You Nuo

Waiting for an urban boom in life and more

By You Nuo (China Daily)
Updated: 2009-12-15 07:25

Things are moving on many fronts to transform China into an urban society.

Poring over Beijing's recent policy paper on the economy in 2010, one gets the impression that the ultimate hope of using the government's financial stimulus package to change the overall domestic business structure somehow lies in the hands of the country's middle-class, mostly urban, consumers.

The restrictions on migration will be partly lifted. Small companies, including those in the urban service sector, will be provided with new freedom and credit line. Some workers could expect a salary raise.

More housing projects have been promised for low-income households. And the nationwide reform of the medical insurance system is to continue.

New items could be added to the original to-do list, keeping in mind the criticisms and suggestions of the National People's Congress, whose annual session is scheduled for March.

Should the promised policies be put into practice, they will be China's first urban policies designed to take care of not only existing urban residents, but also small businesses and migrants from the countryside.

Plus, for the first time the urban economy, based mainly on middle-class consumers' spending, has been recognized as a potentially more important engine to drive overall economic growth.

This is an inevitable change, although the plans for it have been far from adequate till now. To make cities more livable and more dynamic will perhaps be one of the greatest challenges for the country's leaders over the next two to three decades.

During the past few months, judging from retail data, China does not seem to have been very successful in moving some of its inventory of home appliances to the rural market - despite a purchase incentive program.

Nor have the various subsidy packages been really useful in helping farmers steer clear of the price fluctuations - from dairy to orchard business. The subsidies can at best protect them from losing all their investment in certain major crops.

In contrast, the amounts made from the automobile and the urban housing markets have been enormous - not just by industries but more importantly by city governments through the transfer of land-use rights. This in turn facilitates the building of bigger pipelines, wider roads, and possibly new mass transit systems.

The sale of autos, from large cities such as Beijing and Shanghai to smaller ones like Shijiazhuang and Baoding, has been jumping, and the national total is expected to top 12 million and become the highest in the world (as compared with the expected 10 million-plus sale in the US).

The boom in the sale of urban residential housing units and that of automobiles is proof of essentially the same thing: People's unquenchable desire to move into and between cities.

If this desire is ignored or not responded to properly, it will be hard for China to find a similar potential driving force.

To a great extent, responding properly means granting more freedom and providing new government services. Only in this way can life and culture fill in the urban space created by new pipelines and roads.

A more inclusive and dynamic urban society is the best solution for the newly arrived migrant workers and college graduates in the job market; it is better than any specific solution tailored to appease a specific group of people.

If the long-waited reform of the rural-urban migration rules takes place - even if it is confined to a few experimental cities initially - it can raise the demand for new products and services. A nationwide replacement of the half century-old hukou system (registration of residency) would soon tip the country's population balance in such a way that 70 percent of the people could become de facto urban residents.

The change would generate an untold amount of demand for goods and services and for further government reform.