Introduction

First of all, I would like to express my heartfelt sympathy to the victims of the major earthquake that struck Yushu in Qinghai Province, China, last April. At the same time, we sincerely hope that the assistance and recovery activities advance smoothly and the affected people overcome such painful experience and restore normal life at an earliest possible date.

We also would like to express our deep respect to President Hu Jintao, Prime Minister Wen Jiabao and other government officials for their prompt hands-on rescue efforts.

Let me talk about today's topic. The recent worldwide recession seems to have peaked, with the economy of many countries showing signs of recovery. Especially China recorded an outstanding growth of 8.7% last year, exceeding the initial target at the beginning of the year of 8.0%, due to the effective stimulus measures the government implemented in the face of the crisis; the country is expected to record a high growth this year as well.

We can attribute such fastest recovery of China to two major factors: a "very deep sense of crisis" shared by the whole nation in the face of the crisis and "aggressive political measures" implemented by the governmental leaders. Again, we would like to express our admiration and respect for their prompt decision.

Recently, China has been solidifying its position as the "world's leading market" in addition to the "world's manufacturing center." It would be no exaggeration to say that China is "the world's largest source of demand" and also "a savior for the world economy." From the enterprises’ perspective, we believe we will not be able to further grow without incorporating China into our growth strategies.

Last year, China has replaced US as the biggest importer of Japanese products. Also, it is highly likely that in the first half of this year, the nation's total GDP will surpass that of Japan, taking the 2nd place in the world. Japan's GDP has remained in the 2nd place since it superseded West Germany in 1968 but is likely to be superseded by China for the first time in 42 years. However, Japan has neither recognized that it is undergoing a historic turning point nor has a reasonable sense of crisis. The Japanese society as a whole, including its politics and economy, has suffered from a sense of stagnation. In addition, the country seems to lack the spontaneous and outpouring energy that can help change the situation. We believe this is the biggest cause of the stagnation for Japan, in contrast to China.

160 years ago, Napoleon III said "When China wakes up, the world will shake." His prediction has become reality. 

I feel strongly that Asian countries, especially China, have been increasingly important for Japan and Japanese enterprises pursuing sustainable growth.

Inter-city competition and role of Beijing City

Now, let me brief my thoughts about the "future development of Beijing" based on my past experiences. I would like to present the basic direction and ideas rather than a specific proposal. I would greatly appreciate your frank opinions and suggestions.

I believe what is most important and critical to the development of a city is to build an environment that helps attract a lot of visitors from home and abroad, namely to build an "attractive city." 

Focused efforts and endeavors by both the private and public sectors to "create liveliness" are indispensable for the development of a city. It is hoped that a city serves as a model in all respects for other regions both domestically and globally.

Today, it appears to me that the "competition among cities" is harsher than the "competition among countries" globally. The bids by cities to host an Olympic game or international conferences are good examples. In fact, Beijing hosted an Olympic game two years ago and achieved a stunning success. I believe the city is currently in the process of further development with the Olympic game as a trigger. I mean, hosting the game is just a starting point for future development and not an ultimate goal. Therefore, cities making constant efforts for future development should be way ahead of those failing to make such efforts after 10 years, for example.

In short, the cities that survive "inter-city competition" should have the greatest growth potential.
Tokyo had achieved a significant growth since it hosted an Olympic game in 1964. Today, however, Tokyo is struggling with problems inherent in big cities including financial, transportation, safety and environmental problems. In fact, Tokyo is losing its growth momentum to the extent that many suggest it will be overtaken by Beijing and Shanghai after 4-5 years and by Singapore after 10 years.

The rise and fall of a city often foreshadows the future direction of the country. This means a city is given significant role and responsibilities in terms of the development of the country.
When we hear the phrase "market economy," we usually think of an intensified competition among countries or enterprises. However, I would like to draw attention to the fact that this also includes the competition between cities or regions.

China has experienced "inter-city competitions" domestically, and therefore I believe the country should have been prepared to survive potential "inter-city competition" on a global basis.
Although the foresight and leadership of the government leaders, and people's "desire for affluence" have been the major drivers for China's outstanding growth, there is no doubt that intensified competitions among provinces and cities have been the "behind-the-scene drivers" for its growth. Especially, cities in the coastal regions have continued to compete with each other in their "pursuit of affluence." Although such competitions and subsequent development of part of these cities have led to negative results including a disparity among regions, there is not doubt that the "inter-city competitions" within the country have contributed to the growth of China. 
The intensified competitions are still underway among 3 provinces in the north-east region, 6 provinces in the central region and 12 provinces/cities in the west region, with the coastal region serving as the model for growth.

