We show that holographic RG flow can be defined precisely such that it
corresponds to emergence of spacetime. We consider the case of pure Einstein's
gravity with a negative cosmological constant in the dual hydrodynamic regime.
The holographic RG flow is a system of first order differential equations for
radial evolution of the energy-momentum tensor and the variables which
parametrize it's phenomenological form on hypersurfaces in a foliation. The RG
flow can be constructed without explicit knowledge of the bulk metric provided
the hypersurface foliation is of a special kind. The bulk metric can be
reconstructed once the RG flow equations are solved. We show that the full
spacetime can be determined from the RG flow by requiring that the horizon
fluid is a fixed point in a certain scaling limit leading to the
non-relativistic incompressible Navier-Stokes dynamics. This restricts the
near-horizon forms of all transport coefficients, which are thus determined
independently of their asymptotic values and the RG flow can be solved
uniquely. We are therefore able to recover the known boundary values of almost
all transport coefficients at the first and second orders in the derivative
expansion. We conjecture that the complete characterisation of the general
holographic RG flow, including the choice of counterterms, might be determined
from the hydrodynamic regime.Comment: 61 pages, 2 figures, 5 tables; matches with JHEP versio