Urbanization in China: what’s unique and what’s similar with LAC

*by Yuan Li

 

The scale of the urbanization process in China is huge relative to LAC. No country has ever had urbanization as massive as it has been in China. Despite a still relatively small urbanization rate of 53.7 percent, 560 million people have moved from rural to urban areas in the last 35 years. This is almost the entire population of Latin America and the Caribbean (LAC) for a country only half the size of the LAC territory.  According to China’s newly released National New-type Urbanization Plan 2014-2020 (the Plan), the country’s goal is to reach an urbanization rate of 60 percent by 2020. This would translate into another 85 million people leaving their farmland and migrating to urban areas, which will generate an estimated cost of US$6.8 trillion to finance the big “move”.

The large-scale transformation of people has led to a number of challenges for China, among which some very unique ones were caused by the country’s public land ownership and the strong intervention of the state in the urbanization process. Land ownership in China is not private. It is either state-owned or collectively owned. Therefore, the government solely makes decisions on the use of each piece of land. This situation has generated both positive and negative consequences. On the positive side, constructions were able to get started very efficiently. For instance, when a local government decides to build a highway, they expropriate the land and build the highway immediately. The process gets underway at a fast pace, delivering the needed urban infrastructure at a timely manner, known as the “China speed”. On the negative side, centralized decisions are not always optimal, especially when they are not part of an integrated urban development plan or they adversely impact the livelihood of the citizens. In fact many cities suffer from bad planning, and it can be hard to fix the problems once everything is built and done.

 

Another controversial reality due to the public ownership of land is the enormous land value captured by the local government. Since the privatization of housing in 1998, the real estate market boomed and property price surged, which directly drove up the land price. Local government therefore obtained huge profits from land sales, and the land revenues have become the pillar to municipal income, sometimes even creating fiscal dependency on land sales for the local government. In addition, the huge land profits illy stimulated the local government to sell as much land as possible for commercial purposes regardless of the mismatching need for the properties. Real estate bubble has thus been formed, and there have actually emerged some “ghost towns”, where bulks of newly constructed buildings were left empty.

 

Despite the unique characteristics of the land policies in China, some challenges are shared between China and the LAC countries. Similar to LAC, China is also searching for the solutions as to how to better incorporate the large influx of migrants from rural to urban areas, providing them the necessary settlement and equal access to urban social services. Under the current demographic regulations, rural migrants in the cities are excluded from the urban social welfare plans, which do not give them the necessary access to cities’ healthcare, education or social housing programs. Obstacles are thus formed for rural migrants to be fully accommodated in the cities. People come from rural to urban areas to work, but it is extremely difficult for them to establish social and emotional attachment to the cities.

 

How to achieve balanced urban development in small and medium sized cities is another common issue in both China and LAC countries. China now has 6 mega cities that host over 10 million people: Shanghai, Beijing, Chongqing, Chengdu, Tianjin and Guangzhou. While the big cities grow rapidly and attract large number of new-comers, smaller cities are lagging behind in competitiveness, innovation and vitality. The gap is sometimes tremendously huge. Some of China’s first tier cities already look like the most modern cities in the world, or even more advanced than their companions in the developed countries in urban infrastructure like the metro system. However in many smaller cities, things have not changed much for the past 1 to 2 decades.

Although China and LAC countries have their own institutional framework and unique challenges in urban development, the potential for strengthening the cooperation between the two sides is promising. Many of the urban problems that China is facing now were faced by LAC countries during their paths to urbanization. Challenges such as traffic congestion, urban habitat degradation, informality, pollution, urban-rural integration, housing provision, public service upgrading and many others are common concerns for both. LAC countries’ long-time trajectories in urbanization have accumulated many precious experiences and lessons which can be valuable for Chinese policy makers as well. Despite of the institutional divergence, the technical aspects of land and urban policies are exchangeable. Success of selected LAC countries in land reform, transportation innovation, and rental housing promotion may be inspiring and portable to China. According to the Plan, China will strive for urbanization with quality, meaning to build cities that are more compact, more green, more clean, more convenient, more inclusive, and with better services. These are the ultimate objectives of urban development for China and also for LAC countries, so that the citizens can improve and enjoy their quality of life in the cities.