October 14, 2015, by editor
China’s New Urbanisation Plan
Written by Zhou Zhihua.
In recent decades, in tandem with socio-economic development, urbanisation at the global level has increased from 29% in 1950 to 52% in 2010. China similarly experienced dramatic urbanisation growth, from 18% in 1978 to 54% in 2013. However, this massive urbanisation wave has been criticized for its over-reliance on physical construction and spatial expansion, with insufficient attention paid to resource efficiency and the livelihood of urban inhabitants.
These problems, coupled with the international economic climate and the domestic economic restructuring, underscore the need for a new form of urbanisation. The Chinese leadership has singled out urbanisation as the main driver of the economy in the coming years and introduced the ‘New Urbanisation Programme’ at the 18th National Congress of Communist Party of China in November 2012. The central government followed this up with the launch of a compendium to guide the New Urbanizsation Programme in March 2014, which is expected to serve as a strategic, comprehensive and instructional compendium for future urbanizsation.
The Plan—comprising eight chapters that logically set out, in over 30,000 words, the objectives, baseline, four strategic tasks, reforms in five domains, the institutions in charge and the path of future urbanisation—shows the government’s strong intention to differentiate urbanisation from the previous developmental trajectory. The Plan specifically numerates the objectives of urbanisation by 2020, which is divided into 18 assessment indices with respect to urbanisation rate, basic public service, infrastructure, and resource and environment. The government will devote greater efforts in removing obstacles that have constrained the previous urbanisation process by introducing institutional improvements in five domains, namely hukou, land, fiscal and taxation, housing and environment. The Plan affirms that future urbanisation will take a quality-focused and people-centred approach, rather than over-reliance on physical construction and spatial expansion as has been the case in the past. It stipulates that urbanisation will not be implemented as a single strategy, but in parallel with industrialisation, information and agricultural modernisation for a coordinated development.
Specifically, the Plan includes a set of stipulations that tackle problems of the previous urbanisation path, e.g. target-setting for inland counties and towns and megalopolis development to balance urban and economic growth, the establishment of an assessment system on environment protection and a responsibility system for environmental damages and resource abuses. It also stipulates the implementation of initiatives to reduce rural and urban disparity (e.g. free and equitable flow of economic factors between rural and urban areas, establishment of unified labour and land markets and provision of more financial services for rural economy development); sustain economic growth (e.g. measures to stimulate domestic consumption, and fiscal and taxation reforms); alleviate social tensions (e.g. by increasing the compensation standard for land expropriation, and granting urban hukou and affiliated welfares to more migrants); and restructure the political and administrative systems (e.g. role transformation of local governments from one that commands dominance to one that is service-focused, adjustment of relationship between the government and market and between central and local governments, and improvement of the cadre assessment system to rectify the overemphasis on GDP growth). The leadership sees the New Urbanisation Programme as a strategic tool to tackle problems of the previous urbanisation model and to stimulate economic growth. Hence, the Plan may be more appropriately deemed a holistic development package in the name of urbanisation.
The central government has accordingly initiated many follow-up measures to advance the Plan. For instance, in July 2014, the State Council advised that rural-urban distinctions under the household registration system be scrapped; by August 2015 over 20 provinces had issued regional measures to relax the Hukou system. In June 2015 the State council announced the intention to renovate dilapidated buildings of 18 million housing units in the urban areas and 10.6 million in the rural areas during 2015 and 2017. In July 2015 the Ministry of Land Resources selected 33 regions nationwide as the trial locations for rural land reform. In August 2015 the State Council urged local authorities to upgrade the underground conduit and pipeline system to certain standards by 2020. The State Council in April 2015, granted the Compendium for the coordinated development of the Beijing-Tianjin-Hebei Metropolitan Region and the plan of establishing the fourth urban agglomeration around the middle reaches of the Yangtze River. The official website of the National Development of Reform Commission indicates that China is going to develop more new urban agglomerations in the near future.
The new leadership pins high hopes on the New Urbanisation Programme to transform China into a domestic consumption-driven economy, and to promote the country’s rural and urban integration for social equality. Yet, there will be challenges to overcome in implementing the Plan as a holistic development package across China’s vast and diverse territory with a huge population base.
First, China is experiencing a dual transition from an agriculture-based economy to an industrial economy and from a planned economy to a market-oriented one. This transition is further complicated by the distinct segmentation of the rural and urban areas (e.g. dual-track system in the land and hukou systems) and the hierarchical urban management system characterised by the socialist legacy. Second, the quest for a sustainable financing mechanism for this pricy Plan and the coordinated efforts of various ministries and governments at different levels make the implementation of the Plan more challenging. Third, possibly most important, the recent slowdown in economic growth could hamper the implementation of the Plan. Indeed, China has recorded a slowdown in the urbanization rate growth, compared to the figures in the 1990s and 2000s. The leadership has initiated the new development strategy of New Normal Economy, which focuses more on structural balances and market mechanism build-ups, and less on GDP-oriented and monetary-expanding initiatives to sustain the economy.
How to progress the Plan under the New Normal mindset for economic efficiency, social equality and environmental sustainability becomes even challenging. Whether the targets in the Plan could be achieved by 2020 remain to be seen and at this stage it is still too early to assess the efficiencies and outcomes of the Plan.