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OECD URBAN POLICY
REVIEWS: CHINA 2015
William Tompson
Head of the Urban Development Programme
Public Governance and Territorial Development Directorate
Sciences Po, Campus de Reims
31 March 2015
1. TRENDS AND CHALLENGES
2
1990
2010
28 Oct 2015 Centre for Cities, London
3
The world’s urban population is projected to rise
by about 3.4bn during 2000-50 (= +125%)
Source: UNDESA Population Division (2012), World Urbanization Prospects: The 2011 Revision
Growth of world urban population in absolute numbers, 1950-2050
Right now, about one in five
of the planet’s new urban
residents is Chinese
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1950-1970 1971-1990 1991-2010 2011-2030 2031-2050
Developed countries Non-OECD Asia Developing countries excluding Asia China
Right now, about 60%
of the planet’s new
urban residents are in
Asia; one in five is in
China
Billions
28 Oct 2015 Centre for Cities, London
4
The speed of Asian urbanisation is
unprecedented
1750 1775 1800 1825 1850 1875 1900 1925 1950 1975 2000 2025 2050
China, People's Rep. of
Bhutan
Lao PDR
Indonesia
Viet Nam
Asia and the Pacific
Europe
North America
Latin America and
Caribbean
Number of Years from about 10% to 50% of Urbanization Rate
10% 49%
210 years
9% 51%
105 years
12% 51%
150 years
11% 51%95 years
12% 50%90 years
12% 54%65 years
10% 52%60 years
10% 51%55 years
11% 51%61 years
Source: ADB estimates using Bairoch (2008) and UN(2012).
But in China it is unfolding
against the backdrop of a
very different demographic
dynamic – the so-called
“one-child policy”.
28 Oct 2015 Centre for Cities, London
—
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0 1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
World China
5
China is now a predominantly urban
country
China may be both
more and less
urban than it
appears.
Source: UNDESA Population Division (2012), World Urbanization Prospects: The 2011 Revision
Urbanisation rates: China and the World, 1950-2050
28 Oct 2015 Centre for Cities, London
1. Long history and yet very low starting point.
2. Governance: cities as units of central
administration (and yet with a strong element
of localism at the lowest levels).
3. Sociological dimension: hukou status and rights
 urbanisation as “citizenisation”.
4. Settlement patterns – together with governance
arrangements and hukou complicate the
definition of “urban” and “rural”.
5. Largely endogenous take-off (it’s not just a
globalisation story).
6
Urbanisation with Chinese
characteristics
28 Oct 2015 Centre for Cities, London
7
Actual and administrative
urbanisation rates are diverging
Source: NBS, China Development Research Foundation.
Hukou-based Residency-based
• By 2012, around half of the urban population did not hold an urban hukou.
• By 2020, in the absence of policy change, this ratio could approach one-half.
Hukou- and residency-based urbanisation rates
28 Oct 2015 Centre for Cities, London
28 Oct 2015 Centre for Cities, London 8
China may be both more and less
urban than it appears
Population range
1. Number of
FUAs, 2010
2. Population
2000
3. Population 2010 4. Annual growth
rate 2000-2010
5. Urban
population 2010
Megacities (> 10m) 15 212 860 603 260 549 325 1.86% 190 024 964
Very large metro areas
(5m-10m)
23 128 863 733 148 007 123 1.40% 91 231 962
Large metro areas (1.5m-
5m)
89 215 694 602 234 603 655 0.90% 134 145 464
Metro areas
(0.5m-1.5m)
165 137 959 460 146 644 039 0.66% 77 023 351
Medium-sized areas
(0.2m-0.5m)
83 28 713 162 30 601 406 0.76% 17 076 090
Total metro areas 292 695 378 398 789 804 142 1.28% 492 425 741
Total FUAs 375 724 091 560 820 405 548 1.26% 509 501 831
Total China 1 265 830 000 1 339 724 852 0.57% 678 624 285
FUA share of total
population:
57.2% 61.2% 38.0%
Metropolitan areas’ share
of total population:
54.9% 59.0% 36.8%
Total urbanisation rate 50.7%
Functional urban areas in China
Source: Authors calculations of NBS data, via IPLE/CASS for the FUAs; NBS data from the China Statistical Yearbook 2010.
28 Oct 2015 Centre for Cities, London 9
The functional urban hierarchy looks
rather different
City size and growth in China: functional vs statutory cities
Source: Authors calculations of NBS data, via IPLE/CASS for the FUAs; NBS data from the China Statistical Yearbook 2010.
28 Oct 2015 Centre for Cities, London 10
Even the “top 20” list looks different
FUAs Statutory cities
City Population (millions) City Population (millions)
Shanghai 34.0 Shanghai 22.3
Guangzhou 25.0 Beijing 18.8
Beijing 24.9 Chongqing 15.7
Shenzhen 23.3 Tianjin 11.1
Wuhan 19.0 Guangzhou 11.1
Chengdu 18.1 Shenzhen 10.4
Chongqing 17.0 Wuhan 9.8
Tianjin 15.4 Dongguan 8.2
Hangzhou 13.4 Chengdu 7.4
Xian 12.9 Foshan 7.2
Changzhou 12.4 Nanjing 7.2
Shantou 12.0 Xian 6.5
Nanjing 11.7 Shenyang 6.3
Jinan 11.0 Hangzhou 6.2
Haerbin 10.5 Haerbin 5.9
Zhengzhou 9.7 Shantou 5.3
Qingdao 9.6 Jinan 4.3
Shenyang 7.7 Zhengzhou 4.3
Wenzhou 7.6 Changchun 4.2
Nanchang 7.4 Dalian 4.1
Source: Authors calculations of NBS data, via IPLE/CASS for the FUAs; NBS data from the China Statistical Yearbook 2010.
