Bottlenecks in China's Urbanisation Drive

The Chinese leadership’s focus on its “urbanisation” campaign apparently has to cater for nearly 260 million migrant workers who await the benefits calculated on the basis of household registration, known as hukou. At the third plenum of the Chinese Communist Party’s Central Committee, incorporating “human-centered urbanisation” into an approved policy termed “core of urbanisation” was emphasised upon with the primary task of “human-centered urbanisation” being to help migrants in registering as urban residents.

The CCP has set a target of a new hukou status for nearly 100 million migrant workers by the end of 2020. However, one would ask, is this enough? A pertinent question is how would the Chinese government cater to the nearly 250 million former farmers who are now relocated in the cities as migrant workers? While acknowledging that there is a need to change the status of migrant workers, the hukou system itself needs overhauling with integration of urban and rural development an inflexible prerequisite given the huge imbalance between China’s urban residents and migrant population.

This also brings to light the issue of poverty alleviation of 100 million plus Chinese residing in the interiors, which the urbanisation campaign of the government intends to address by making growth more balanced. The officialXinhua press reports that local teenagers in the far less-developed central, west and northeast regions of China manage to get only one meal a day. The Laiyuan County, for an instance, located 160 kms southwest of Beijing, has been home to people living below the $1.25 a day.

Stemming primarily from lack of financial resources, the per capita annual income of farmers in Laiyuan reached a bare 3,000 yuan ($490). Given that the national average is 7,917 yuan, Laiyuan is placed far below in comparison to the rest of China. What comes across as a ray of hope for this county are newly opened travel routes which have cut down travel time from Beijing, Tianjin and Shijiazhuang, thus attracting more visitors and resultantly boosting income generation.

China’s urbanisation has resulted in an irreversible trend – that of adversely impacting schooling in the rural areas. Many Chinese have lamented the divide in the education system between the urban and rural areas. Since a growing number of Chinese migrant workers are opting to move their children from villages to cities for better quality education that is fully resourced, various primary schools especially in Jiangxi, Hubei, Henan and Guizhou provinces are facing the predicament of losing students to this trend.

According to a 2012 report on rural education, released by the 21st Century Education Research Institute, an average of 63 primary schools, 30 teaching spots and three junior high schools disappeared every day in China’s rural areas between 2000 and 2010. This draws a direct correlation with government data figures between 2000 and 2012 which state that more than 150 million farmers moved to urban areas in this span surging at 12 percent. While “human-centered urbanisation” is a prime focus of the government, simultaneous measures also need to be rolled out to attract qualified teachers in rural areas with incentives such as offering financial subsidies and improved living and working environment.

Therefore, the major bottlenecks towards realising the newly unveiled urbanisation plan of China include: settlement of the rural (migrant) population in the cities; financial constraints and restructuring of the funding mechanisms; and intensifying usage of land resources. By the end of 2012, China had 710 million urban residents. This was a historic moment as for the first time, China’s urban population, surpassed its rural population. Minister of the Chinese Ministry of International Economic Exchange Center, Hong Xu, avers “China’s urbanisation must focus on quality development... The primary task is to enable migrant workers to gain urban status.” Notwithstanding that the urban populace accounts for 51 percent of China’s total population, only 35 percent possess the hukou status. In May 2013, authorities in Guangzhou took the lead in the Guangdong Province by scrapping the hukou system, thereby enabling farmers to receive the same training, education and pension benefits as the urban residents would.

In so far as financial constraints and streamlining the funding system are concerned, urbanisation will prove to be a demanding challenge for the Xi Jinping administration. The national development bank estimates that the capital demands of China’s investment in its urbanisation campaign are likely to touch 25 trillion yuan ($4.1 trillion) by 2016. With limited financial resources, Chinese analysts argue that heavy/sole reliance on government funds will see deficit spending becoming high and render the development pattern to be untenable.

In its conference on urbanisation, it was declared to adopt sustainable funding mechanisms into finance policies. Zhang Liqun, a macro-economic researcher at the Development Research Center of the State Council argues, “... currently, large amounts of private capital cannot find suitable investment channels. As long as the government provides fair opportunities and creates a favourable market environment, financial resources will be able to play a useful role in liberating all levels of social forces.”

Finally, intensifying usage of land resources would be a critical sector of focus. China has relatively poor per capita land resources with average annual reduction of arable land over 40 hectares and its arable land approximate to 120 million hectares. Exploitation of land in the past three decades for China to become a “modern society” has proved detrimental. This sharp decline in arable land area could have a direct bearing on food security. China’s urbanisation conference also reflected this concern by announcing a “red line” for the arable land left that is/should be exclusively available for farming.

Although, the leadership in China under Xi Jinping has advocated for proactive progress in the promotion of “human-centered urbanisation”, the influx of people into bigger cities looking for better opportunities always entails to trigger a population explosion that could well be overwhelming for China to handle politically, economically, and most importantly, socially.

The author is a Senior Fellow at CLAWS

Views expressed are personal