Central government's urbanisation plan meets resistance from mayors

Beijing's plan to encourage hundreds of millions of rural residents to settle in cities to boost growth faces opposition from local governments, according to Li Tie, an official with the country's top economic planning agency.

Li spoke at an urbanisation forum in Beijing over the weekend where officials, researchers and company executives highlighted the challenges facing the leadership's push. These obstacles included strains on local government finances, the dangers of overbuilding and the cost of scrapping the hukou, or residence permit, system that denies migrants and their families the same welfare, health and education benefits as city-dwellers.

Premier Li Keqiang has championed urbanisation as a "huge engine" for growth as he seeks to shift the world's second-largest economy towards a model that relies on consumption rather than investment and exports. As policymakers draft plans for the new leadership's reform agenda ahead of a key Communist Party meeting later this year, Li is grappling with vested interests that could stymie some of his plans.

"Nobody wants such a big group of migrants to be their neighbours and share their so-called civilised space. This is a conflict of interest," said Li Tie , director-general of the China Centre for Urban Development under the National Development and Reform Commission. "We are facing rejection from so many mayors and city elites who have enough ability to influence decision-making."

One of the thorniest issues facing policymakers is who pays for urbanisation - the cost of the physical infrastructure and the recurring annual spending on providing millions of new urbanites with health care, welfare and education services.

"Urbanisation isn't only about changing people's residency, it's about their overall development and an improvement in the quality of their lives," said Li Lianzhong, head of the economy bureau at the Policy Research Centre of the Communist Party Central Committee. Ending the hukou system and replacing it with identity cards will signal the "victory of reforms", he said.

Mao Daqing, executive vice-president of China Vanke, the biggest developer by market value traded on the mainland's stock exchanges, questioned whether China needed more towns and cities when most migration has been to the mainland's 70 biggest conurbations.