A New Road for Urbanization

By+Lan+Xinzhen

The State Council， the countrys cabinet， released the National New-Type Urbanization Plan （2014-20） on March 16， indicating that Chinas “new-type” urbanization， after years of discussion， has been officially launched. This plan， containing 31 chapters in eight sections， will impose great influence upon Chinas urbanization process.

According to the plan， by 2020， 60 percent of the population will be urban residents， while 45 percent of the total population will be residents with hukou， urban household registration. Such urbanization rates may be peculiar to China， since it adopts a dual household registration system between urban and rural residents. Although many people work and live in cities， they cannot really integrate with the city because their hukou are still attached to their hometown. Permanent residents of a city include people both who have and do not have household registration in the city.

Currently， Chinas permanent urban residents account for 53.7 percent of the total population， while residents with city household registration only make up 36 percent of the total population. That means each year over the next six years， China must raise its urbanization rate in terms of permanent urban residents by 1 percentage point and raise the urbanization rate in terms of residents with city household registration by 1.5 percentage points. Therefore， from now to 2020， about 100 million migrant workers will move to cities. According to figures from the National Bureau of Statistics， at present， 260 million migrant workers are living and working in cities.

Such large-scale urbanization requires the construction of a huge number of houses and public facilities， which will significantly stimulate the Chinese economy. However， the subsequent pressure on employment and healthcare will also be severe.

Xu Xianping， Vice Minister of the National Development and Reform Commission， said as a country with a population of 1.3 billion， China has no precedent to follow in urbanization， so it welcomes more international companies to participate in the new-type urbanization taking place in China.

How ‘new it is？

Since the reform and opening-up policy was introduced more than 30 years ago， China has made significant progress in urbanization， but there are also many conflicts and unsolved problems， Xu said at a press conference on March 19. “The drive toward urbanization has now reached a crucial stage. The former extensive expansion approach is no longer appropriate. We must find a new way out.”endprint

The new-type urbanization is “new” in six aspects. Firstly， it focuses on peoples rights and orderly converting a sizeable proportion of Chinas rural population into urban residents. In 2013， China had 730 million urban residents， including over 200 million migrant workers and their families. Migrant workers have become the mainstay of Chinas industrial worker population. However， they cannot enjoy the benefits of urban residents. Hence， the plan requires the relevant government departments to promote the reform of the hukou system and the equalization of basic public services， implement a hukou policy with different eligibility requirements for people under different conditions， and progressively grant urban residency to rural migrant workers and their families who are both willing and able to stay in cities and towns where they have had jobs or carried out business for a long time. A new residence permit system will be introduced to let people who have moved from rural areas to cities but have not yet gained urban residency avail of basic public services. The plan is the first document regulating the proportion of permanent urban residents and the proportion of urban residents carrying a rural household registration. This is the biggest break with the past， and represents the biggest area of progress.

Secondly， the plan emphasizes the integrated development of new-type urbanization， new-type industrialization， IT application and agricultural modernization. This is also a necessary requirement of Chinas drive toward modernization， because industrialization is the driving force for development， agricultural modernization represents its foundation， IT applications bring new elements and vigor necessary for development and urbanization serves as a platform for the entire process. Integration of these four elements will push forward the process of modernization.

Xu said the third aspect of the newtype urbanization is reflected in optimizing macro-level city layouts. Based on major city clusters， China will boost coordinated development of cities and small towns. The three city clusters， namely， the Beijing-TianjinHebei region， the Yangtze River Delta and the Pearl River Delta， are home to 18 percent of the countrys total population and create 36 percent of the national GDP with only 2.8 percent of the countrys land. However， they now face intensifying ecological pressure and increasing international competition， and need readjustment， transformation and upgrading. Hence， the plan requires the relevant authorities to foster and develop new city clusters， such as the ChengduChongqing region， the Central China Plain and the middle reaches of the Yangtze River， in central and west China where there are more resources and a better environment， in order to promote the balanced develop- ment of geographical space and create new regional economic growth poles.endprint

Now China has 142 cities with a population of 1 million or above， with six cities each having a population of 10 million or above. The country also has 10 cities with a population between 5-10 million. Some of these megacities are facing a conflict between their growing population and decreasing capacity. There must be effective regulations to tackle this problem. Therefore， the plan requires the authorities to intensify the integration of transportation and information networks， promote the distribution of key industries and public resources and move out some of the megacities economic capacity and other functions， so as to help small and mediumsized cities and small towns to develop industries and attract residents.

