. Small towns in Hebei province would be developed. The satellites would be linked by HSR or metro. The overall plan represented a systematic approach to the different development needs of different localities. The redevelopment of Hebei would involve road and rail connectivity, new airports, the development of factories, logistics and services. Hebei had land for development and significant development needs.
Yan Fengtian highlighted the importance of technological innovation in the thinking of the central government. The Made in China 2015 initiative promoted advanced manufacturing industries which were essential to China’s development. He noted that China was still developing technologically.
Shi Yan highlighted the Standards for Piloting Smart Cities project which in 2012–15 involved 290 smart city pilots using a common evaluation process, although this was found to advantage larger cities over smaller cities. Twenty five central government agencies were involved in the joint working group. In 2015, a new Smart Cities Program was launched with 100 pilot programs focussed on different city sizes—big, middle and small. Central government investment was provided for 62% of projects, the rest coming from other sources, including private enterprise. The CCDA invited Australian participation.
Yan Fengtian observed the economic and developmental disparities that remained in China. The Pearl River Delta (Guangzhou, Shenzhen, Hong Kong etc.) and the Yangtze River Delta (Shanghai etc.) had advanced economies while many rural and regional areas were still quite backward. Managing this disparity required a coordinated response—it was not just a city or region problem. The central government was anxious to lift living standards in the regions. Experience had taught valuable lessons: private funding follows central government investment; policy mistakes were costly; and the system of policies is more important than individual policies. Development was not the only priority in planning—the aim was systematic planning directed at improving livelihoods.

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