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What is…a charter city?

In its purest form, a charter city is a newly created municipality governed by a nation other than the one in which its borders are contained – [a] host country would provide land; a source country would provide residents; and a guarantor country would provide the assurance that the new city’s charter would be respected and enforced.

In practical terms, it’s a city created within a sovereign country [which] is free to experiment with its own political and economic system. Essentially, because they’ve been granted special permission to create a new internal system of government and manage their own internal legislation, they operate with a completely different economic and social model to the rest of the country in order to β€˜supercharge’ development.


Improved local governance:

Support for the development of charter cities in the UK comes from free market think tanks such as the Institute for Economic Affairs, the Adam Smith Institute and the Taxpayers’ Alliance. They argue that they can help improve governance in a limited geographic area by giving local officials the authority to implement the best legal and administrative practices and commercial regulations for their particular region.

Because the charter city covers only a limited geographic area, it’s possible for that administration to implement greater reforms than would be possible at a national level. This decentralisation can create a competitive business environment, attracting investment and accelerating economic growth especially in areas suffering from economic neglect. Examples of this success include Shenzhen, a former fishing village, where reforms stimulated land and labour markets bringing direct foreign investment into China for the first time, Hong Kong, Singapore and Dubai - all demonstrating that by following a different developmental strategy from the nation as a whole, it is possible to grow world-class cities within two to three generations.

Improved financial situation of the region & residents:

Charter cities have a unique position - they have the power to better the financial situation not only of their geographical region but also that of their residents. By using incentives beyond those available to national government to attract business, for example, internationally competitive tax rates and/or responsible land use powers to implement the development of the city, residents would benefit as the demand for local labour would grow, local businesses would see increased levels of supply and demand for products/raw materials all in addition to increased levels of funding made available for local public services. The unrivalled economic growth of the charter city will raise the residents up out of the poverty experienced in areas of economic neglect.

Improved environment:

Whilst charter cities would, admittedly, be densely populated, residents’ carbon emissions would be lower than their suburban counterparts for at least three reasons. Firstly, closer proximity and effective public transport would eliminate the need for private cars but even if households retain their cars, higher-density urban areas involve far less travel than more out-of-town areas. Secondly, high-rise housing reduces energy consumption as less heating is required to heat homes and thirdly, if the population is concentrated in a metropolitan area, rural areas can be protected from development.


Whilst the concept of charter cities would appear to offer the promise of an urban utopia, opponents point to the glaring issue with the project - privately owned and operated cities where everything from healthcare, education and policing to the legislature and judicial system are ring fenced from the host country and operated by private companies accountable to no one, run the very real risk of becoming privately operated β€˜kingdoms’. With no independent or legal oversight, just the regulations and policies that they themselves set in their privately owned legislative bodies and enforce with their privately owned judicial system, they have carte blanche to act as they please.

Consider the scope for nepotism and corruption by elected officials and executive management in aspects such as services, procurement, construction and contracts. Consider the exploitation of the workforce through corporate agreed wage levels, loss of benefits such as sick pay or maternity leave, lack of Health & Safety regulation. Then ask yourself, how far do you trust the corporations in charge of these charter cities to invest in public services and protect the environment?

The truth, as they say, is out there.