I often travel across China and witness such competitions. The "regional disparity" is often referred to as a "negative phenomenon" representing the unequal development of the country. However, I have felt uncomfortable with the idea for a long time because such disparity can drive and trigger growth. I believe people's longing for affluence have good ripple effect to underdeveloped regions.

China used to put up slogans like "Learn engineering from Daquing" and "Lean agriculture from Dazhai." The regional disparity is not necessarily bad. I myself believe it is fortunate for the country to have a paradigm where a developed model region leads other underdeveloped regions.

Asia experienced a similar phenomenon in 1970s - 1980s which is called "Economic Development Based on Flying Geese Model" where Japan served as the goose flying ahead of the flock to lead the development of relatively underdeveloped other Asian countries. As a matter of fact, this model has proven successful.

Beijing needs to function not only as the capital of China but also as the model for the other provinces and cities of the country; Beijing is given significant role and responsibilities to set a good example for other regions in China.  To ensure this, Beijing has to commit to continued reform and constant development in all respects.

For Beijing to commit to continued reform, it must be the "city that never sleeps."

What is expected of Beijing as a model city

Next, let's discuss what is expected of Beijing as a model city both domestically and globally. Before discussing this topic, we need to take into account the "form of the country," and the history and culture of Beijing, more briefly the "particular circumstances of the country."
The expertise and techniques that were proven successful in other countries may not necessarily contribute to the development of Beijing, and thus, just transferring them to Beijing may not be effective.  Beijing clearly reflects such "particular circumstances" of the country in that it is the capital of China. Reform without regard to such "particular circumstances" of the country is more likely to turn out to be a pie in the sky. China has a saying: "Chinese leaning as the essence, Western learning as the tool" (similar to the Japanese saying "Japanese spirit with Western learning"). This implies that the country should learn advanced knowledge and techniques from western countries while retaining the history and culture of China at the foundation, which also applies to the reform of Beijing City. The reform of Beijing City needs to reflect the "particular circumstances" of the country (or "Chinese learning as the essence"). I recently With respect to this, the important lecture on February 3 this year by President Hu Jintao titled "Pursuit of Scientific Concept of Development and Transformation of Policy on Economic Development" gave me a kind of insight. The lecture was about a nationwide proposal, but I believe the proposal is fully applicable to Beijing, the country's capital, or should be applicable to Beijing before being applied nationwide.

1. The lecture by President Hu Jintao and what Beijing should do

(1)The global financial crisis underscored the problem associated with the transformation of the country's policy on economic development. Although the crisis only hurt the economic growth rate on the surface, it actually "hit the form for economic development."

→ Beijing City should establish a "city development model" for stable economic growth at an earliest possible date. I recommend that the mayor of Beijing create and articulate a comprehensive vision for the 21st century incorporating the economy/culture/people's lifestyles. The vision should not be drafted only within the city but should reflect the views and opinions of citizens through advisory bodies, for example. Also, the timetable should incorporate specific actions for building a model city and such actions should involve all citizens. The most important macroeconomic measure here is to expand domestic demand for sustainable growth. Beijing should take the lead in reviewing the conventional development form heavily dependent on exports and transform it into a more powerful form where an increase in exports drives domestic demand. The ratio of domestic demand for Beijing is 60% which is higher than the national average of about 40%. It is critical for Beijing to lead the flock of geese to ensure that the ratio increases to 70 - 80%, a level equivalent to that of developed nations.

(2)Accelerating the adjustment of industrial structure

→ The current industrial structure heavily dependent on secondary industries including the heavy industry (approx. 50%) should be transformed so that the proportion of service industries can be much higher, prior to the nationwide review. The ratio of tertiary industries is 80% or higher in some cities of developed nations including NY and Tokyo, which I believe may be used as a benchmark.

(3)Accelerating independent innovation initiatives

→ Beijing should take the initiative and set a good example for China that boasts itself as a "scientific technology-oriented country." One of the critical tasks for the city is to take the lead in the initiatives for a long-term economic development by fostering human resources with expertise in scientific technology and its development.

(4)Establishing eco-friendly civilization

→ Beijing should transform itself into an "advanced city in terms of environmental protection" at an earliest possible date. Beijing has the significant responsibility to ensure that the slogan "Learning environmental protection from Beijing" spreads nationwide. Each country in the world is now required to bear reasonable responsibilities and burden in order to reduce greenhouse gas. Tokyo also has put forward a number of energy-saving initiatives prior to the Japanese government. During Beijing Olympic 2 years ago, "Green Beijing" was used as a slogan. The important thing is to sustain such momentum. Continued efforts pay dividends.

(5)Promoting harmonized development of economy and society

→ Social reform focused on the improvement of people's livelihood should be promoted. It is required to accelerate the qualitative economic growth especially through active initiatives for improving the level of education and expansion of job opportunities, which I believe will help substantiate "Scientific Concept of Development" centered on the ideas like "putting people first" and "harmonious society."