FUAs and statutory cities, 2010 – total population
28 Oct 2015 Centre for Cities, London 11
Even the “top 20” list looks different
Source: Authors calculations of NBS data, via IPLE/CASS for the FUAs; NBS data from the China Statistical Yearbook 2010.
FUAs and statutory cities, 2010 – urban population
FUAs Statutory cities
City
Urban population
(millions)
City
Urban population
(millions)
Shanghai 28.2 Shanghai 20.2
Guangzhou 21.0 Beijing 16.4
Shenzhen 21.7 Chongqing 10.8
Beijing 19.2 Shenzhen 10.4
Wuhan 12.6 Guangzhou 9.7
Tianjin 11.6 Tianjin 9.6
Chengdu 11.3 Wuhan 7.5
Chongqing 11.1 Dongguan 7.3
Hangzhou 9.3 Foshan 6.8
Nanjing 8.3 Chengdu 6.3
Xian 7.8 Nanjing 5.8
Shantou 7.5 Shenyang 5.7
Changzhou 7.3 Xian 5.2
Shenyang 7.0 Hangzhou 5.2
Jinan 6.9 Haerbin 4.9
Haerbin 6.4 Dalian 3.9
Qingdao 6.2 Zhengzhou 3.7
Zhengzhou 5.8 Shantou 3.6
Wenzhou 5.3 Jinan 3.5
Nanchang 4.2 Changchun 3.4
28 Oct 2015 Centre for Cities, London 12
The urban system is growing more
concentrated…
Panel A. OECD countries, 2001-11 Panel B. China, 2000-10
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
0
100
200
300
400
500
600
700
Large Metropolitan
(>1.5m)
Metropolitan
(0.5-1.5m)
Medium
(0.2-0.5m)
Averageannualgrowthrate(2001-11)
Populationinmillions(2011)
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
0
100
200
300
400
500
600
700
Large
metropolitan
(>1.5m)
Metropolitan
(0.5-1.5m)
Medium
(0.2-0.5m)
Averageannualgrowthrate(2000-10)
Populationinmillions(2010)
-2.0%3.0%(300)700
Large metropolitan (>1.5m)Metropolitan (0.5-1.5m)Medium (0.2-0.5m)
Av
er
ag
e
an
n…
Population in millions Average annual growth rate (%)
Note: Small urban areas, with a population of between 50 000 and 200 000 people; medium-sized urban areas, with a population between
200 000 and 500 000; metropolitan areas, with a population between 500 000 and 1.5 million; and large metropolitan areas, with a population
of 1.5 million or more. The OECD Metropolitan Areas Database includes 275 metropolitan areas.
Source: OECD Metropolitan Areas Database.
13
…And converging over time towards
the international norm
Source: OECD (2013).
Population growth of cities grouped by initial size, 2000-2010
The political hierarchy of Chinese cities biases the allocation of fiscal
resources and capital in favour of the biggest cities even as policy-makers
call for growth elsewhere.
28 Oct 2015 Centre for Cities, London
28 Oct 2015 Centre for Cities, London 14
Larger FUAs tend to have higher per
capita incomes…
FUA population and GDP per capita (2010)
500
1 000
2 000
4 000
8 000
16 000
32 000
0.2 1.0 5.0 25.0
Millions
Note: The horizontal axis represents logged values of the 2010 population of the Chinese FUAs. The vertical axis represents logged values of the GDP per
capita (in USD) for Chinese FUAs in 2010.
Source: Authors’ calculations of NBS data; accessed via IPLE/CASS.
28 Oct 2015 Centre for Cities, London 15
…And the size/income relationship is
clearer in respect of urban population
FUA urban population and GDP per capita (2010)
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
18 000
0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
Note: The horizontal axis represents logged values of the 2010 urban population of the Chinese FUAs. The vertical axis represents logged values of the GDP
per capita (in USD) for Chinese FUAs in 2010.
Source: Authors’ calculations of NBS data; accessed via IPLE/CASS.
28 Oct 2015 Centre for Cities, London 16
Cities of all sizes continue to show
great economic dynamism
28 Oct 2015 Centre for Cities, London 17
Chinese cities may still be under-
specialised
Economic structure of Chinese and selected OECD FUAs
• Agglomeration
economies.
• Consumption
opportunities.
• Environmental
challenges and
urban policy
responses.
Urbanisation and development
18
Urbanisation and income, 1970-2005
28 Oct 2015 Centre for Cities, London
Significant positive
correlation between
urbanisation and
economic prosperity
in China
Close to one-quarter
of China’s population
now lives in areas
with per capita
incomes comparable
to Chile, Mexico or
Turkey.
BUT:
Current trend tends to
favour sprawling metro-
regions.
Pollution and congestion costs.
Limit agglomeration economies.
Social challenges (integration of migrants)
China benefits from agglomeration
economies
19
Productivity and city size in China
0
5
10
15
20
25
30
0
5
10
15
20
25
30
1-25
26-50
51-75
76-100
101-125
126-150
151-175
176-200
201-225
226-250
251-275
276-300
301-325
326-350
351-375
376-400
401-425
426-450
451-475
476-500
Thousand constant
2010 USD PPP
Thousand constant
2010 USD PPP
Mexico
Turkey
Chile
Portugal
Poland
Source: CEIC, National Bureau of Statistics: City Statistical Yearbook; Communiqués on 6th
Census issued by local national Bureau of Statistics offices; World Development Indicators and
OECD Economics Department calculations.
28 Oct 2015 Centre for Cities, London
• Air: 58% of Chinese cities
have PM2.5 concentrations five
times the WHO standard.
• Water: Fresh water resources
per capita are ¼ of the world
average but 42% of the water
in the seven biggest river
systems is not potable.
