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China’s urbanization rate exceeds 60% for first time

Author  :  LIN HUOCAN     Source  :    Chinese Social Sciences Today     2020-07-06

Urbanization is an important indicator of national modernization. At the end of 2019, permanent urban residents in China numbered 848.43 million, accounting for 60.6% of the total population. This was the first time the figure exceeded 60%.

The new people-centric urbanization mode has been making steady progress. This is one of the major signs of the high-quality development of China’s economy. Currently, there is a huge discrepancy between China and developed countries in terms of the level of urbanization. During the past decade, China’s urbanization rate has grown by 1 percentage point each year. The index increased by 1.02 percentage points between the end of 2018 and the end of 2019. 

Urban-rural imbalance

“Regarding the urbanization rate, China has achieved most of the goals set out in the National New Urbanization Plan (2014–2020). Its gross economy is expanding like a big ship charging over the waves. However, the circumstances in different regions greatly vary, displaying inadequate and unbalanced development. The climbing urbanization rate shows that the country has made great progress in dealing with the urban-rural divide and regional fragmentation, said Xia Dan, a senior researcher at the Bank of Communications Financial Research Center.

“In 2010, China’s urbanization rate was about 50%. We spent nearly 10 years pushing the number to a new stage. This was a hard-won achievement. In recent years, many ‘new citizens’ have experienced tremendous changes in their production and lifestyle. The transition from a farmer to an urban resident has steadily expanded the consumer market but also accelerated the continuous upgrading of consumption. Objectively, it has also promoted the supply of higher-quality goods and services,” said Xu Hongcai, deputy director of the Economic Policy Committee of the China Association for Policy Science. 

Cai Yifei, an associate research fellow from the Institute of Population and Labor Economics at the Chinese Academy of Social Sciences, said that according to the experience of developed countries, the urbanization rate will slow down after exceedsing 60%, and its role in driving economic growth will change.

“In the past, the massive flow of factors such as labor and capital to urban areas led to economies of scale, stimulating higher production efficiency and economic growth. However, as urbanization proceeds in a more moderate manner, the speed of factor accumulation will decline. In terms of urbanization’s contribution to economic growth, its driving force will shift from the supply side to both supply and demand. At present, China has an urban permanent population of over 800 million. Unlocking its consumption potential will help alleviate the structural problems amidst economic development, such as the imbalance between internal and external demand, and that between investment and consumption. Furthermore, it is necessary to double down on solving the insufficient and uneven urban-rural development as China’s urbanization rate has surpassed 60%,” Cai said. 

Currently, the biggest development imbalance is the imbalance between urban and rural areas, and the biggest underdevelopment is inadequate rural development. Therefore, China should build a relationship in which urban areas support rural development and industry promotes agriculture. The establishing of a mechanism and policy system will provide an institutional framework for the smooth promotion of rural revitalization, Cai added.

Experts also agreed that the continuous progress in urbanization will allow more farmers to increase their income as they gain employment and access to better public services by becoming urban residents, thereby enlarging the urban consumer crowd, upgrading the consumption structure, and tapping the consumption potential. It will also create huge investment needs in such fields as urban infrastructure, public service facilities and housing construction, providing sustained momentum for economic development. 

Massive internal demand

China’s urbanization rate of the permanent population has exceeded 60%, but it is still far below the average level of 80% in developed countries. The country’s urbanization has much room for further improvement, and the economic development potential contained in the urbanization process is greater.

“Urbanization will directly upgrade infrastructure investment. The reconstruction of the old urban areas and the building of smart cities will gather pace. The scale of investment in infrastructure construction such as rail transit will also see an increase. The new infrastructure will also accelerate, thus becoming a significant driving force of economic growth,” Xia said. 

Urbanization will open up more opportunities for industrial transfer and transformation. The adjustment and improvement of urban functions will promote the reshaping of the industrial layout and frame a more reasonable regional coordinated division of labor. At the same time, the pioneering projects can perform more functions regarding R&D and the application of advanced technology and industrial upgrading, leading to the rise of smart cities, Xia added.

Xu suggested that the urbanization rate continues to outperform by one percentage point every year, which means that more and more farmers will become citizens. The new people-centric urbanization mode will raise the supply of infrastructure such as water, electricity, gas, transportation, and public services such as healthcare, education and sanitation, thereby driving the expansion of consumer demand. 

Wang Bin, an associate professor from the Economics Department at the Party School of the Central Committee of CPC, said that as new urbanization proceeds, large cities will wrestle with the “urban disease” problem in a more targeted manner, investment opportunities for infrastructure and public service construction will be tapped in large quantities, and the renovation of old urban communities, the construction of smart cities and the improvement of commercial convenience will also create a huge investment space. Furthermore, small and medium-sized cities, especially at the county level, will make greater efforts to tackle shortcomings.

“Construction of a new urbanization model reflects the need for economic transformation and upgrading, while performing as a solution for adding jobs. It helps secure stability in employment, financial operations, foreign trade, foreign investment, domestic investment and expectations while ensuring security in jobs, basic living needs, operations of market entities, food and energy security, stable industrial and supply chains, and the normal functioning of primary-level governments,” said Huang Maoxing, president of the School of Economics at Fujian Normal University. 

Becoming citizens

As for the law of global urbanization development, China is still experiencing fast development with the rate ranging between 30% and 70%. Following profound changes in the internal and external environment and conditions, urbanization must enter a new stage focusing on improving quality.

“Without strong industrial support, urbanization may lead to empty cities and ghost cities. We should focus on the integration of industrial construction and urbanization, and promote the quality of urbanization by supporting high-quality industrial development. The country should strengthen labor skills training for the rural migrant population so that the quality of the labor force conforms to the level of industrial development and that rural laborers can better settle down in cities,” Xu said. 

The current urbanization rate of the household registration population is less than 45%, meaning that many people in the city have no access to the rights and interests bound to household registration. Therefore, it is necessary to improve the quality of urbanization by emphasizing the “urbanization of people.” One aspect relates to survival, including the employment structure, high housing prices in large cities, and environmental pollution control. The other aspect is associated with household registration, including the relaxation of conditions for household registration, the promotion of the free flow of labor elements and the supply of public resources such as medical care and education. The third aspect touches upon urban construction issues, such as the renewal and transformation of smart cities, the use and reform of land resources, the improvement of emergency response capabilities, and the transmission and protection of material and intangible cultural heritage, Xia added.

 

This article was translated from Economic Daily.

 

(Edited and translated by MA YUHONG)

 

 

 

Editor: Yu Hui

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