China and India are in the vanguard of a wave of urban expansion that is restoring the global prominence that Asia enjoyed before the European and North American industrial revolution. By 2025, nearly 2.5 billion Asians will live in cities, accounting for almost 54 percent of the world’s urban population. India and China alone will account for more than 62 percent of Asian urban population growth and 40 percent of global urban population growth from 2005 to 2025.
In 1950, India was a more urban nation than China (17 percent of the population lived in cities, compared with China’s 13 percent). But from 1950 to 2005, China urbanized far more rapidly than India, to an urbanization rate of 41 percent, compared with 29 percent in India. New research from the McKinsey Global Institute1 expects this pattern to continue, with China forecast to add 400 million to its urban population, which will account for 64 percent of the total population by 2025, and India to add 215 million to its cities, whose populations will account for 38 percent of the total in 2025.
Never before in history have two of the largest nations (in terms of population) urbanized at the same time, and at such a pace. This process will drive fundamental shifts—in both countries—which will have significant consequences for the world economy and offer exciting new opportunities for investors.
Comparing urbanization in China and India