• Land: 27% of land is
desertified and this figure
grows by almost 2500 km2 per
year.
 Increasing social discontent
and palpable economic costs.
20
Environmental pressures are
increasing
28 Oct 2015 Centre for Cities, London
21
Income inequality has grown but is
now falling on some dimensions
28 Oct 2015 Centre for Cities, London
28 Oct 2015 Centre for Cities, London 22
There is some evidence of
convergence at different scales
Initial income growth and income levels, Chinese FUAs
China’s urbanisation (and, to a great extent, its
macroeconomic performance) has been driven by:
1. Cheap labour.
2. Cheap land.
3. Cheap pricing of environmental externalities.
4. Robust export demand.
These are not a basis for sustained – or sustainable
– growth in future.
23
China needs a new model of
urbanisation
28 Oct 2015 Centre for Cities, London
Urbanisation is about people, land and flows – of ideas, people, goods
and bads. And, of course, money. Challenges:
• “Citizenising” the rural population (more than just integrating the
segmented labour market).
• Integrating urban and rural land markets (closely linked to
citizenising peasants, because it concerns their land rights).
• Changing incentives that shape the way cities are built.
• Reforming municipal finance to remove the incentives for
discrimination against migrants and crazy, inefficient land use.
None of these will be easy, but the good news is that they are entirely
consistent with the broader goal of rebalancing China’s economy away
from investment and exports towards consumption and domestic
sources of growth.
24
So where to go from here?
28 Oct 2015 Centre for Cities, London
2. PEOPLE
2528 Oct 2015 Centre for Cities, London
26
Chinese migrant workers play a huge
role in driving growth
In 2013, 262m migrant workers in
China (>1/3 of internal migrants in
the world).
• Mostly men, almost 60% between
16 and 40.
• High (and rising) levels of
education, which facilitates
further up-skilling.
1.5
14.3
60.5
13.3
4.7
5.7
Illiterate Primary school
Junior high school Senior high school
Technical secondary schools College or higher
Educational endowments of the migrant
population, 2010
Source: NBS, OECD calculations.
Around 35.6% work in industry, 18.4% in
construction, 6.6% transport and logistics, the rest
in services.
Inter-provincial migration flows, 2005-2010
Adapted from K. Chan (2012), “Migration and
Development in China: Trends, Geography
and Current Issues”, Migration and
Development: 1:2, pp. 187-205.
28 Oct 2015 Centre for Cities, London
• Segmented land markets and differential land
rights.
• Discrimination in access to education, social
protection and physical infrastructure.
• Increased cost of rural-to-urban migration
(which was, once upon a time, the point).
• Also increased cost of urban-urban migration
(perhaps 15-16% of migrants).
• Issue is not merely hukou status of migrants – it
is the status of rural citizens as a group.
27
Consequences of the hukou system
28 Oct 2015 Centre for Cities, London
28
Migrants are disadvantaged in terms
of education and housing
Region
Type (% of all migrant children)
Key
school
Public
school
Private
school
East 6.3 70.3 23.5
Middle 6.9 63.6 29.5
West 12.9 84.5 2.6
Source: OECD (2013).
Type of school attended by
migrant children in cities
Accommodation of migrant workers, 2013
The children in the able above are
generally better off in terms of
education than the “left-behind”
children – estimated to include
38% of rural children and 22% of
the entire population of children
in China.
This has huge implications for the next generation…
28 Oct 2015 Centre for Cities, London
• Higher rural household incomes
• Changes to rural lifestyles and consumption patterns
29
Consequences of migration for
sending areas
3.37%
32.67%
10.70%
36.39%
16.89%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
Living on his/her
own due to both
parents' out-
migration
Living with
grandparents due
to both parents'
out-migration
living with others
due to both
parents' out-
migration
Living with
mother due to
father's out-
migration
living with father
due to mother's
out-migration
Source: OECD calculations based on NBS (2013) data.
Living conditions of “left-behind children”, 2010
• Family separation:
“Left-behind”
women (47m),
children (60m)
and elderly (58m).
• Impact on work &
family burdens,
emotional state.
28 Oct 2015 Centre for Cities, London
30
Despite some improvement, social
protection of migrants is poor
Social insurance coverage for migrant workers
In 2012, it is estimated that 55-60% of migrant employees had no labour
contracts at all.
28 Oct 2015 Centre for Cities, London
• Endless debate but timid reforms (making it easier for people to go
where they do not wish to).
• Reform often countered by local action: many local authorities are
strengthening hukou.
• Better to break the link between hukou and access to pensions,
healthcare, education, etc.
 Allow migrants’ children to enrol in high schools and take
university entrance examinations in their places of residence.
Abolish local quotas for entrance to university.
 Strengthen and extend recent reforms aimed at reducing the gap
between urban and rural social protection systems (portability of
rights) with a view to eventual consolidation.
• Estimated cost of urbanising a rural migrant: RMB100,000. But what
is the long-run cost of not doing so…?
31
Hukou reform is a dead end: the key
is “citizenising” the rural population
28 Oct 2015 Centre for Cities, London
3. LAND
3228 Oct 2015 Centre for Cities, London
33
China’s land-management system:
an institutional mapping
Fortunately for you all, this is not examinable material (and it is incomplete:
reality is even more complex).
Source: Li, Morris, Nevares Parras and Parker (2014).
28 Oct 2015 Centre for Cities, London
1. Urban land is state-owned; rural land is collectively owned.
2. Urban land is relatively available for development.
3. Rural land is broken into several categories. Changes of use are,
in principle, strictly regulated, as is the use of each category by
the collective.
4. Rural dwellers cannot sell or otherwise alienate their land rights
(this means, inter alia, that taking urban hukou means
surrendering land rights).