(6)Accelerating development of cultural industry

→ Beijing, as the capital of China, should seek to become a "matured city of culture and arts" with cultural attractiveness and full of arts. The dynamism of a city is attributed not only to economic strength but also to cultural strength which is also a source of attraction.

(7)In transforming the form of economic development, a long-term vision is important equally     to the speed of such transformation.

→ Transforming the form of economic development takes a long time. A conflict of interest with those with vested interests cannot be avoided.

2. Challenges Beijing must face in order to become a "global city" and their possible solutions

(1)"Water issue"

"Water" is the key to sustainable development of Beijing. Although this is a national issue, a chronic water shortage and declining water quality can pose the greatest threat to the growth of Beijing where the population is overly large and the precipitation is limited.

Beijing should declare its commitment to transforming itself into the "best water-saving city" in the world and implement initiatives for optimal management of industrial water and domestic noncommercial water, water saving and incentives to use recycled water, as precipitation is climate dependent and thus cannot be increased artificially.  Beijing is encouraged to deliberate a new scheme where it constructs on its own the "gray-water system," of which construction is likely to be delayed due to upfront cost, and collects the money invested from water charges, for example. 

Tokyo also suffered water shortage almost every summer during the period of high economic growth due to excessive concentration of population and industry there; Tokyo was sometimes called "Tokyo Desert" back then. In case of Tokyo, the water resource development at nearby Tone River was key to fundamentally solving the issue. In case of Beijing, it needs to address the pressing issues including the scheduled construction of a dam and/or water and sewage plants by providing the maximum supports to the national government including cost. 

(2)Infrastructure improvement

(i) Transportation infrastructure

Beijing currently fails to meet commuters' demand due to delayed improvements of transportation infrastructure.  Also, the traffic congestion resulted from overpopulation has adversely impacted the people's quality of living, as well as its efficiency and productivity as an international city.

Beijing Olympic helped significantly accelerate the construction of subways and its total operating length reached more than 200km. However, buses still seem to account for the largest proportion of all public transportations in Beijing. In contract, railways account for more than 90% of all public transportations in metropolises like Tokyo, London, Paris and New York. Railways are very efficient means of transportation in many aspects, including transport capacity, less emission of greenhouse gas, and higher emery saving, and thus, their scheduled expansion is desirable. In Tokyo, the increased interconnection between subways in Tokyo and railways in neighboring areas has helped significantly improve their convenience. When constructing/improving subways, an optimal collaboration with other railways is quite important.
China is one of the countries where bicycles are heavily used by citizens, though the number seems to be decreasing in urban areas. To facilitate the use of bicycles while ensuring safety and eliminating accidents, I believe Beijing needs to build cycling roads like many European nations.

(2) Energy saving related

I recommend that Beijing accelerate the introduction of photovoltaic systems by promptly establishing a special committee to set specific numerical targets, building on PDCA cycle annually and promote relevant projects in a planned manner.

Also, how about introduce a new regulation to require new condominiums to be built with photovoltaic systems?  However, this will need specific incentives like providing subsidy to cover part of the initially invested cost, and tax exemption on property acquisition. Without a mechanism that allows for collection of invested money, the plan will not work and will be just a pie in the sky.

(3) Signs in multiple languages (including other than English)

To ensure that Beijing becomes an international city that people of different nationalities and languages would love to visit, it needs signs in multiple languages including English. Also, it may be a good idea to introduce pictograms which even children can understand visually, though it seems they have yet to be fully popular. I would like to recommend that you invite talented industrial designers from around the world, let them design original pictograms and deliver them to the world.

Although we understand from the information given, the government leaders in China have a deep sense of crisis concerning the sustainable economic growth, it is difficult to introduce their plans nationwide at the same time. I would like to emphasize again that what is most important is Beijing takes on the role and responsibilities to set a good example for all other regions in China.

Finally, I would like to introduce a brief story about Torahiko Terada, a geophysicist and an essayist well known in Japan. After he was struck by the major earthquake called "The Great Kanto Earthquake" in 1923, he left a famous remark, "A natural disaster strikes when people lose their memory of the previous one," which is familiar to most Japanese people. He compared a society to a higher-order animal and fixed-wire and traffic networks to nerves and blood vessels and said that even a single failure or malfunction can lead to the collapse of the entire society. An earthquake in a big city can result in an unrecoverable disaster. No one could predict the earthquakes in Sichuan and Chinghai. No one can predict when and where the earthquake will occur next time. The most urgent task for a big city like Beijing is to "enhance disaster prevention functions" as early as possible.