Recently, the Chinese authorities have accelerated the promotion of urbanization. Experts believe that the goal of moving rural families to cities to drive the real estate market and increase urbanization rates cannot be achieved. Most of the benefits that can be brought to urbanization by relaxing the household registration system have already been exhausted.
According to a report by the Chinese state-run Xinhua News Agency on July 31, the State Council recently issued the “Five-Year Action Plan for the In-depth Implementation of the People-Centered New Urbanization Strategy,” which aims to increase the urbanization rate of permanent residents to nearly 70% over the next five years to “better support high-quality economic and social development.”
On August 1st, Zhu Keli, the founding dean of the National Research Institute of New Economy, stated in an interview with Red Star News that the full cancellation of settlement restrictions for cities with a permanent population of below 3 million and the relaxation of settlement conditions for cities with a permanent population of 3-5 million are important measures to promote the new type of urbanization.
According to the Ministry of Housing and Urban-Rural Development’s “China Urban Construction Statistical Yearbook 2022,” as of the latest statistics, there are 695 cities in China, including 302 prefecture-level cities and 393 county-level cities. There are 25 cities with a permanent urban population of over 3 million, such as Shanghai, Beijing, Shenzhen, Chongqing, Tianjin, Dongguan, Chengdu, Guangzhou, Wuhan, Hangzhou, Xi’an, Nanjing, Changsha, Shenyang, Jinan, Kunming, Qingdao, Zhengzhou, Harbin, Dalian, Changchun, Shijiazhuang, Hefei, Taiyuan, and Suzhou.
If cities with a population below 3 million lift settlement restrictions, it would mean that over 600 cities in China would no longer have such limitations.
On August 2nd, Financial First released a topic titled “Rural Families Moving to Cities Could Become a Driving Force for the Real Estate Market,” indicating a new wave of “urbanization of agricultural population,” sparking criticism from netizens. Some commented, “It’s hard for farmers to constantly shuttle between urbanization and new rural construction, they are truly struggling, and the money is never enough.” Others expressed concerns about the elderly in rural areas and the need for job creation to prevent de-urbanization.
In May of this year, the Finance Department of Shanxi Province allocated 978 million yuan in incentive funds for the citizenization of agricultural transfer population in 2024, to support the basic public service needs such as compulsory education for children of agricultural transfer population, leading the way in promoting the citizenization of the agricultural transfer population.
Netizens responded, “This 978 million yuan is not nearly enough for the officials. Many elderly people in rural Shanxi cannot afford natural gas in winter. They can only buy firewood. Are they going to force them to move to cities?” There were further criticisms about the exploitation of rural resources without adequate benefits for the residents.
Mr. Qin Shuzhong from Xinji, Hebei, shared with reporters that ten years ago during the real estate boom, marriage was out of the question without a house and a car. However, as population demographics and housing development changed, there was now an oversupply of real estate in Xinji County, with all the residents moving into high-rise apartments, making room for even more population growth.
He explained, “A few of my peers have secured government positions, some have moved their businesses to urban areas, and families have resettled in the city, all more than a decade ago. The remaining people born in the 1970s purchased homes in the county town, with new developments in larger villages or near prime locations along National Highway 307. There are too many apartments and residential complexes.”
“We are still living in one or two-story houses. The large living spaces provided by housing plots are much more comfortable than the cramped high-rise apartments. Where can you find comfort in those matchbox-sized apartments?”
Qin pointed out that while people may have some savings, they struggle with the high costs of social expenses like healthcare, retirement, and education, which are not fully covered by the government. The elderly population lacks the resilience to cope with these financial burdens.
According to official data from the National Bureau of Statistics of China, as of 2023, the urbanization rate in mainland China was 66.16%, having increased by 10% over the past decade. On July 19, Han Wenxiu, vice director of the State Council’s Financial Office and director of the Central Agricultural Office, stated at a Central Committee press conference that “the new type of urbanization is still progressing, and there is still significant room for high-quality development in real estate.”
In response, some netizens estimated, “To achieve 70% by spending another 5 years, approximately 56 million (4% increase) of the 1.4 billion population would need to move to cities annually. By the end of 2023, there were 672.95 million square meters of unsold commercial housing. Each new urban dweller would need to buy about 60 square meters of housing to absorb this inventory, meaning a family of three would require 180 square meters to match the current stock.”
Yang Xu, a commentator, stated during an interview with Epoch Times that many cities have already relaxed or abolished settlement restrictions, such as the second-tier cities like Hangzhou and Nanjing, where families can migrate their household registrations with homeownership. The benefits of relaxing the household registration system to urbanization have mostly been exhausted.
He pointed out that many of the elderly living long-term in rural areas are over 60 years old and emotionally prefer to stay in the countryside due to lower living costs. Without substantial welfare benefits like free medical care and housing assistance from the government, the rural elderly have no urgent desire to move to cities.
Scholar Dai Wei, in an interview with Epoch Times, remarked that following the Third Plenum, a series of measures from increasing local fiscal autonomy to expanding local tax revenues and nationwide social insurance network have been introduced. However, the key issue remains the lack of financial resources, aiming to exploit another layer of land from the massive rural population.
Regarding the 70% urbanization rate target, Dai Wei believes it is an unrealistic goal given the challenges in real estate and land sales. The economic downturn has led to bankruptcy in 90% of provinces, cities, counties, and towns in China, indicating severe financial constraints within the national machinery and civil service.
Dai emphasized, “Farmers who have graduated from ordinary universities, have better family conditions, and work in county towns or have taken out loans to buy houses in their workplaces make up only around 15%. For those who cannot afford to buy homes, they remain tenants. Within this 15%, nearly half are now selling off their houses, unable to sustain mortgage payments, and about 5% have defaulted on their loans.”
“Singletons not being a new problem anymore. Those who have left the rural areas and still hold agricultural household registration status, with no houses in urban areas and no stable occupations, including the third and fourth agricultural generations, may all end up being single. They dream of buying a house and getting married, but it remains out of reach. This is the harsh reality.”
“Once rural cooperative medical treatment is shifted towards urban employee basic medical insurance, how can they seamlessly join the urban employee insurance system? Without previous contributions to urban employee insurance, and only having participated in rural cooperative medical care, how can they access pension benefits? How can they integrate into the urban lifestyle halfway through urbanization?”
Yang Xu also noted that the overall economic environment in China has deteriorated, with industrial chains relocating, foreign investment withdrawing, private businesses closing, and diminishing job opportunities. Even university graduates are struggling to find jobs, leading to a further decrease in employment opportunities for migrant workers. Data shows that over 80% of employment in Chinese cities relies on private enterprises, and with the declining private sector, job opportunities naturally shrink.
As for the next steps involving rural migration or return of migrant workers to their hometowns, Dai Wei and Yang Xu agreed that both options present challenges given the current economic conditions and policy uncertainties. The implementation of policies alone may not be sufficient to bolster the Chinese economy, especially in light of decreasing confidence in the future economic outlook among foreign investors, private enterprises, and the general population.
They suggested that the ongoing urbanization efforts may not yield significant outcomes and could potentially face the same fate as previous initiatives. The lack of comprehensive support and the difficulty of accommodating demands from the Chinese government make it challenging to institute policies that could effectively revive the economy.
In conclusion, the intricacies of urbanization and citizenization in China highlight the complexities and challenges faced by rural populations, the government, and the broader economic landscape. The balancing act between urbanization goals, social welfare provisions, and economic sustainability continues to evolve as China navigates the complexities of modernization and demographic shifts. However, the path forward remains uncertain as the country grapples with economic uncertainties and social disparities in its pursuit of urban transformation.