On Sunday, China released a 31-point plan mapping out the next six years of the nation’s urban development. Between now and 2020, the government will take steps to modernize agriculture and transform into a consumer driven, service-based and environmentally friendly economy, all while ameliorating the various social and economic gaps between urban and rural, and coastal and inland that have widened since Deng Xiaoping opened the country to free market activity in 1978. China will also superintend the urbanization of an additional 100 million migrants into cities, while granting urban status to 100 million of 234 million total people who currently live in cities but can’t access basic services.
Social and economic imbalances featured prominently in the plan issued on Sunday. The document stated that while China’s urbanization rate has risen to 53%—lower still than nations with comparable per capita income levels—only about 36% are legal urban residents, meaning that 17% cannot access education for their children and other government services in the areas where they live and work. The urbanization rate is 62% in China’s eastern regions, but only 48% and 44% in central and western regions, respectively. And finally, the urbanization of land has far outpaced the flow of people into cities, a process that has, in the words of the report, “wasted a large quantity of arable land, threatened food and ecological safety, and increased local government debt and financial risk.”
The government reflected its hopes and concerns in overlapping definitions of urbanization. “Urbanization is the necessary road that modernization must take, the way to resolve the issues of farmers and agriculture, the pillar of coordinated development between regions, and the important lever that will expand domestic demand and promote industrial advancement.” And further: “Urbanization is a natural, historical process that accompanies industrial development, the gathering of non-agricultural activities in the city, and the movement to cities of an agricultural population. It’s an objective trend of human society, and a symbol of a nation’s modernization.” Urbanization is both an end and a means: the mark of a modern society, as well as the policies that will direct China towards that goal. It is the cause of and cure of many of China’s woes.
Zhou Qiren, a Chinese economist that advocates hukou reforms, stronger land rights and land reform, describes urbanization as a feedback loop in which population concentration stimulates economic activity, which in turn leads to greater population concentration and greater economic activity. In China this feedback loop has proceeded unevenly. Concentration of industrial activity, and urbanization of land, have occurred much faster than increases in population density. The result is that China’s cities are relatively under populated. Tom Miller emphasizes this point in his book China’s Urban Billion: “This matters, because China has to feed one-fifth of the world’s population with just 7 per-cent of its arable land. Around 80 per cent of China’s urban residents live in cities with a population below 5 million, similar to the figure in the United States, whose land resource per head is eight times greater.” Zhou Qiren ascribes the imbalance between land and people to long-standing policies that have limited the free flow of rural migrants to cities.
The urbanization of land is particularly riddling. Local city and town governments have long relied on acquiring, selling, and mortgaging land to raise money for infrastructure projects, pay for public services, and boost GDP. The negative consequences of the program—high property prices, inefficient use of land, opportunities for corruption, and environmental degradation— are familiar, and the government has been taking steps to reform the system. The new plan prioritizes economic, efficient use of the land, demanding that local governments take population density, production potential and environmental concerns into account when expanding cities.
The more intractable issue, however, is the legal discrepancy between “national land” and “collective land.” Urban land is subsumed into “national land,” while rural land is considered “collective land.” Yet only “national land” can be legally mortgaged, sold, or treated generally as a financial asset. Urban residents can sell or mortgage land despite the fact that the government technically owns it. Rural dwellers enjoy no such right. Only local governments have the right to purchase “collective land” and convert it to “national land.” The result, argues Zhou Qiren, is that land acquisition and seizure have become the only ways for China to incorporate land into the market system.
The new plan does promise to take measures to grant equal legal rights to “collective land,” including granting rural collectives the ability to independently put land onto the market. This is a step in the right direction. But the strong financial incentives that drive the urbanization of land don’t look like they’ll disappear immediately. According to the Land Resources Bureau, 4 trillion RMB worth of land was sold in 2013. So far, land reform has generally been limited to certain pilot zones across the country, and may arrive too late for those who have already lost their land.
On top of this, the expected 100 million additional migrants will not be moving to Beijing, Shanghai, Guangzhou or Shenzhen. Nor will they be moving to work in factories producing cheap goods for export. Instead, the government hopes that the migrants will move into small and medium sized cities and towns with populations between 500,000 and 3 million. Miller supports the argument that this dispersed method of urban development is wasteful. But the government is moving forward. The plan promises to expand the country’s rail network, connecting smaller cities to normal speed and high-speed trains. It has also promised to relax hukou restrictions in small and medium sized cities to ease the process of migration. But the plan vows to restrict the growth of larger cities, already tilting under the physical pressure of an enormous population. The “China Dream” might come true for millions of people over the course of the next 6 years. It just might not come true in the place they imagined it would.