China’s urbanisation push could be at a ‘bottleneck’, with slowest migration growth rate in quarter-century

Downward trend may continue as economic situation remains challenging during the pandemic and fewer jobs are available in major cities
Demographer warns that the higher the urbanisation rate, the lower the fertility rate – a worrisome prospect as China tries to cope with plunging births

Migrant workers in China

He Huifengin Guangdong

Published: 6:30pm, 28 Feb, 2022

Why you can trust SCMP

China’s decades-long urbanisation push may have reached a bottleneck, after the movement of rural residents to large cities rose by less than 1 percentage point last year for the first time in 25 years.

And the downward trend looks to continue this year, experts say, as various local governments have lowered their economic growth targets, making it difficult to generate enough jobs to further support migrant workers working and living cities.

The nation’s urbanisation rate of permanent residents rose by 0.83 percentage points to 64.72 per cent last year, according to data released on Monday by the National Bureau of Statistics, about China’s economic and social development.

China’s urbanisation rate was estimated to increase by an average of 1.03 percentage points annually during the 14th five-year plan (2021-25), with an aim of reaching 75 to 80 per cent by 2035, according to a report on the country’s population and labour issues, released in late December by the Chinese Academy of Social Sciences.

Is a demographic turning point just around the corner for China?

“This is the first time since 1996 that the urbanisation ratio rose by less than 1 percentage point,” according to Zhang Zhiwei, chief economist at Pinpoint Asset Management.

“The pace of urbanisation has been trending down since 2015. The migration to cities slowed further in 2021, partly due to the zero-tolerance approach to the Covid-19 pandemic, as a large part of the service sector has been adversely affected. The slowdown of the property sector likely also played a role.”

Last year, China’s demographic figures showed a year-on-year increase of 12.05 million permanent residents in urban areas, to 914.25 million.

The number of rural permanent residents fell by 11.57 million, to 498.35 million, while China’s so-called floating population, featuring mostly migrant workers, reached 384.67 million in 2021, 8.85 million more than in 2020.

The population living in areas other than where they hold household registration, for at least six months, reached 504.29 million, or 11.53 million more than in 2020.

04:46

Chinese migrant worker father watches son go to school from 267km away

Meanwhile, small-business owners, as well as multinational firms, are becoming increasingly wary of disruptions resulting from China’s zero-Covid goal.

Cracks in China’s US$1.7 trillion housing market, about seven times the size of the US market in 2019, are widening. Sales rose 3 per cent in 2021 and are forecast to drop by 5 to 10 per cent this year, according to estimates from eight research reports from brokerages, money managers and rating companies compiled by the Post.

Rural residents are facing great pressure to live in urban cities, said Peng Peng, executive chairman of the Guangdong Society of Reform, a think tank to the provincial government overseeing China’s main economic engine.

“The economic situation has been not good [in the past year] … Many companies are laying off workers and lowering wages, while living costs remain high,” Peng said. “China’s urbanisation may have reached a bottleneck – that is, most rural residents who are able to move to urban areas have done so.”

After seven decades, China will ‘gradually’ delay retirement ages by 2025

A greater increase in the urbanisation rate would come only if economic growth resumes and more benefits for migrant workers are provided fairly in cities, he added.

Over the past four decades, China has grown into the world’s second-largest economy, and it achieved this with the help of its army of migrant workers – hundreds of millions of whom relocated from the countryside to major cities for better-paying jobs.

“Now that the urbanisation rate of permanent residents has surpassed 64 per cent, it is not surprising that the rate of urbanisation is slowing down,” said He Yafu, an independent demographer who has written extensively about the nation’s birth rate.

“The higher the urbanisation rate in China, the lower the fertility rate,” he added. “China’s population will very possibly go into negative growth this year, which would serve to force the government to introduce more policies to boost fertility next year.”