China’s urbanisation has fuelled economic growth, but without redirection it will come at a cost
- China’s new urbanisation strategy focuses on city clusters, which will improve economic efficiency and prevent white elephant infrastructure projects
- But the change is likely to have far-reaching implications for China’s regional development, with many small towns doomed to die while big cities prosper
Urbanisation, the process by which people leave rural areas for cities, has powered China’s economic development in recent decades and altered the country’s natural and social landscapes as new towns mushroomed across the country.
But if not done correctly, it also risks becoming a massive waste of resources. The attitude of many local authorities that “if we build a new town, people will come” looks increasingly wishful in the face of rising debt, slowing economic growth and an ageing population.
This change could have far-reaching implications for China’s regional development and economic landscape. In short, the chosen “city clusters” are expected to boom, attracting money and talent from other parts of the country.
Accordingly, most of China’s small cities and towns will see an exodus of people as they cannot offer the same financial and career prospects to young people as the likes of Shenzhen or Shanghai. In a country where the labour force is shrinking year after year, many of these small cities will struggle to maintain their current level of prosperity.
Many more institutional changes are needed to facilitate China’s historical transition from a rural country into a nation of one billion plus urban consumers
China’s urbanisation focus on bigger cities is a step in the right direction, respecting people’s choices and the market power of cities. The strategy will reduce waste in the form of duplicate construction, while improving economic efficiency.
However, it could create challenges to governance by mismatching economic and political resources under China’s centralised administration system. The size of local government is about the same for both poor inland cities and rich coastal ones, but the resources and responsibilities will be completely different.
Though small, it is a positive move. But many more institutional changes are needed to facilitate China’s historical transition from a rural country into a nation of one billion plus urban consumers.