5. City governments typically manage spatial planning well outside
their administrative boundaries.
6. City governments can, under certain circumstances, convert
rural collective land into state-owned urban land – increasing
its value 10-fold or more via an administrative action.
7. Governance of the collectives themselves is also an issue.
34
How the land market is divided
28 Oct 2015 Centre for Cities, London
• Rural collectives cannot realise the potential of
their land – at least not legally.
• Informal developments do occur around major
cities (so-called “weak property rights housing”).
• The Land Management Law, though apparently
strict, leaves local governments considerable scope
to requisition rural land for urban purposes.
• Compensation is largely determined locally – it
varies but the usual ceiling is based on the gross
annual yield of the land in agricultural use.
35
How the land requisition system
works
28 Oct 2015 Centre for Cities, London
Fiscal pressures create incentives for local governments to:
• Make land cheaply available for industrial development.
• Restrict the supply (and maximise the price) of land leased for
residential and commercial purposes.
• Vary the mechanism of land allocation according to the type of
investor/developer (negotiation vs various types of auction).
36
What happens once land is
“urbanised”
0
5
10
15
20
25
30
0
1
2
3
4
5
6
7
8
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
%%
GDP (LHS) Government revenue (RHS)
Gross revenue from the sale of land-use rights
Source: Wu (2012).
28 Oct 2015 Centre for Cities, London
• Wasteful use of prime urban land for industry.
• Poor urban planning.
• Abusive expropriation of rural collectives’ land.
• Concentration of migrants in “urban villages”
and “small property rights housing”.
• Property bubbles in some cities – and ghost
towns in others.
• Corruption and pressure to game the system for
restricting farmland conversion.
37
This results in…
28 Oct 2015 Centre for Cities, London
• Change the use-rights of agricultural land to the same length as
in urban areas.
• Specify the rights of rural collectives to use land as collateral
(much discussed but never implemented).
• Subject to zoning and planning requirements, ease the limits on
the use of agricultural land for development and housing.
• Allow farmers to sell land to developers directly and to
consolidate agricultural land parcels in order to raise
productivity.
• To smooth the transition, rural collectives could for some period
be restricted to commercial activity on the housing rental
market.
• Strengthen the governance of rural collectives.
38
What is to be done? Step-by-step
desegregation of the land market
28 Oct 2015 Centre for Cities, London
4. FLOWS
3928 Oct 2015 Centre for Cities, London
• Trends with respect to
income, population,
structural change and
transport costs all point
that way.
• Chinese cities are already
far denser on average
than cities in OECD
countries (despite wasteful
use of land for industrial
parks). Reductions in
density have so far been
greatest in the cities that
were densest to start with.
40
Chinese cities are going to spread
out
- 20
- 15
- 10
- 5
0
5
10
15
20
0 50,000 100,000 150,000
Changeinpopulation(%)
Initial population density
Change in population density and initial density
(Chinese cities, 1990-2010)
Source: OECD (2013).
The risk, of course, is that uncontrolled spatial expansion will lead to
urban sprawl, with undesirable economic, social and especially
environmental consequences.
28 Oct 2015 Centre for Cities, London
• The extent of urban spatial expansion can be affected by
policy.
 Most obviously, this concerns things like transport-oriented
development and approaches to land-use planning that favour
density, but
 the first step should be getting rid of policies that positively
encourage sprawl – these are rooted in the fiscal system and the
arrangements for land requisition and development.
• Containing urban development should not be
overemphasised. Failed containment is worse than planned
accommodation of growth. It leads to
 Higher prices for housing.
 Land speculation and high prices on the urban fringe.
 Underestimation of future land and infrastructure needs.
41
Urban expansion must be managed
28 Oct 2015 Centre for Cities, London
Current practice is characterised by
• extreme functional segregation,
• the development of very large superblocks,
• poor internal connectivity, and
• inadequate investment in public transport.
Desirable steps include
• building economic indicators into planning processes,
• designing road networks to better support foot traffic and
public transport, and
• managing density at smaller scales.
This could allow more transit-oriented development, more
multi-functional urban spaces and greater competition
among developers.
28 Oct 2015 Centre for Cities, London 42
Better planning can make cities greener,
more efficient and more liveable
• Generous but credible urban growth boundaries allow
policy-makers to plan realistically for the land, infrastructure and
amenities that will be needed.
• Selective protection of non-urban land, which is probably more
credible in such places than very tight growth boundaries.
• An arterial grid of roads spaced about a kilometer apart that
can support public transit.
• Reservation of land for public infrastructure.
• Reforms to urban planning. Best practice in China is already
impressive: day-to-day practice is not. Extreme functional
segregation and short-termism are common.
• Fiscal incentives probably matter more here than technical
capacity.
• Governance matters, too: long-term decisions are typically taken
by people who will not remain long in the city.
43
Changing the way China builds cities
28 Oct 2015 Centre for Cities, London
• Generous but credible urban growth boundaries allow
policy-makers to plan realistically for the land, infrastructure and
amenities that will be needed.
• Selective protection of non-urban land, which is probably more
credible in such places than very tight growth boundaries.
• An arterial grid of roads spaced about a kilometer apart that
can support public transit.
• Reservation of land for public infrastructure.
• Reforms to urban planning. Best practice in China is already
impressive: day-to-day practice is not. Extreme functional
segregation and short-termism are common.
• Fiscal incentives probably matter more here than technical
capacity.
• Governance matters, too: long-term decisions are typically taken
by people who will not remain long in the city.
44
Changing the way China builds cities
28 Oct 2015 Centre for Cities, London
• Big cities are growing more – the authorities wish to
take the pressure off the big four.
• The aim is to create satellites around the largest cities.
Networks of cities may be allow some de-
concentration.
