Introduction

China and Switzerland have enjoyed a long history of economic, scientific and cultural interaction built on a solid foundation of mutual respect.  The two countries will be celebrating the 60th anniversary of their formal diplomatic relationship this year, and the fruits of that relationship are already evident. There are a number of city partnerships - Kunming is twinned with Zurich; Changsha with Fribourg; and Beihai with Lugano, just to name a few.

Based on our understanding of the current position of Chinese cities, the considerable potential they hold, this report attempts to analyze the attributes of a world-class city and discuss some of the best practices that will help Beijing move from one of the most important cities in the world to the leading world-class city.

Characteristics of world-class cities

Based on our observations in cities, such as London, New York and Zurich, we would argue that a world-class city features the following characteristics:

It is a destination for top talent, both home-grown and from overseas, who desire to live and work there.

Security, order, rule of law is clear, transparent and non-negotiable.

Advanced urban services infrastructure, sophisticated transportation, reliable public hygiene and medical services, well-developed educational institutions, as well as the availability of recreational facilities and cultural attractions are vital.

A dynamic business environment, which is often marked by a high level of economic deregulation in a city’s labor and financial markets, as well as open trade and foreign direct investment conditions.

A fair and reasonable tax regime.  Indeed, lower personal income tax rates are not necessarily a bad thing for public finances.  On the contrary, cities with lower taxes often enjoy a strong bill of health as they are able to attract a relatively large population of high caliber professionals and entrepreneurs. Hong Kong and Singapore are both examples of this. The contribution that professionals and entrepreneurs make to an economy tends to overcompensate for the effect of reduced income taxes.

Most regional hub cities are characterized by a dynamic service sector and often a thriving financial services industry. A service oriented metropolis depends on, among other factors, a well-educated, English-proficient workforce. It also requires open access to information, supported by state-of-the-art communication facilities at genuinely competitive rates. With regard to the financial sector, a high degree of deregulation, a fully convertible currency and free flow of capital contribute to further elements of competitive strength.

Specific Examples from Beijing and Zurich

It is interesting to note that both Beijing and Zurich share a number of common positive features, although obviously, the size of the Swiss economy and geography only allow for limited comparison.

Recognizing the pivotal value of education, both cities have built a number of world class universities, such as the Tsinghua University and Peking University or the Swiss Federal Institute of Technology and the University of Zurich. Some universities, such as the Peking University, have moreover been particularly successful in teaming up with the business world and in sponsoring the inception of such leading companies as the Beijing Founder Group, which has emerged as a prime force in China’s software, pharmaceutical and financial industries.

Beijing and Zurich have also both been successful in ensuring their economic operating parameters are attractive to existing and new businesses.  Switzerland’s thoroughly deregulated financial markets and the level playing field offered to market participants has led to a further increase in foreign players throughout the recent financial crisis, evidenced by a major Chinese bank having acquired a subsidiary in Geneva.

Developments in Beijing

The evolution and modernization of China is the past three decades is unprecedented. 
The speed at which these changes have been implemented is breath-taking and sets an inspiring example for Swiss and European cities when it comes to planning and implementation, in particular, of state-of-the-art infrastructure projects. At the same time, however it is good to note that Switzerland continues to receive a lot of interest from China on Switzerland’s experience in developing a successful public transport and road network.

As China's capital, Beijing has seen a constant influx of new residents. This has, among others, fuelled a further massive increase in residential prices. Switzerland at various times of her development has witnessed similar challenges as our country continues to be an important destination for immigration. In order to ensure sustainable real estate prices, a number of transactional taxes and ownership regulations had to be introduced aimed at curbing speculation. For example, the profit generated by the sale of a real estate investment within one to two years is taxed at 80 to 90%.

The 2008 Beijing Olympics highlighted the importance of public sports and recreational facilities. The success of the Olympics and the flawless organization and execution is already a significant step forward in making Beijing a world-class city. It also created a number of landmarks, including, of course, the iconic “Bird’s Nest” stadium, designed by Swiss architects Herzog & de Meuron.  It is good to see Chinese city planners’ interest in making use of organic architecture and the generally timeless design that comes with it.

The rapid development of sports facilities has also been complemented by a growing number of cultural institutions and activities, such as the Beijing Municipal Museum, the Beijing Today’s Art Museum, the National Center of Performing Arts and the Beijing Music Festival, offering an increasingly cosmopolitan and diverse range of art genres. 

Conclusion

Today’s Beijing is indisputably one of the most dynamic cities in the world.  While it is challenging to manage a city of Beijing’s size, planning for the city’s next phase is most pertinent as the balance of global economic influence is clearly shifting towards Asia.  And China is leading the charge of that change.


Dr. H. U. Doerig
Chairman, Credit Suisse Group
Beijing, May 26, 2010