Chinese authorities taking the right steps to increase urbanisation

PUBLISHED : Wednesday, 01 January, 2014, 11:31pm
UPDATED : Thursday, 02 January, 2014, 1:03pm

A cornerstone of China's development has been attracting people to cities. The migration of hundreds of millions to urban areas to work has brought huge economic gains and dramatically lowered poverty. With the urban population in 2011 passing 50 per cent, but growth slowing, leaders are understandably eager for a fresh surge in urbanisation. As necessary as it may be to spur domestic consumption, though, the movement has to be carefully planned and co-ordinated.

Senior officials acknowledged this need last month at a meeting devoted to urbanisation. They hope to lift the proportion of the population living in cities and towns from the present 52 per cent to 60 per cent by 2020. But this cannot happen without essential infrastructure and services first being in place; new arrivals will need housing, water, sanitation, education, health care and transport. That will take time and, as was made plain at the meeting, will require the gradual removal of the residential registration system known as hukou.

The system means that workers not registered to live in areas they have migrated to are not entitled to state-run services like education and welfare. A recent International Monetary Fund report pointed out that people without such basics often live in poverty and squalor. Mainland authorities therefore face the dilemma of wanting economically disadvantaged farmers and others in rural areas to move to towns and cities, while constrained by the hukou and infrastructure costs. Wisely, they have opted for a strategy of drawing people to smaller urban settlements where the growth can be more manageable.

Many people counted as city dwellers do not hold residential permits - if excluded from statistics, the urbanisation level would be about 35 per cent. Infrastructure strains in mega cities like Beijing and Shanghai and provincial capitals make them poor choices for migrants. Building housing and infrastructure in second- and third-tier cities and promoting them as attractive places for investment, business and jobs is a better strategy. These are the places where hukou restrictions should first be eased and removed.

Big cities are often overcrowded and heavily polluted. Home prices and rents are high and the streets jammed with traffic. Greater urbanisation will ensure the nation's continued economic growth, but it has to be better controlled. Leaders have chosen the right path by wanting people to move to smaller towns and cities while relaxing the hukou system.