economics

March 12, 2010

Mismanaging China’s rural exodus By David Pilling

Filed under: Uncategorized — ktetaichinh @ 4:30 am
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If Han Jun is right, over the next three decades a population the combined size of Germany, France, Britain, Italy, South Korea, South Africa, Spain, Poland and Canada will up sticks and move to China’s swelling cities. Mr Han, a rural expert at Beijing’s Development Research Centre, reckons that by 2040, the number of people in China’s countryside will have shrunk by 500m to just 400m. On that assumption, China’s city-dwellers would rise to well over 1bn, catapulting the urban population from 45 per cent of the total to around 70 per cent.

The startling numbers conjure up images of mass migrations and the trebling or quadrupling in size of big cities such as Beijing, Shanghai and Guangzhou. In practice, it is unlikely to be quite like that. China, after all, is a planned economy. Even so, McKinsey Global Institute, which has researched China’s urbanisation trends, paints one scenario under which, by 2025, the country will have 15 super-cities with an average population of 25m people each. Meanwhile, many cities will “move” to the countryside as the state frantically constructs new urban centres in the interior and as changing land use blurs the distinction between village and town.

This is not futurism. By some counts, China already has some 170 cities with a population above 1m. That compares with nine in the US and two in the UK. In population terms, Tianjin is China’s New York and Qingdao its Los Angeles.

The emergence of second and third-tier Chinese cities with big populations has businesses salivating at the prospects of a consumer bonanza. A steady stream of urbanites could indeed become tomorrow’s purchasers of kitchen appliances, insurance and cars. City authorities will need mass-transit systems, power grids and telecoms equipment. Chinese urbanisation could, as McKinsey says, be the biggest business opportunity of the next several decades.

There is a hitch. Not only will planners need to build the physical infrastructure to accommodate this urban groundswell. Harder still, China will have to erect a legal framework. As things stand, of the estimated 200m migrants who have already swapped their hoe for factory aprons or a hard hat, the bulk have no right to permanent residence in the cities. The so-called hukou registration system, instituted by Mao Zedong in the 1950s as a way of limiting internal migration, divides China’s urban population into two castes – privileged official residents and marginalised migrants.

In Beijing alone, according to work carried out at the Beijing Institute of Technology, about half the 460,000 children born over the past threeyears cannot be registered as official residents. China has tens of millions of people living in legal limbo. Designated as rural-dwellers – though they may spend most or all of their time working in the cities – they are denied access to social services, including subsidised housing, income support and education for their children. Yasheng Huang, a China expert at the Massachusetts Institute of Technology, says the system is “inhumane” and economically damaging. Scrapping it, he says, would narrow the rural-urban income gap at a stroke, unleashing the pent-up demand of people too socially vulnerable to spend freely.

China’s leaders have been talking about modifying the system for years. The theme plays into the priorities of the current leadership – Hu Jintao and Wen Jiabao – for whom building a harmonious society has been a constant theme. Hopes for change were recently raised a notch when Mr Wen said on an internet chat forum – imagine inadvertently coming across China’s premier on Chat Roulette – that hukou reform was a priority. More unusually still, 13 newspapers printed a joint editorial complaining in almost revolutionary terms about a system they (quite accurately) denounced for being unconstitutional and placing “invisible fetters” on China’s population. “Bad policies unsuitable to these times enrage the people,” it thundered.

The editorialseems to have gone too far. The piece fell foul of the Communist party’s propaganda department. The editorial has since disappeared from most websites and one of its authors has lost his senior editing position. When Mr Wen addressed the National People’s Congress last week, he disappointed those hoping for bold changes by talking only vaguely about the need for gradual change.

It is not hard to see why Beijing is nervous about moving too quickly. Mishandled, it could trigger a stampede to the richer urban centres. Even if the law were changed to regularise the status of those migrants already living in cities, most local governments lack the money to provide the housing, education and other benefits to which newly designated city-dwellers would become entitled.

An abrupt change could have a revolutionary impact. Revolution is, of course, the last thing Beijing wants. Yet it does want change, not least because rural poverty is potentially just as destabilising. Gradually shifting people to the cities could bring big economic benefits. Indeed, change is being orchestrated at a local level. At least 10 cities, Shenzen and Wuhan among them, have already tinkered with their hukou system. The world’s biggest experiment in urbanisation is unstoppable. It is about time legislation caught up with reality.

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