BUT
• The econometric evidence suggests that Chinese cities
have not exhausted potential agglomeration
economies.
• Policy still favours the mega-cities, which may indeed
lead to over-concentration.
• Size-neutrality may be a policy worth trying.
45
How many mega-cities?
28 Oct 2015 Centre for Cities, London
5. A WORD ABOUT MONEY
4628 Oct 2015 Centre for Cities, London
• Reform of the financial system and capital markets will
greatly affect urbanisation:
Big-city bias contradicts stated national goals but
reversing it will be unpopular.
Some studies find that productivity performance has
been better in non-administrative cities.
Most Chinese cities are relatively “under-specialised”
( reduced benefit from agglomeration).
Some evidence that the financial system plays a role
here, too.
Chinese savers need new instruments.
47
“Urban policy” is broader than you think
28 Oct 2015 Centre for Cities, London
• Local governments’ own-revenue sources are limited.
• In the absence of a property tax, the one-off
conveyancing charges from land conversion
procedures are a huge source of income.
• Increased central transfers – and changes in transfer
allocation formulae – are needed.
• Public services with strong spill-overs may need to be
re-centralised some degree (e.g., compulsory
education, skills training, affordable housing).
• The argument that farmers should not capture the
rents from land conversion begs the question of who
should capture them.
48
Fiscal reform is essential
28 Oct 2015 Centre for Cities, London
TO SUM UP…
4928 Oct 2015 Centre for Cities, London
• The sociological and spatial dimensions of urbanisation have
to be addressed together. Land reform and the status of rural
dwellers are linked. It is not about the “citizenisation” of
migrants but about the citizenisation of the rural population.
• Neither can be addressed without addressing the fiscal
resources of cities, which will be profoundly affected on both
revenue and expenditure sides.
• The bias in the allocation of both fiscal resources and capital
towards the largest cities must also be addressed.
• Currently policy seeks to preserve big-city bias while
simultaneously promoting urban deconcentration. This will
fail.
• Bottom line: incentives trump rules.
It all has to fit together
5028 Oct 2015 Centre for Cities, London
A new approach to urbanisation to match a
new economic model:
• Economic policy shift: greater reliance on
consumption, productivity, efficient
resource use.
• The changes in urbanisation outlined here
policies reflect and reinforce that shift.
28 Oct 2015 Centre for Cities, London 51
Urbanisation and economic policy
THANK YOU FOR YOUR
ATTENTION.
5228 Oct 2015 Centre for Cities, London

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City Horizons: what does the future hold for China’s cities?

  • 1. OECD URBAN POLICY REVIEWS: CHINA 2015 William Tompson Head of the Urban Development Programme Public Governance and Territorial Development Directorate Sciences Po, Campus de Reims 31 March 2015
  • 2. 1. TRENDS AND CHALLENGES 2 1990 2010 28 Oct 2015 Centre for Cities, London
  • 3. 3 The world’s urban population is projected to rise by about 3.4bn during 2000-50 (= +125%) Source: UNDESA Population Division (2012), World Urbanization Prospects: The 2011 Revision Growth of world urban population in absolute numbers, 1950-2050 Right now, about one in five of the planet’s new urban residents is Chinese 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1950-1970 1971-1990 1991-2010 2011-2030 2031-2050 Developed countries Non-OECD Asia Developing countries excluding Asia China Right now, about 60% of the planet’s new urban residents are in Asia; one in five is in China Billions 28 Oct 2015 Centre for Cities, London
  • 4. 4 The speed of Asian urbanisation is unprecedented 1750 1775 1800 1825 1850 1875 1900 1925 1950 1975 2000 2025 2050 China, People's Rep. of Bhutan Lao PDR Indonesia Viet Nam Asia and the Pacific Europe North America Latin America and Caribbean Number of Years from about 10% to 50% of Urbanization Rate 10% 49% 210 years 9% 51% 105 years 12% 51% 150 years 11% 51%95 years 12% 50%90 years 12% 54%65 years 10% 52%60 years 10% 51%55 years 11% 51%61 years Source: ADB estimates using Bairoch (2008) and UN(2012). But in China it is unfolding against the backdrop of a very different demographic dynamic – the so-called “one-child policy”. 28 Oct 2015 Centre for Cities, London
  • 5. — 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 World China 5 China is now a predominantly urban country China may be both more and less urban than it appears. Source: UNDESA Population Division (2012), World Urbanization Prospects: The 2011 Revision Urbanisation rates: China and the World, 1950-2050 28 Oct 2015 Centre for Cities, London
  • 6. 1. Long history and yet very low starting point. 2. Governance: cities as units of central administration (and yet with a strong element of localism at the lowest levels). 3. Sociological dimension: hukou status and rights  urbanisation as “citizenisation”. 4. Settlement patterns – together with governance arrangements and hukou complicate the definition of “urban” and “rural”. 5. Largely endogenous take-off (it’s not just a globalisation story). 6 Urbanisation with Chinese characteristics 28 Oct 2015 Centre for Cities, London
  • 7. 7 Actual and administrative urbanisation rates are diverging Source: NBS, China Development Research Foundation. Hukou-based Residency-based • By 2012, around half of the urban population did not hold an urban hukou. • By 2020, in the absence of policy change, this ratio could approach one-half. Hukou- and residency-based urbanisation rates 28 Oct 2015 Centre for Cities, London
  • 8. 28 Oct 2015 Centre for Cities, London 8 China may be both more and less urban than it appears Population range 1. Number of FUAs, 2010 2. Population 2000 3. Population 2010 4. Annual growth rate 2000-2010 5. Urban population 2010 Megacities (> 10m) 15 212 860 603 260 549 325 1.86% 190 024 964 Very large metro areas (5m-10m) 23 128 863 733 148 007 123 1.40% 91 231 962 Large metro areas (1.5m- 5m) 89 215 694 602 234 603 655 0.90% 134 145 464 Metro areas (0.5m-1.5m) 165 137 959 460 146 644 039 0.66% 77 023 351 Medium-sized areas (0.2m-0.5m) 83 28 713 162 30 601 406 0.76% 17 076 090 Total metro areas 292 695 378 398 789 804 142 1.28% 492 425 741 Total FUAs 375 724 091 560 820 405 548 1.26% 509 501 831 Total China 1 265 830 000 1 339 724 852 0.57% 678 624 285 FUA share of total population: 57.2% 61.2% 38.0% Metropolitan areas’ share of total population: 54.9% 59.0% 36.8% Total urbanisation rate 50.7% Functional urban areas in China Source: Authors calculations of NBS data, via IPLE/CASS for the FUAs; NBS data from the China Statistical Yearbook 2010.
