The news that London’s Chinatown is in danger of disappearing adds to the list of examples of the same fundamental issue, which is that growing property values threaten the things that make a city, in human terms, valuable. The doubling and more of rents and the pressure to convert restaurant space into residential property are causing long-established family businesses to close, social networks to break up and generic catering businesses with more financial muscle to move in. A famous and attractive manifestation of London’s celebrated diversity will dilute and fade.

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Other examples include threats to markets and industrial space in other parts of the city, to the music shops of Tin Pan Alley, much-loved clubs or independent-spirited restaurants. There are the squeezing out of small but useful shops and other businesses, the city’s inability to house its poor, the exclusion by house price of the people who provide its services, from cleaners and carers to the designers and creatives who are said to add so much to London’s international lustre.

This is what happens when a city is driven overwhelmingly by the logic of investment, no matter by whom or for what purpose. It is the same logic that sees residential skyscrapers erected principally as investment vehicles rather than homes, as what the planner Peter Rees calls “stacks of safety-deposit boxes in the sky”. It creates the phenomenon of homes in the most desirable areas of the city being left empty most of the time, such that nearby shops and restaurants struggle to survive. And, if this seems like the local lament of an over-privileged capital, it is a pattern that other British cities aspiring to grow will also follow.

Of course, cities need investment, and London’s ability to attract wealth has enabled it to dazzle as never before. It is now a vast pleasuredome, able to offer an unprecedented array of stimulations and delights, if at a price. Its physical fabric is changing fast. The place has energy, excitement, crowds, construction, big swinging cranes.

Cities are dynamic. It is part of their ecology that places such as Chinatown come into being, flourish and then decline or move. London’s Chinese community was once more associated with the old dock area of Limehouse and it now goes far beyond its symbolic centre in Soho. If it’s a question of cuisine (which, in discussions about Chinatown, it often is), the best and most authentic examples are often found elsewhere. But the issue is one of rate of change and of direction of travel. Most change is going in the same direction, where genuine heterogeneity and small-scale enterprise, as well as the ordinary, the everyday and the provision of basic needs, give way to financial force.

Singapore took fiscal steps specifically to prevent the sort of residential property bubble that has developed in London

It is often said that London is a city of trade and enterprise, which makes it adaptable and strong. It is argued that its Georgian and Victorian squares and terraces, now much admired examples of city building, were largely created by the great estates – aristocratic landowners lucky enough to own swaths of property on the edge of an expanding city. There is some truth in these theories, but they ignore the extent to which modern London was also created by ambitious and imaginative public interventions: the sewerage system and embankments of Joseph Bazalgette, the invention of council housing, laws to clean the air, protect historic buildings and green space. Also policies to remove the gates and barriers that once excluded the general public from those famous squares and terraces.

Many of the successes of contemporary London are due to public actions: the making of cultural institutions such as Tate Modern and the 2012 Olympics, for example. The new high-frequency line Crossrail, while criticised by transport experts for not being the best way of spending money on improving infrastructure, will nonetheless be an essential expansion of the underground network.

There is also the redevelopment of the King’s Cross area, where commercial development is combined with the provision of accessible public benefits. On the face of it this seems to be all the work of the private developers Argent, and of London and Continental Railways, but it was also created by the active involvement of the London borough of Camden, using powers given by national planning policies, and of the active and tireless work of local campaign groups, who also rely on the leverage of planning law to have influence.

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No city has to lie back and take whatever market forces thrust upon it. It has some influence over its own destiny. Singapore, for example, which is hardly an enemy of private enterprise or capital, took fiscal steps specifically to prevent the sort of residential property bubble that has developed in London. It also manages to protect a plethora of tiny and often outstanding food outlets from annihilation by restaurant chains.

It is not easy to frame policies specifically to protect something like Chinatown, and to do so risks creating a theme-park caricature version. It is however possible to use planning to favour certain types of activity and of business over others. Perhaps the new degree of pressure on such places might push the ingenuity of legislators into finding previously unsuspected responses, in the way that smog and cholera did in the past.

At the moment national policy is going in the opposite direction, towards a loosening of protections and towards the easing of conversions to residential use. At the same time the creativity of London’s leaders, which might be focused on everyday life and the threat of its impoverishment, is distracted by vanity projects such as the Garden Bridge, which is a symbolic surrogate for the life-enhancing qualities of cities that are being lost elsewhere. It has just been announced that this project is going to a judicial review, as a result of what look like the ill-conceived procedures by which it gained planning permission.

A large factor is the failure so far to respond fully to the scale of London’s prospective population growth, to 10 million within 15 years, with accompanying pressure on property and land values. Another is national government’s addiction to a model of economic growth based on endless property inflation. Together these factors make the potential profits from real estate into an unstoppable force that overwhelms all other considerations: quality of life, character of a place, social identities, community networks. They urgently need questioning and reform. But there also needs to be a clearer collective vision of what we want London and other British cities to be. Do we want them to be money traps and accumulations of residential units, garlanded with the occasional glamour project, or places where multiple forms of life, culture and work exist productively together?