Plenum offers new platform for urbanization

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The Third Plenum of the 18th Central Committee of the Communist Party of China may be a good opportunity to push the country's ambitious urbanization bid - a major effort to change the development model of the world's second-largest economy.

The CPC's new leadership designated urbanization as a growth point of the economy and called for quality and new urbanization at its economic work conference in December, after China's exports were adversely affected by the lingering global crisis.
China's urbanization ratio hit 52.57 percent in 2012, increasing almost 1 percentage point each year from 17.9 percent in 1978. The per capita gross domestic product was about $6,102 in 2012. The steady and rapid urbanization seems sustainable for awhile along with the economic growth.

However, only 27 percent of the national population has urban hukou, or household registration, with which residential welfare is affiliated. More than 300 million migrant workers have lived in cities without hukou.

Although China has established a basic social security network nationwide, the welfare gap between an urban hukou holder and a farmer remains so large that local governments cannot afford to offer all migrant workers hukou in a short time.

After the central government abolished the agriculture tax in 2006, some migrant workers decided they would leave their small plots uncultivated at home rather than rent them out because of the absence of a functional land transfer market.

China's urbanization has been propelled by the artificial divide between urban and rural areas. The hukou system, which establishes the agricultural population's inferior position, is the main barrier to healthy urbanization in China.

Some local governments stress only urbanization as an immediate statistical driving force of economic growth, ignoring the necessary conditions of quality urbanization, such as the innovation and equalization of public services.

Gao Guoli, an economic researcher with the National Development and Reform Commission, pointed out recently that China's urbanization demonstrates three characteristics: slow industrialization, fast land urbanization and the prioritization of speed over quality.

China should draw lessons from Latin American countries, whose urbanization ratio is 79.6 percent, much higher than the 72.08 percent of Europe. But the industrialization of these countries is much lower than that of European countries. Poor people flood into cities and create new villages there.

In contrast, the United States' urbanization ratio of 85 percent is based on the coordinated development of agriculture and industry.

The Third Plenum is expected to instill in officials of various levels a sense that urbanization should not be regarded as an artificial means to boost domestic consumption, but as a necessary result of advancement of production efficiency in both agriculture and industry.

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