Urban push could cause negative impacts: Economist

Updated: 2013-06-18 11:03

By Michael Barris in New York (China Daily)

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China's push for urbanization will lead to social unrest as migrant workers from rural areas grow increasingly disenchanted with their new lives in cities, a US economic forum was told Monday.

China is moving 250 million rural residents into newly built cities to boost domestic consumption and revive a slowing economy. The government's goal is to fully integrate 70 percent of the country's population, or roughly 900 million people, into city living by 2025. China's population included more than 250 million migrants in 2012, as its urban population exceeded the rural population for the first time, according to the National Bureau of Statistics.

Simeon Djankov, a visiting professor at Harvard University's Kennedy School of Government, was part of a panel of economists discussing the global economy at the Council on Foreign Relations in Manhattan. Djankov, the former chief economist for finance for the World Bank, and Bulgaria's former deputy prime minister and minister of finance, compared China's ongoing transformation into a more urbanized society with Turkey's.

Although China and Turkey are "somewhat different in political systems," they are "not that different", Djankov said. Typically, he said, it "takes a decade" for urbanization's impact to begin sowing discontent among migrants.

An article in Sunday's editions of the New York Times on China's urbanization echoed Djankov's observation. The article noted that in Liao-cheng, a town in the North China Plain once populated by local wheat farmers, scores of 20-story towers house "now-landless farmers who have been thrust into city life". Many are "giddy at their new lives - they received the apartments free, plus tens of thousands of dollars for their land - but others are uncertain about what they will do when the money runs out," the article said.

In China, families are registered as rural or urban. When rural migrants move to the cities, they can't access health care, social security or even public education as part of the nation's "hukou" system, which requires household registration. Migrant workers still must be registered in their rural town of origin, not the city to which they move - which keeps public services out of reach for many who have flocked to cities for work.

Djakov said China's building of massive infrastructure projects to support urbanization has limited ability to continue boosting national growth. "It increases GDP while you're building them, but there is only so much you can build," he said.

Barclays Capital on Friday lowered its 2013 and 2014 forecasts for growth in China to 7.4 percent, citing lower than expected industrial growth and rising debt weighing on the economy.

Another panelist, Lewis Alexander, managing director and US chief economist for the Nomura investment firm, said China's urbanization goal is "consistent" with its national growth objectives.

"If you really think they're going to grow 5, 6, 7 percent on a continued basis for the next 20 years, it makes perfect sense to think that part of that process is going to be this rapid urbanization," said the former counselor to the secretary of the Treasury and the former chief economist for Citigroup.


(China Daily USA 06/18/2013 page2)