Fourthly， ecological progress is emphasized. The plan says China will promote green， circular and low-carbon development； conserve water， land， energy and other resources and use them efficiently； intensify ecological restoration and environmental treatment； promote the development of green cities and smart cities； and encourage green lifestyles and lowcarbon city construction， operation and management methods. The country vows to reduce the negative effects of urbanization on nature and the environment as much as possible.

The fifth aspect is to stress cultural continuity and focuses on the special features of different cities. The plan requires local governments to accentuate these differences and promote the diversified development of cities according to their own natural， historical and cultural characteristics.

Lastly， the plan stresses reform that will set up a mechanism conducive to the healthy development of urbanization. The plan states that China will comprehensively reform key areas concerning people， land and funds， gradually change the urban-rural dual structure and integrate the developed and underdeveloped areas in cities.

“These six parts represent the new ideas and the implementation focus of the plan，”Xu said.

Money supply

Securing funds is important for the process of urbanization， said Liu Kun， Vice Minister of Finance， at the March 19 press conference. It is envisioned that the problem will be addressed mainly by making institutional innovations. “We will speed up the reform in the financial and taxation system and the investment and financing mechanisms， make innovations in financial services， open up market access， and build a diversified and sustainable financial guarantee mechanism，” he said.endprint

The MOF will also establish a mechanism that connects fiscal transfer payments with the urbanized agricultural population， further improve the fiscal transfer payment system and promote equitable and universal public services including social security， medical treatment， education and culture.

In securing capital for urbanization， the MOF will reinforce the power of local government bonds in promoting urbanization， grant more rights to local governments to issue bonds in accordance with the law， improve the current system of local government bonds and explore a means of local government bond issuance. The ministry will promote the cooperative model of government and social capital， in which the government， by means of franchise rights， fair pricing， fiscal subsidies and other open and transparent measures， clarifies the benefit-cost mechanism in advance and attracts social capital to participate in the construction of the infrastructure necessary for urbanization.

It is unnecessary to worry about local government debt risks， said Liu， because the MOF will further strengthen the management of local government financing companies， regulate local government borrowing， sort out the relationship between enterprises and governments， correctly guide market expectations， and prevent and diffuse financial risks.

Enabling migrant workers

There are slum areas in many cities of the world. They are actually a byproduct of rapid urbanization. After moving to cities， many people only earn low incomes， or else become jobless because of their low level of education or incapability. Finally， they naturally congregate in areas with low rent and living costs. In such areas， both security and living environment are often poor. The public is concerned that such areas will arise in China during the process of urbanization.

Yang Zhiming， Vice Minister of Human Resources and Social Security， said at the press conference that the most important tasks are to maintain and increase employment for migrant workers， protect their fundamental labor rights and interests， raise their technical abilities， encourage them to integrate into their enterprises， and help their children to integrate into schools， their families into communities and the their group as a whole into society.

“We must make sure they are employed when they move into the cities， have training before they are employed and get paid for their jobs，” Yang said， listing these as the minimum requirements to protect migrant workers during the process of new-type urbanization. Moreover， there are some other higher-level requirements， such as workers living under improved conditions， spending their spare time engaged in cultural activities， having schools for their children and setting goals in their careers.endprint

According to Yang， at present， China aims to accomplish two fundamental transformations through joint efforts by the government， enterprises and migrant workers： upgrading the migrant workers into modern technical workers and changing their identities from rural to urban residents so far as they are willing.

The plan includes programs for raising technical skills of migrant workers and proposed detailed targets for training. Training for migrant workers will be developed to get them into employment. The plan is to train 10 million people each year. By 2020， each migrant worker will enjoy technical training subsidized by the government. The aim of this is to eliminate the cases in which migrant workers with no skills are employed； training for employed migrant workers will be developed to improve their work skills， with 10 million people being trained each year by 2020 to upgrade the majority of migrant workers from junior workers to new-type technical workers. The government will train 1 million people a year， focusing on senior workers， technical workers and senior technicians. The plan also supports the construction of a number of specialized training bases for migrant workers to learn technical skills， through cooperation between schools and enterprises.

“In summary， we will enable migrant workers to learn skills， hold diplomas， find work and earn higher salaries， so as to fundamentally solve the dilemma of the job market， whereby demands for high skilled technicians are high but cannot be met in some areas，” said Yang.endprint