  • 9. 28 Oct 2015 Centre for Cities, London 9 The functional urban hierarchy looks rather different City size and growth in China: functional vs statutory cities Source: Authors calculations of NBS data, via IPLE/CASS for the FUAs; NBS data from the China Statistical Yearbook 2010.
  • 10. 28 Oct 2015 Centre for Cities, London 10 Even the “top 20” list looks different FUAs Statutory cities City Population (millions) City Population (millions) Shanghai 34.0 Shanghai 22.3 Guangzhou 25.0 Beijing 18.8 Beijing 24.9 Chongqing 15.7 Shenzhen 23.3 Tianjin 11.1 Wuhan 19.0 Guangzhou 11.1 Chengdu 18.1 Shenzhen 10.4 Chongqing 17.0 Wuhan 9.8 Tianjin 15.4 Dongguan 8.2 Hangzhou 13.4 Chengdu 7.4 Xian 12.9 Foshan 7.2 Changzhou 12.4 Nanjing 7.2 Shantou 12.0 Xian 6.5 Nanjing 11.7 Shenyang 6.3 Jinan 11.0 Hangzhou 6.2 Haerbin 10.5 Haerbin 5.9 Zhengzhou 9.7 Shantou 5.3 Qingdao 9.6 Jinan 4.3 Shenyang 7.7 Zhengzhou 4.3 Wenzhou 7.6 Changchun 4.2 Nanchang 7.4 Dalian 4.1 Source: Authors calculations of NBS data, via IPLE/CASS for the FUAs; NBS data from the China Statistical Yearbook 2010. FUAs and statutory cities, 2010 – total population
  • 11. 28 Oct 2015 Centre for Cities, London 11 Even the “top 20” list looks different Source: Authors calculations of NBS data, via IPLE/CASS for the FUAs; NBS data from the China Statistical Yearbook 2010. FUAs and statutory cities, 2010 – urban population FUAs Statutory cities City Urban population (millions) City Urban population (millions) Shanghai 28.2 Shanghai 20.2 Guangzhou 21.0 Beijing 16.4 Shenzhen 21.7 Chongqing 10.8 Beijing 19.2 Shenzhen 10.4 Wuhan 12.6 Guangzhou 9.7 Tianjin 11.6 Tianjin 9.6 Chengdu 11.3 Wuhan 7.5 Chongqing 11.1 Dongguan 7.3 Hangzhou 9.3 Foshan 6.8 Nanjing 8.3 Chengdu 6.3 Xian 7.8 Nanjing 5.8 Shantou 7.5 Shenyang 5.7 Changzhou 7.3 Xian 5.2 Shenyang 7.0 Hangzhou 5.2 Jinan 6.9 Haerbin 4.9 Haerbin 6.4 Dalian 3.9 Qingdao 6.2 Zhengzhou 3.7 Zhengzhou 5.8 Shantou 3.6 Wenzhou 5.3 Jinan 3.5 Nanchang 4.2 Changchun 3.4
  • 12. 28 Oct 2015 Centre for Cities, London 12 The urban system is growing more concentrated… Panel A. OECD countries, 2001-11 Panel B. China, 2000-10 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 0 100 200 300 400 500 600 700 Large Metropolitan (>1.5m) Metropolitan (0.5-1.5m) Medium (0.2-0.5m) Averageannualgrowthrate(2001-11) Populationinmillions(2011) 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 0 100 200 300 400 500 600 700 Large metropolitan (>1.5m) Metropolitan (0.5-1.5m) Medium (0.2-0.5m) Averageannualgrowthrate(2000-10) Populationinmillions(2010) -2.0%3.0%(300)700 Large metropolitan (>1.5m)Metropolitan (0.5-1.5m)Medium (0.2-0.5m) Av er ag e an n… Population in millions Average annual growth rate (%) Note: Small urban areas, with a population of between 50 000 and 200 000 people; medium-sized urban areas, with a population between 200 000 and 500 000; metropolitan areas, with a population between 500 000 and 1.5 million; and large metropolitan areas, with a population of 1.5 million or more. The OECD Metropolitan Areas Database includes 275 metropolitan areas. Source: OECD Metropolitan Areas Database.
  • 13. 13 …And converging over time towards the international norm Source: OECD (2013). Population growth of cities grouped by initial size, 2000-2010 The political hierarchy of Chinese cities biases the allocation of fiscal resources and capital in favour of the biggest cities even as policy-makers call for growth elsewhere. 28 Oct 2015 Centre for Cities, London
  • 14. 28 Oct 2015 Centre for Cities, London 14 Larger FUAs tend to have higher per capita incomes… FUA population and GDP per capita (2010) 500 1 000 2 000 4 000 8 000 16 000 32 000 0.2 1.0 5.0 25.0 Millions Note: The horizontal axis represents logged values of the 2010 population of the Chinese FUAs. The vertical axis represents logged values of the GDP per capita (in USD) for Chinese FUAs in 2010. Source: Authors’ calculations of NBS data; accessed via IPLE/CASS.
