China's urbanisation push needs land reform, freer residency rights in cities

Tan Yingyu is one of China’s 200 million migrant workers, and like many he is stuck: he does not want to return to his village but also cannot become a legal resident in the city of Chengdu, where he has worked for nearly 20 years.

His dilemma highlights a key issue for China’s reformist leaders as they look for ways to encourage more people to move to cities to help turn a credit- and investment-driven economy into a consumer-powered one.

If rural Chinese are given formal rights to their land, they could cash in its value and feel more secure about moving to work in cities.

If they are given residency status in cities, rather than having it tied to their home village, they would have access to social welfare, making it more likely they would spend more or move their family to live in the cities too.

Without reform of land and residency rights, a government urbanisation drive may fall behind, endangering broader economic reform and even risking social unrest.

“I won’t go back to work the land, but I cannot afford to buy a property here – prices are too high,” said Tan, pointing to towering apartment blocks in Chengdu, the capital of Sichuan province.

Top leaders are meeting in secret in Beijing to plot an economic agenda for the next decade and will be looking at pilot schemes in Chengdu and elsewhere that are testing land and residency reform for clues on what changes to make.