After prolonged debate, China’s long anticipated “New-Type Urbanisation Plan 2014-2020” was unveiled in mid-March. There is much to be applauded. It rightly focuses on improving the quality of urbanisation by reining in wasteful investments, meeting the social needs of migrant workers, addressing environmental concerns and developing new financing sources. The ultimate target is that by 2020 China will be 60 per cent urban compared with 54 per cent today.
—But its flaw comes from a seemingly reasonable stipulation that the size of the largest cities should be “strictly controlled” and labour migration should be targeted at the smaller and medium-sized cities. This restriction not only violates a central theme of the leadership’s Third Plenum in Beijing last November — that the market and not the government should play the “decisive role” in allocating resources — but it also will make it more difficult for China to achieve much needed productivity gains.
The problem comes from having to forge a compromise among the divergent interests of the cities, provincial officials and central agencies. Larger cities have differing interests from smaller ones regarding growth and financing needs; while provincial and Beijing policy makers have varying views about promoting balanced regional development.