  • 15. 28 Oct 2015 Centre for Cities, London 15 …And the size/income relationship is clearer in respect of urban population FUA urban population and GDP per capita (2010) 0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 Note: The horizontal axis represents logged values of the 2010 urban population of the Chinese FUAs. The vertical axis represents logged values of the GDP per capita (in USD) for Chinese FUAs in 2010. Source: Authors’ calculations of NBS data; accessed via IPLE/CASS.
  • 16. 28 Oct 2015 Centre for Cities, London 16 Cities of all sizes continue to show great economic dynamism
  • 17. 28 Oct 2015 Centre for Cities, London 17 Chinese cities may still be under- specialised Economic structure of Chinese and selected OECD FUAs
  • 18. • Agglomeration economies. • Consumption opportunities. • Environmental challenges and urban policy responses. Urbanisation and development 18 Urbanisation and income, 1970-2005 28 Oct 2015 Centre for Cities, London
  • 19. Significant positive correlation between urbanisation and economic prosperity in China Close to one-quarter of China’s population now lives in areas with per capita incomes comparable to Chile, Mexico or Turkey. BUT: Current trend tends to favour sprawling metro- regions. Pollution and congestion costs. Limit agglomeration economies. Social challenges (integration of migrants) China benefits from agglomeration economies 19 Productivity and city size in China 0 5 10 15 20 25 30 0 5 10 15 20 25 30 1-25 26-50 51-75 76-100 101-125 126-150 151-175 176-200 201-225 226-250 251-275 276-300 301-325 326-350 351-375 376-400 401-425 426-450 451-475 476-500 Thousand constant 2010 USD PPP Thousand constant 2010 USD PPP Mexico Turkey Chile Portugal Poland Source: CEIC, National Bureau of Statistics: City Statistical Yearbook; Communiqués on 6th Census issued by local national Bureau of Statistics offices; World Development Indicators and OECD Economics Department calculations. 28 Oct 2015 Centre for Cities, London
  • 20. • Air: 58% of Chinese cities have PM2.5 concentrations five times the WHO standard. • Water: Fresh water resources per capita are ¼ of the world average but 42% of the water in the seven biggest river systems is not potable. • Land: 27% of land is desertified and this figure grows by almost 2500 km2 per year.  Increasing social discontent and palpable economic costs. 20 Environmental pressures are increasing 28 Oct 2015 Centre for Cities, London
  • 21. 21 Income inequality has grown but is now falling on some dimensions 28 Oct 2015 Centre for Cities, London
  • 22. 28 Oct 2015 Centre for Cities, London 22 There is some evidence of convergence at different scales Initial income growth and income levels, Chinese FUAs
  • 23. China’s urbanisation (and, to a great extent, its macroeconomic performance) has been driven by: 1. Cheap labour. 2. Cheap land. 3. Cheap pricing of environmental externalities. 4. Robust export demand. These are not a basis for sustained – or sustainable – growth in future. 23 China needs a new model of urbanisation 28 Oct 2015 Centre for Cities, London
  • 24. Urbanisation is about people, land and flows – of ideas, people, goods and bads. And, of course, money. Challenges: • “Citizenising” the rural population (more than just integrating the segmented labour market). • Integrating urban and rural land markets (closely linked to citizenising peasants, because it concerns their land rights). • Changing incentives that shape the way cities are built. • Reforming municipal finance to remove the incentives for discrimination against migrants and crazy, inefficient land use. None of these will be easy, but the good news is that they are entirely consistent with the broader goal of rebalancing China’s economy away from investment and exports towards consumption and domestic sources of growth. 24 So where to go from here? 28 Oct 2015 Centre for Cities, London
  • 25. 2. PEOPLE 2528 Oct 2015 Centre for Cities, London
  • 26. 26 Chinese migrant workers play a huge role in driving growth In 2013, 262m migrant workers in China (>1/3 of internal migrants in the world). • Mostly men, almost 60% between 16 and 40. • High (and rising) levels of education, which facilitates further up-skilling. 1.5 14.3 60.5 13.3 4.7 5.7 Illiterate Primary school Junior high school Senior high school Technical secondary schools College or higher Educational endowments of the migrant population, 2010 Source: NBS, OECD calculations. Around 35.6% work in industry, 18.4% in construction, 6.6% transport and logistics, the rest in services. Inter-provincial migration flows, 2005-2010 Adapted from K. Chan (2012), “Migration and Development in China: Trends, Geography and Current Issues”, Migration and Development: 1:2, pp. 187-205. 28 Oct 2015 Centre for Cities, London
  • 27. • Segmented land markets and differential land rights. • Discrimination in access to education, social protection and physical infrastructure. • Increased cost of rural-to-urban migration (which was, once upon a time, the point). • Also increased cost of urban-urban migration (perhaps 15-16% of migrants). • Issue is not merely hukou status of migrants – it is the status of rural citizens as a group. 27 Consequences of the hukou system 28 Oct 2015 Centre for Cities, London
  • 28. 28 Migrants are disadvantaged in terms of education and housing Region Type (% of all migrant children) Key school Public school Private school East 6.3 70.3 23.5 Middle 6.9 63.6 29.5 West 12.9 84.5 2.6 Source: OECD (2013). Type of school attended by migrant children in cities Accommodation of migrant workers, 2013 The children in the able above are generally better off in terms of education than the “left-behind” children – estimated to include 38% of rural children and 22% of the entire population of children in China. This has huge implications for the next generation… 28 Oct 2015 Centre for Cities, London
  • 29. • Higher rural household incomes • Changes to rural lifestyles and consumption patterns 29 Consequences of migration for sending areas 3.37% 32.67% 10.70% 36.39% 16.89% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% Living on his/her own due to both parents' out- migration Living with grandparents due to both parents' out-migration living with others due to both parents' out- migration Living with mother due to father's out- migration living with father due to mother's out-migration Source: OECD calculations based on NBS (2013) data. Living conditions of “left-behind children”, 2010 • Family separation: “Left-behind” women (47m), children (60m) and elderly (58m). • Impact on work & family burdens, emotional state. 28 Oct 2015 Centre for Cities, London
