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Monday, March 27, 2000, updated at 14:21(GMT+8)


China

Researchers Call for Speeding up Urbanization in China

A group of brain trustors to China's State Council have urged to accelerate the pace of urbanization as a way of hasten national economic growth, China Daily reports.

"A one percent increase in urbanization annually usually adds three percentage points to economic growth," Liu Yong, an expert with the Department of Development Strategy and Regional Economy under the State Council's Development Research Center, was quoted by China Daily Business Weekly as saying.

Liu and his colleagues have been working on the urbanization topic for nearly two years before they came to a conclusion that China's economic growth now largely depends on expansion of domestic demand.

Although the central government has used active fiscal policies to stimulate domestic demand, it has remained sluggish, and has become the largest bottleneck to economic growth.

Liu cited the low consumption level of rural residents, who make about 80 percent of China's approximately 1.25 billion population, as a primary factor affecting sluggish demand.

To stimulate demand within this huge population is loaded with potential, Liu said. But despite decades of rapid growth, surplus labor and overproduction of some key farm products such as grain and cotton, have retarded growth in rural incomes and consumption.

"Accelerating urbanization could play a decisive role in stimulating domestic demand," he said, adding that urbanization helps reduce rural population growth rate while increasing incomes and consumption rates.

He predicted that a 30 percent reduction in the rural population could along enhance rural per capital incomes by 30 percent in the next 15 years.

Urbanization will require a large investment in infrastructural construction, including water supplies, communications and waste handling facilities. Undertaking these projects would stimulate domestic demand and hasten urbanization.

"Urbanization would spur the country's inert tertiary sector. More rural residents would live in more highly urbanized cities and towns and their living standards would be improved," he said.

The tertiary sector, including service industries, accounts for only 32 percent of China's GDP, compared with 60 percent to 70 percent in the developed countries.

The country's sustainable development strategy will significantly benefit from urbanization, Liu said.

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