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China faces crucial urban test

Publication Date : 25-03-2014


China's leaders know the risks associated with urbanisation that outstrips liveability. Pressures on urban services, if unrelieved, breed social tension. Examples are Guangzhou and Shenzhen, representing the old and new in the post-revolution growth of its mega-cities.

Political emancipation also rises with city living, a reality diehard Communist Party ideologues have never been comfortable with. The fact that China has made it state policy to accelerate urbanisation despite the downside - to reach 60 per cent of its 1.4 billion population by 2020 - acknowledges the need to change its growth model so that services and private consumption, fuelled by city dwellers, displace the export trade and investments as the chief GDP stimulant.

It was a brave future the government unveiled last week: the cities, already holding more people than the entire 700 million population of Europe excluding Russia, will add another 100 million residents by decade's end. This is an enormous undertaking on several fronts, each of which will require coordination between the provinces and the centre - not least in the funding to pay for infrastructure such as housing and transport, and services like education and health care.

Local-area corruption is one bugbear that could delay the best-laid plans. Air quality, water supply and waste management are matters that will test the mettle of national planners and city managers.

Raising consumption relative to GDP to about the two-thirds level typical of developed economies is not a straightforward matter of multiplying urbanites and building new cities, which the plan provides for. Incomes have to rise accordingly while social safety nets need to be reinforced to encourage more people to spend. Jobs have to be found just as a declining price edge slows manufacturing, while millions of graduates join the work ranks in the cities each year.

Relaxing the hukou, a household registration system for access to essential services, is the right step as it will stimulate consumption among new arrivals. But changing the land tenure system to allow more rural people to monetise farmland and move to the cities is not advisable at this stage of the country's uneven development. If a recession struck, there must be land for them to return to or the cities will become cauldrons of unrest.

These challenges are not insurmountable. Many cities, even those with populations of five million plus, are well-managed. The 2020 plan at any rate provides for migration to smaller cities and towns, with the metropolises firmly off limits. If implemented well and expectations are not raised unduly high, China can begin to achieve the balanced development it will need to keep its people contented.


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