China's urbanisation conundrum: balancing economic growth and human wellbeing

What is the justification, and rationale, behind China’s phenomenal rate of urbanisation? And who are the winners and losers? 

Bingqin Li's picture
Insight by 
Bingqin Li
Professor in the Social Policy Research Centre at UNSW Sydney, Australia
30 April 2024
A view of Beijing across the river. There are trees and greenery in the foreground.

Beijing cityscape (Photo: Alexander Savin, via Flickr, CC BY 2.0 Deed)

My previous blog was on whether China’s rate of urbanisation has been too fast or too slow. This blog looks at what motivated the ‘too slow’ discourse and the barriers to equality for rural migrants.

But first, we should note that any discussion of urbanisation in China must be clear about Hukou – a system of household registration – that had historically been used to control population migration, in particular rural to urban migration. Its application led to a large migrant population in cities who were not counted as ‘urban,’ as residents could not get registered as being urban and were unable to access public services as a result.

Two justifications for speeding up urbanisation

Two separate sets of ideas supported the ‘too slow’ discourse.

The first is the economic development theory that supported urban expansion, enabling urban governments and the real estate development sectors to acquire more land from rural areas.

This was considered important for China’s economic growth. The acquired land was used to build more houses, factories and other urban infrastructure. In this urban expansion process, urban governments leased the acquired land to gain more revenues to support building infrastructure and providing services. Land rentals were the single most important source of local revenue for many years.

To accelerate urban expansion and more acquisition of rural land, some policy advisers actively pushed the idea of China ‘urbanising too slowly’. To minimise the negative impact on agriculture, turning farming land to urban usage was not allowed. The policy pursued was to stack farming families from sparse rural villages in high-rises in urban and peri-urban areas. Then their homesteads could be vacated for urban use.

The second argument is about equality for urban residents to access social rights. This argument criticises policies like the Hukou system for restricting migrant rights in cities and, by implication, making it difficult for people to be fully urbanised.

This is because in China, the rights to work, to education and to access other social services are defined by the type of household registration. Without being able to change the household’s Hukou status, it is hard for people to enjoy their full rights.

Migrating to Beijing and Shanghai is the most difficult. Except for highly skilled workers or those who married local citizens and bought a house, rural to urban migrants would not be able to become citizens of these two cities.

It is easier to migrate to other cities, but usually it would take some years of residency and work experience. Therefore, there is also a call for faster urbanisation, to alleviate the uncertainties and disadvantages associated with not having urban citizenship.

The chart below summarises the different types of resident status in China. With the continued reform, it is possible nowadays for long-term residents to gain more rights to social services and protection as urban citizens. However, in the largest cities, access to urban long-term residency is tightly controlled. As a result, one can observe a repressed urbanisation in these conurbations.

Urban citizens Urban long term residents Urban temporary Rural
Live in Cities Cities Cities/rural Rural
Work in Cities Cities Cities/rural Rural
Access to services in cities Yes Yes Some No

If one follows the second line of argument, the policy solution would be to grant all migrants in urban China equal social rights to enjoy equal citizenship as they settle down in cities.

National and local governments have long been criticised for not being willing to address the human needs of these migrants. After all, these workers have contributed to the booming economy, received very low pay and, via their employers, they should have contributed their share of tax.

Changes and challenges

Some reforms in recent years tried to grant more social rights to urban long-term residents and the criteria for a person to become an urban long-term resident were also made clearer. There are also continued efforts to restructure social service entitlements to allow points-based application for changing Hukou status, and allowing entitlement to be recognised across different provinces.

However, these policies made it easier for people to move to smaller and medium sized cities, but more difficult for people to move to the largest cities, which adopted more stringent criteria for granting citizenship.

At the same time local governments also complain about the difficulties they have to face when planning for social services, providing housing and governing migrant-concentrated communities.

It was not only about acquiring resources; the sheer task of accommodating millions of incoming migrants in a city means that there needs to be enough housing, infrastructure and human resources to support them. In the last 45 years (1978-2023) China has built enough housing to accommodate the entire population of the European Union.

So what do we think?

In conclusion, the answer to the question of whether China is urbanising at an appropriate pace would be different depending on the indicators used, the reference point and the expectations of those asked.

Most Chinese rural-urban migrants’ living conditions may still appear to be far below what is expected in many other countries. But it is worth highlighting that to complete an urban construction project of this scale within the time frame, the resources needed, the pressure for construction and the governing ability, are all phenomenal. What is more, what would the learning curve be for other countries if they had to deal with a similar challenge?

The remaining challenges also pose further questions regarding the methodology to be used when conducting international comparative analyses, as discussed in the previous blog

Let us assume there is an internationally agreed ‘ideal’ speed for urbanisation which can be used to urge a faster pace. When this rate is anchored to GDP growth without taking into account scale and timeframe, it may create enormous pressure for the hosting communities.

This could potentially lead to social ills that would result in a deteriorating quality of life, not only for the urban locals, but also for the migrants. For urban authorities, it would be realistic to focus on improving the quality of existing urbanisation rather than actively pushing more people into cities.

Further reading

Hukou system influencing the structural, institutional inequalities in China, by Jason Hung

Policy coordination in the talent war to achieve economic upgrading, by Yang Shen and Bingqin Li

About the author

Bingqin Li is professor in the Social Policy Research Centre at UNSW Sydney, Australia

Bingqin Li's picture