CHINA-ECONOMY: URBANISATION

Zhou Tianyong, a well-known professor at the Central Party School in Beijing, recently said in an article that "there is now a large group of people who have been prevented from urbanizing by hukou restrictions, and who realistically will never be able to urbanize in the future–thereby resulting in a permanent loss of income: because cities do not provide education and other public services, or because they do not have any income from rural land while urban housing prices are too high."  He argued that the existence of a large group of people who have missed out on urbanization creates economic losses in three ways. First, an overly large labor force in agriculture results in relatively low productivity. These people could have higher productivity in the city, but in rural areas they can only do some basic agricultural work, which is a huge loss for the national economy. Second, the delay in urbanization results in a loss of consumer demand. Because rural migrant workers cannot easily urbanize, there is a big gap between their spending power and that of true urban residents. Third, people do not realize their potential to create and distribute wealth, which leads to a huge loss of national income. Much rural land is abandoned because it cannot be used for large-scale operations, houses are rundown and the woods empty because the land cannot be allocated by the market and re-purposed by investors. In fact rural land is becoming a zombie asset that cannot be re-allocated to other uses because of restrictions on private capital, resulting in a huge loss of potential output and value.





Subscribe to Newswire | Site Map | Email Us
Centre for China Analysis and Strategy, A-50, Second Floor, Vasant Vihar, New Delhi-110057
Tel: 011 41017353
Email: office@ccasindia.org