The need is for rational urbanization

China's burgeoning urbanization has been a key driving force of its sustained economic development over the past decades. But it has also given rise to a series of problems that call for greater government efforts to make urbanization suitable for its economic conditions.

At a time when China's exports sector is running out of steam to further fuel economic growth amid a lingering global economic slowdown, some domestic experts tend to pin greater hope on urbanization as a key force to increase national investment and consumption.

China's urbanization efforts have produced noticeable results in the past 30-odd years since the adoption of the reform and opening-up in 1978, with its urbanization rate increasing from 17.9 percent to more than 50 percent. According to the National Bureau of Statistics, about 691 million people were living in cities by the end of 2011. A NBS report published in February this year shows that by the end of last year more people were living in urban than rural areas for the first time in China's history. To be precise, 51.3 percent of China's population was living in urban areas - 12.2 percentage points higher than in 2002.

The concentration of such a large army of people in urban areas, no doubt, has offered an endless supply of workforce to urban industries and contributed to their prosperity.

According to Zheng Xinli, vice-president of China Center for International Economic Exchanges, a government think tank, the movement of one resident from rural to urban area will ultimately result in an additional investment of 100,000 yuan ($15,730) on infrastructure construction and public services.

China's rate of urbanization, Zheng says, is expected to increase by 1 percentage point a year for the next two decades and newly increased investment and consumption demands in this process will boost the sustained development of the national economy.

Some people's assumption that China's urbanization will continue its fast momentum in the coming years or decades is largely based on the fact that its current urbanization rate is still lower than the average 60 percent in some emerging countries and 70-80 percent in the developed world.

It is thus right for China to take advantage of its urbanization potential to boost its slackened domestic demand, especially at a time when external demand remains extremely feeble because of the global economic recession. However, the fast pace of urbanization has exposed a series of problems, from the sprawling of some cities and deteriorating air and environmental pollution to inadequate auxiliary urban services and infrastructure.

Although a huge number of people have moved from rural areas to cities, most of them still face difficulties when it comes to social security, housing and their children's education. Given the firmly entrenched hukou (household registration) system, such a "secondary citizenship" status is not expected to change fundamentally within a short time. But such unequal treatment continues to create instability and thwart the country's bid to build a harmonious society. Ensuring that newcomers to cities get the same rights and facilities as their existing urban counterparts poses a big challenge for local as well as national decision-markers.

According to a report published by the Shanghai Municipal Academy of Social Sciences in February, the influx of rural people to big cities has greatly increased the pressure on the limited urban resources. This, together with serious traffic congestion, environmental degradation, disorderly city management and the lack of a far-sighted plan by some city authorities, will seriously hinder their sustained development.

Accelerating urbanization has contributed greatly to China's economic and social development, as is evident in its rising international economic status over the past three decades. However, the experiences of some Latin American countries show that once an economy enters the middle-income development period, fast-paced urbanization does not necessarily lead to simultaneous economic development. Brazil, for example, now has an urbanization rate of 80 percent. But even such a high ratio has not been able to pull the largest South American economy out of lingering stagnation.

A report on urbanization by the Chinese Academy of Social Sciences in June 2011 also warned of the challenges that China's efforts to advance urbanization faces - it includes the lack of simultaneous development between wealth accumulation and the rise in people's livelihood, between the fast expansion of cities and their low-efficiency in using some production elements. For many cities, the failure to acquire modern management expertise also poses a big threat to development.

Urbanization is the result of a country's economic development and industrialization. At a time when China is more determined to boost domestic demand to transform itself into a consumption-driven economy, we should be particularly cautious about the blind, and thus unscientific, acceleration of urbanization by some regions. The "ghost city" of Ordos in the Inner Mongolia autonomous region - with its unrestrained real estate development despite lacking the power of continuous consumption to sustain the housing boom - should be a profound lesson for us.

In the 12th Five-Year Plan (2011-15), the central government has promised to implement a strategy of simultaneous industrialization, urbanization and modernization of rural areas. This offers a scientific and rational approach to local governments in their effort to advance urbanization in the years ahead.

The author is a writer with China Daily. E-mail: wuyixue@chinadaily.com.cn

(China Daily 11/29/2012 page9)