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Reforms seen as key to success of China’s long-delayed urbanisation blueprint

Moving 100m people into cities needs changes to land and welfare systems, analysts warn

Beijing's long-delayed urbanisation blueprint, which aims to move about 100 million people from rural areas to cities by 2020, will require complex reforms, analysts say.

The full text of the plan released on Sunday night showed that Beijing wants to raise the proportion of urban residents to about 60 per cent of the total population by 2020, from the current 53.7 per cent. The proportion of people registered under urban households is targeted to rise to about 45 per cent from 36 per cent over the same period.

China's goal remains far below the average urbanisation rate of about 80 per cent in developed nations, but boosting the rates requires an intense effort to overhaul the fiscal, land, and social welfare system, analysts say. The plan is designed to spawn a consumption-driven, greener growth model in a shift from the old pattern, which was typified by heavy capital spending and high environmental costs.

Watch: China's urban drive risks digging economic hole

Qiao Runling, a vice-director at the China Centre for Urban Development under the National Development and Reform Commission (NDRC), said: "The blueprint centres on moving migrant workers into cities, transforming [the] growth model to low-carbon and green development, and improving the structure of cities."
The blueprint centres on moving migrant workers into cities, transforming the growth model to low-carbon and green development, and improving the structure of cities
Qiao Runling, a vice-director at the China Centre for Urban Development

He told the Post: "It's no longer an emphasis on enclosing land, adding investment, and constructing properties."

Migrant workers moving into cities are expected to consume more food, buy houses and home appliances, and join transport networks. Local governments are expected to include them in the social and medical insurance coverage for urban areas.

"There wouldn't be a second 'four-trillion-yuan' stimulus," Qiao said, referring to a stimulus package rolled out by Beijing during the global financial crisis to combat economic slowdown, a policy that fuelled high inflation, asset bubbles, and overcapacity. Economic growth cooled to 7.7 per cent last year after peaking at more than 14 per cent in 2007.

But Qiao said implementation would be much more complicated and pilot trials would be conducted across the nation first.

The government plans to guide some labour-intensive industries to move to central and western regions from the affluent eastern coast. It aims to develop a few city clusters in areas including the Chengdu -Chongqing region in the west, central China, and the middle reaches of the Yangtze River.

The government also plans to expand railways, roads, highways, and airlines to facilitate labour flows.

Cities will be encouraged to develop strategic industries such as information technology, biology and renewable energy.

A more market-based investment and financing system with participants from private enterprises will be established to cut local authorities' reliance on land sales.

The government also plans to reform the rural land ownership system, a major problem that has discouraged many farmers from moving to cities for fear of losing their land permanently.

Beijing also aims to boost air quality, ensuring 60 per cent of cities meet national pollution standards by 2020.

"The blueprint will help narrow the gap between urban and rural areas," said Wang Jun, a senior researcher with the China Centre for International Economic Exchange, a government think tank. But he cautioned that: "There is a long way to go, as China's fiscal strength and public services networks will take time to catch up."

Beijing has repeatedly suspended the rolling out of the urbanisation plan in the past two years. President Xi Jinping , taking office in the autumn of 2012, rejected a proposal last year as it focused more on expanding investment than improving livelihoods, according to people familiar with the talks.

The central government will oversee the design of the overall urbanisation strategy, while the NDRC will be responsible for making detailed plans.

Harry's view
This article appeared in the South China Morning Post print edition as Reforms seen as key to success of urban blueprint
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6:37am
The social/economic structure may have been set by the current central government to expand China’s urbanization by increasing urban population to 60% of the total population. It would be a 20% increase that would cover large swath of lands wherever land can be developed. The coming burden is finding a model that is suitable for modern living in urban setting. The urban planners are encouraged not to repeat big city blocks as used in Beijing as a model. They may take a good look at the comparatively small road grid and blocks of New York City. More than two hundred years of history since the beginning of the planning and implementation, the NYC is still a viable in its function as a city and a modern city as well.
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The urban planners must do their best to reduce air pollution by cars in the new cities.



5:29pm
Some of the rural Chinese may not be willling to forsake their rights to use their land in the villages, by moving to permanently reside in the cities and surrendering those rights once and for all.
Some incentives may have to be given to them to entice them to move.
Part of the fund needed for the coming urbanization can be raised through issuing government treasuries and local government municipal bonds.
The borrowing rate should be set at a higher nominal level (above the inflation rate) to enrich the Chinese consumers, the firms and the banks who buy the treasuries and bonds issued.
This is an indirect way of transferring wealth from the public to the private sector, which is sorely needed to balance her economy.
This may also help subdue the precarious shadow banking market and internet financing, by luring lenders away from those risky and unregulated products.
The children of those rural villagers can receive much higher standard of school education in the urban cities, thereby further raising China's future worker productivity.
The overall income inequality of the country will further be lowered.
The required infrastructure and housing expenditures will help absorb China's present excess capacities.
If successfully enacted, there will be no problem in maintaining China's GDP growth rate at a relatively higher level in the coming decade.
Perhaps too high a level really, considering the gradual economic recovery of the foreign countries.

http://www.scmp.com/news/china/article/1450765/reforms-seen-key-success-chinas-long-delayed-urbanisation-blueprint