What is Driving Chinese Urbanization?

1. What is Driving Chinese Urbanization? Discussion of the Causes and Consequences of China’s Rapid Urbanization ECON 428 Vincent Blais and Ben Cmejla

2. General Trends in Chinese Urbanization • China’s urban population: • 1978: 10.6% • 2005: 43% • 2020: ~60% • Coastal cities in China’s east and south developing faster than inland cities

3. General Trends in Chinese Urbanization

4. Drivers of Chinese Urbanization • Government policy • Economic growth

5. Government Policy: Small Cities and Towns • For approx. the first two decades after reform, the Chinese government sought to suppress the growth of large cities in favor of promoting the growth of small cities and towns • Policy aims: • Control surplus rural labor • Promote rural enterprises • Develop urban areas outside of major cities and industrial centers • Policy failures: • Inefficient development of cities and towns • Local government officials pursued urban development for the purposes of currying favor with the central government and increasing local revenues through land lease agreements with private developers • Consideration was given to infrastructure and real estate development, but not to the development of industry and social services in these cities

6. Government Policy: Hukou System • Registration system (urban v. rural) • Requires all Chinese citizens to register in their place of residence • Rural residents must present evidence of employment, school registration or a special permit granted by an urban hukou registration authority before they could settle • Rural migrants living “illegally” in urban centers do not equal have access to: public schools, hospitals, or any of the other social services enjoyed by urban residents • Gradually liberalized post-1978 • Policy aims: • Control the size of cities and towns • Avoid a flood of rural migrants to urban centers • Ensure the continued supply of agricultural inputs for the purpose of promoting rapid industrialization

7. Economic Development • Foreign Direct Investment and Special Economic Zones • 2000: coastal areas received over 90 percent of total FDI • Population boom in Beijing, Shanghai and other coastal cities • Since 2000, Beijing and Shanghai have been growing by more than 350,000 persons per annum • Late 1990’s: 10% increase in GDP correlated to a 3.97% expansion of China’s urban core

8. Urban-Rural Migration Why can they leave? • Increases in agricultural efficiency • Loosening of Hukou system Draws to Urban Areas: • per capita city income • job-creation potential of the private sector • number of proprietors per capita Statistically insignificant variables: • Rural Industrialization • Housing Investment • Public transport • Fiscal Expenditures (Chen) Conclusion: Potential income and employment is far more important than quality of life improvements

9. Social Costs of Urbanization • Appropriation of Farmland • As of 2006, 40 to 50 million famers in peri-urban areas and fast-growing areas have lost their land • Second-class citizen status for temporary migrants • lack basic social services, including public education for their children, health care, and insurance • Increasing rural-urban divide

10. Social Costs of Urbanization • Reform the hukou system • Enfranchise rural migrants in urban areas • Reduce rural-urban divide • Rural development programs • “Neutralize” social policy • Prevent making social services and protection into factors that would attract more migrants

11. References Chen, Aimin; Coulson, N. Edward (2002), "Determinants of Urban Migration: Evidence from Chinese Cities", Urban Studies v39, n12 (November 2002): 2189-2197. Deng, Xiangzheng, Jikun Huang, Scott Rozelle and Emi Uchida, (2008), "Growth, Population and Industrialization, and Urban Land Expansion in China", Journal of Urban Economics, Vol. 63, 2008, pp. 96-115. Liang, Zai; Chen, Yiu Por; Gu, Yanmin (2002), "Rural Industrialisation and Internal Migration in China", Urban Studies v39, n12 (November 2002): 2175-2187. Li, Bingqin and David Pichaud, (2006), "Urbanization and Social Policy in China", in Asia-Pacific Development Journal, vol. 13, No. 1, June, pp. 1-21. Zhang, Kevin Honglin (2002), "What Explains China's Rising Urbanisation in the Reform Era?", Urban Studies v39, n12 (November 2002): 2301-2315.