Mismanaging China’s Rural Exodus

A column in the Financial Times looks at the future of China’s internal migration and household registration reform, quoting a rural expert who predicts that China’s urban population will grow from 45% of the total to 70%:

The startling numbers conjure up images of mass migrations and the trebling or quadrupling in size of big cities such as Beijing, Shanghai and Guangzhou. In practice, it is unlikely to be quite like that. China, after all, is a planned economy. Even so, McKinsey Global Institute, which has researched China’s urbanisation trends, paints one scenario under which, by 2025, the country will have 15 super-cities with an average population of 25m people each. Meanwhile, many cities will “move” to the countryside as the state frantically constructs new urban centres in the interior and as changing land use blurs the distinction between village and town.

This is not futurism. By some counts, China already has some 170 cities with a population above 1m. That compares with nine in the US and two in the UK. In population terms, Tianjin is China’s New York and Qingdao its Los Angeles.

The emergence of second and third-tier Chinese cities with big populations has businesses salivating at the prospects of a consumer bonanza. A steady stream of urbanites could indeed become tomorrow’s purchasers of kitchen appliances, insurance and cars. City authorities will need mass-transit systems, power grids and telecoms equipment. Chinese urbanisation could, as McKinsey says, be the biggest business opportunity of the next several decades.

There is a hitch. Not only will planners need to build the physical infrastructure to accommodate this urban groundswell. Harder still, China will have to erect a legal framework. As things stand, of the estimated 200m migrants who have already swapped their hoe for factory aprons or a hard hat, the bulk have no right to permanent residence in the cities. The so-called hukou registration system, instituted by Mao Zedong in the 1950s as a way of limiting internal migration, divides China’s urban population into two castes – privileged official residents and marginalised migrants.