Central government's urbanisation plan meets resistance from mayors

Officials tell forum that national drive to settle migrants puts strain on municipal resources

PUBLISHED : Monday, 12 August, 2013, 12:00am
UPDATED : Monday, 12 August, 2013, 5:50am

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.

"These big cities interest people because they have more job and education opportunities, and medical resources," Mao said. "Those other 610 cities can't attract people even though they already exist," he said. "It indicates some of those 610 cities have problems or can't survive."

Taking Beijing as an example, Mao said that assuming 700,000 people moved into the city each year, that could cost the local government at least an extra 77 billion yuan (HK$97 billion) a year in urbanisation-related spending, equivalent to doubling its annual land sales or a 25 per cent increase in tax revenue.

"This is totally beyond the affordability of a local government, Beijing can't afford it," Mao said. "We must guide big cities, develop medium-sized cities and unleash small towns," he said.

Speaking at his first news conference after becoming premier in March, Li said: "Urbanisation will usher in a huge amount of consumption and investment demand, increase job opportunities, create wealth for farmers, and bring benefits to the people."

While the country's urbanisation ratio included small towns, they often had worse living conditions, infrastructure and public services, said Zhao Hui, director of the village and town construction department at the Ministry of Housing and Urban-Rural Development.

Separately, a deputy director of the China Centre for Urban Development, Qiao Runling, warned that reckless expansion of cities had left many of them empty, Xinhua reported.

"China now has an oversupply of cities, given the number of new urban districts that we have," the report quoted Qiao as saying at a forum held in southern Jiangxi province last week.