China: World Bank reveals new blueprint for urbanisation

A new report recommends that China curb rapid urban sprawl by reforming land requisition and giving migrants urban residency and equal access to basic public services, and also by allowing local governments to borrow directly within strict central rules.

As China’s people are increasingly concentrated in cities, with 200 million more urban dwellers than a decade ago, the government is under pressure to strengthen the enforcement of environmental legislation and reduce the number of pollution-related health problems, according to the joint report by the World Bank and the Development Research Center of China’s State Council.

The report was prepared over the last 14 months and provides an important basis for the formulation of policies on China’s new model of urbanisation.

“The reform agenda the report presents would boost revenue for farmers in land sales, provide more services for migrants and encourage more responsible financing by local governments,” said Jim Yong Kim, World Bank Group President. “It would also mean greener urban planning, and stronger environmental management so everyone can breathe easier. China has already made big progress with experiments at the local level that can be expanded on a huge scale.”

“Urbanisation is a powerful engine for China’s sustained and healthy economic growth,” said Lou Jiwei, China’s Minister of Finance. “It is necessary to put people at the core of urbanisation, supported by institutional and systemic innovation, and unleash the development potential of urbanisation through reform. We need to accelerate reform of the fiscal and tax system as well as investment and financing mechanisms, promote the application of the public-private partnership (PPP) model, to help build a diverse and sustainable urban financing mechanism. We need to gradually address the issue of basic public services for rural migrants, and create a mechanism to link the financial payment system for rural migrants transferring to urban areas, in order to achieve the goals for people centred urbanisation.”

The report includes six priority areas for a new model of urbanisation:

1. Reforming land management and institutions.
2. Reforming the hukou household-registration system.
3. Placing urban finances on a more sustainable footing.
4. Reforming urban planning and design.
5. Managing environmental pressures.
6. Improving local governance.

In the last 30 years, China’s record economic growth lifted half a billion people out of poverty, with rapid urbanisation providing abundant labour, cheap land and good infrastructure. The report notes that while China has avoided some of the common ills of urbanisation, strains are showing as inefficient land development leads to urban sprawl and ghost towns, pollution threatens people’s health, and farmland and water resources are becoming scarce. With China’s urban population projected to rise to about 1 billion–or close to 70 percent of the country’s population–by 2030, China’s leaders are seeking a more coordinated urbanisation process.

“Managing urbanisation is fundamental for China to achieve its goal to become a high-income country,” said Li Wei, Director of China’s Development Research Center. “Good management of urbanisation is essential to unleash the potential of cities to improve efficiency and promote innovation. The key is to ensure good governance at the city level, while meeting the challenge to strengthen urban environmental protection and control pollution. It is vital to develop institutional mechanisms for efficient, inclusive and sustainable urbanisation.”