New Light on China’s Misunderstood Urbanization

Li Zhang, Richard LeGates, and Min Zhao explore the complex and fascinating story of China’s urbanization.

According to official statistics 55% of China’s population is now urban compared with was only 10% urban when the People’s Republic of China was created in 1949. Most of this massive transformation has occurred in the last 35 years. Urbanization this quickly on such a vast scale is unprecedented in human history. A tsunami of books, scholarly articles, and press accounts attempt to describe and explain the phenomenon. Unfortunately, much of what has been written about China’s urbanization is dated, one-dimensional, simplified, generalized, or simply wrong.

A tidy, but incorrect, impression is that a little more than half of China’s population is now part of the global economy living in megacities like Beijing and Shanghai while the other half are farmers in the countryside

The 55% number is determined with great care. It precisely describes the number of people who had de facto been living in areas officially classified as urban for at least six months at the time the count was made. Statistics on where people live based on their residence address report more than a quarter of a billion fewer de jure urban residents. This matters. To some extant entitlements to education, health, pensions, job training, and social welfare are still based on a person’s official (hukou) residence address.

In China local government boundaries and definitions of what areas qualify as urban change rapidly. Municipal boundaries are very large by Western standards and usually include peri-urban and rural land. The distinction between “urban” and “rural” residence and occupations in China has changed. Tens of millions of people in China’s “floating” or “amphibious” population do agricultural work during the planting and harvest seasons and work in manufacturing, assembly, construction, or retail work in cities the rest of the year. In many parts of China rural household members living in the countryside commute to jobs in adjacent towns and cities.

Many people who have not followed recent developments in China assume that Chinese cities are rigidly planned by the central government. Under Mao socio-economic development planning was highly centralized, but land use and physical planning decisions involved local government actors. As market socialism was implemented in the 1980 and 1990s power and control of decision-making about land use and local economic development was progressively decentralized. In China today cities, counties, and towns now make most physical planning decisions and the burden of implementing plans falls largely on them. The central government supports local decision-making with major infrastructure investment such as construction of high-speed train lines and highways, low interest loans, and designation of zones that receive favorable treatment.

The level of a country’s economic development and its urbanization rate are correlated. The higher a country’s per capita GDP the higher its urbanization rate is likely to be. Statisticians can estimate what percentage of a country’s population “should” be urban given their level of development. In some countries urbanization has outpaced development. Critics point to Sao Paolo and Lagos as examples. Nigeria and Brazil have high urbanization rates, but are still developing. Sao Paolo and Lagos suffer from un- and under-employment, slums, and other urban problems.

Many studies conclude that China is under urbanized. The policy prescription is to speed up urbanization in order to speed up development. But China contains 1/5 of the world’s population: more people than live in the European Union and South America combined. Megacities in Eastern China are as different from cities in Tibet, Xianjiang, and Inner Mongolia as cities in Bulgaria are from London. New research, discussed in our book Understanding China’s Urbanization, contradicts the dominant conclusion and the conventional policy prescription. Using a model that analyzed different parts of China over time, we conclude that China’s development and urbanization levels are now close to balanced. Understanding China’s Urbanization points out that it is development that drives urbanization; not the other way around. Planners and policy makers should not push urbanization faster than the local economy will bear.

Today 260 million Chinese live somewhere
other than their official (hukou) address

Most are migrants from rural areas to cities in Eastern China. Average wages in urban areas of China are about 3 times wages in rural areas. Much of the young, able-bodied labor force from some rural areas has moved to cities in Eastern China leaving only the elderly parents, children, and sometimes wives. A common view is that urbanization is ruining China’s countryside. A more nuanced analysis in Understanding China’s Urbanization depicts the transformation of China’s countryside as a revolutionary social/economic/spatial transformation with positive as well as negative aspects. Migrants almost always earn much more cities or towns than they could earn farming or in sideline occupations or small enterprises in rural places where they have hukou. Even after paying higher housing and living costs, they have money for themselves and to remit to family members back in the countryside. Much of the capital for new village housing comes from remittances from absent family members living in cities. Some returning migrants bring back skills and connections from China’s most developed cities as well as capital for rural town and village enterprises (TVEs).

China is at a high stage in its rapid urbanization. The United Nations projects that about 85% of China’s population will be urban by 2045. In contrast Understanding China’s Urbanization suggests that reaching full urbanization is likely to take longer and end at a lower level than UN and other mainstream projections. Living and work conditions in the countryside are improving, both because of market forces and national projects to create a “New Socialist Countryside” and a “Beautiful Countryside”. Many rural Chinese now prefer to “live in the countryside and work in the city” and this is becoming increasingly possible. More and more people living in the countryside are reluctant to trade rural for urban hukou. Agricultural modernization is proceeding slowly and it is unclear how rapidly rural structural reform can be achieved and additional surplus rural labor can be absorbed into the modern economy.

Understanding China’s Urbanization by Professors Li Zhang, Richard LeGates, and Min Zhao is out now.

Read Chapter 1 free on Elgaronline.