Are China’s megacities an insurance challenge or opportunity?

By 2025, China is expected to house over 1 million inhabitants in 221 cities – news which will bring the urban population up to 1 billion and pose both an insurance opportunity and a challenge.

Guangzhou China

Natural risks

One of China’s major challenges is their vulnerability to natural threats; especially as two of China’s megacities (Beijing and Tianjin) are defenseless against earthquakes.

In fact, since 1965, some of the world’s most expensive natural disasters have struck China. This figure has greatly affected insurance statistics.

Many believe that China will undoubtedly become a major catastrophe zone for the reinsurance industry after the European windstorm, the USA wind and quake and the Japanese wind and quake.

When costs from rebuilding the Sichuan province after the 2008 earthquake are factored in, China’s megacities could become more of a challenge especially as there’s more than one concern to worry about with floods and typhoons also high risk in these areas.


Current figures show the proportion of urban residents to China’s total population to be 53.7%, which is lower than the typical developed nations. Over a span of 10 years, the government hopes to push this figure up to 70%.

Placing a mass of individuals in one urban space poses numerous challenges. There must be sufficient resources to move people from A to B and enough assets to go around. Urban planning and durable buildings are just one consideration to factor into the equation.


Engineering and technological expertise are also expected to play a hugepart in tomorrow’s big cities. Optimists see a new network of powerful, stable and prosperous city states and in 2010, China surpassed the USA as the world’s principal car market so transportation will be one of the top assets to focus on.

In 2013 alone, the number of cars sold reached a figure of over 20 million.

Other investments must focus their attentions on underground subways and high-speed rail, as well as alternative mass transport devices. Many of these groundwork projects are already taking place and in 2012 the government sanctioned 25 new subway projects investing over $127 billion in the process.

Natural resources

One of the major challenges China is facing is the tension on natural resources, such as water. With precipitation at less than half the usual levels, Henan in central China is currently suffering from a drought which is disturbing food production and limiting drinking water supplies.

Northern China’s water supply is of major concern too – last year it was the lowest it has ever been in 60 years. China needs to figure out how to secure this water supply to support the lives of the people.

To tackle this challenge, various projects are now in place, including the impressive South-North Water Diversion Project that is said to cost in the region of $50 billion. Once finished, its purpose is to move water along 2,000 miles of canals running from the Yellow River in the north to the Yangtse in the south with some of the water paths intended to run across the Himalayan plateau.

Having concentrations of people and assets in close proximity creates other megacity weaknesses. Natural catastrophes, pandemics, climate change and pollution are all greatly exaggerated in densely packed urban environments, especially one that starts with a population of over 10 million!'

Author: Andrew Darrow

Andrew is News Editor at Agenda Daily. He enjoys working online for the variety, speed and reader interaction. He has been a featured writer for more than 2 years, covering everything from geopolitics and business to current events, sports and technology.

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  • Juliet_3

    It’s no shock that China’s rural population is in sharp decline as citizens scramble to the big cities in search of work!! The whole economy is based on harnessing the massed efforts of huge teams of people whether it’s working in factories or on building sites and seems to be representative of the country’s communist agenda!

    • RnBBB

      Completely agree with you here juliet – you’re spot on! The whole chinese economy is on the verge of collapse in my opinion!!!

      • Juliet_3

        The overcrowding has got to the point where it’s no longer productive or affective, kind of reminds me of a rat colony that’s got out of control!!! Mother nature step in please (without hurting anyone, if that’s possible :s)