  • 30. 30 Despite some improvement, social protection of migrants is poor Social insurance coverage for migrant workers In 2012, it is estimated that 55-60% of migrant employees had no labour contracts at all. 28 Oct 2015 Centre for Cities, London
  • 31. • Endless debate but timid reforms (making it easier for people to go where they do not wish to). • Reform often countered by local action: many local authorities are strengthening hukou. • Better to break the link between hukou and access to pensions, healthcare, education, etc.  Allow migrants’ children to enrol in high schools and take university entrance examinations in their places of residence. Abolish local quotas for entrance to university.  Strengthen and extend recent reforms aimed at reducing the gap between urban and rural social protection systems (portability of rights) with a view to eventual consolidation. • Estimated cost of urbanising a rural migrant: RMB100,000. But what is the long-run cost of not doing so…? 31 Hukou reform is a dead end: the key is “citizenising” the rural population 28 Oct 2015 Centre for Cities, London
  • 32. 3. LAND 3228 Oct 2015 Centre for Cities, London
  • 33. 33 China’s land-management system: an institutional mapping Fortunately for you all, this is not examinable material (and it is incomplete: reality is even more complex). Source: Li, Morris, Nevares Parras and Parker (2014). 28 Oct 2015 Centre for Cities, London
  • 34. 1. Urban land is state-owned; rural land is collectively owned. 2. Urban land is relatively available for development. 3. Rural land is broken into several categories. Changes of use are, in principle, strictly regulated, as is the use of each category by the collective. 4. Rural dwellers cannot sell or otherwise alienate their land rights (this means, inter alia, that taking urban hukou means surrendering land rights). 5. City governments typically manage spatial planning well outside their administrative boundaries. 6. City governments can, under certain circumstances, convert rural collective land into state-owned urban land – increasing its value 10-fold or more via an administrative action. 7. Governance of the collectives themselves is also an issue. 34 How the land market is divided 28 Oct 2015 Centre for Cities, London
  • 35. • Rural collectives cannot realise the potential of their land – at least not legally. • Informal developments do occur around major cities (so-called “weak property rights housing”). • The Land Management Law, though apparently strict, leaves local governments considerable scope to requisition rural land for urban purposes. • Compensation is largely determined locally – it varies but the usual ceiling is based on the gross annual yield of the land in agricultural use. 35 How the land requisition system works 28 Oct 2015 Centre for Cities, London
  • 36. Fiscal pressures create incentives for local governments to: • Make land cheaply available for industrial development. • Restrict the supply (and maximise the price) of land leased for residential and commercial purposes. • Vary the mechanism of land allocation according to the type of investor/developer (negotiation vs various types of auction). 36 What happens once land is “urbanised” 0 5 10 15 20 25 30 0 1 2 3 4 5 6 7 8 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 %% GDP (LHS) Government revenue (RHS) Gross revenue from the sale of land-use rights Source: Wu (2012). 28 Oct 2015 Centre for Cities, London
  • 37. • Wasteful use of prime urban land for industry. • Poor urban planning. • Abusive expropriation of rural collectives’ land. • Concentration of migrants in “urban villages” and “small property rights housing”. • Property bubbles in some cities – and ghost towns in others. • Corruption and pressure to game the system for restricting farmland conversion. 37 This results in… 28 Oct 2015 Centre for Cities, London
  • 38. • Change the use-rights of agricultural land to the same length as in urban areas. • Specify the rights of rural collectives to use land as collateral (much discussed but never implemented). • Subject to zoning and planning requirements, ease the limits on the use of agricultural land for development and housing. • Allow farmers to sell land to developers directly and to consolidate agricultural land parcels in order to raise productivity. • To smooth the transition, rural collectives could for some period be restricted to commercial activity on the housing rental market. • Strengthen the governance of rural collectives. 38 What is to be done? Step-by-step desegregation of the land market 28 Oct 2015 Centre for Cities, London
  • 39. 4. FLOWS 3928 Oct 2015 Centre for Cities, London
  • 40. • Trends with respect to income, population, structural change and transport costs all point that way. • Chinese cities are already far denser on average than cities in OECD countries (despite wasteful use of land for industrial parks). Reductions in density have so far been greatest in the cities that were densest to start with. 40 Chinese cities are going to spread out - 20 - 15 - 10 - 5 0 5 10 15 20 0 50,000 100,000 150,000 Changeinpopulation(%) Initial population density Change in population density and initial density (Chinese cities, 1990-2010) Source: OECD (2013). The risk, of course, is that uncontrolled spatial expansion will lead to urban sprawl, with undesirable economic, social and especially environmental consequences. 28 Oct 2015 Centre for Cities, London
  • 41. • The extent of urban spatial expansion can be affected by policy.  Most obviously, this concerns things like transport-oriented development and approaches to land-use planning that favour density, but  the first step should be getting rid of policies that positively encourage sprawl – these are rooted in the fiscal system and the arrangements for land requisition and development. • Containing urban development should not be overemphasised. Failed containment is worse than planned accommodation of growth. It leads to  Higher prices for housing.  Land speculation and high prices on the urban fringe.  Underestimation of future land and infrastructure needs. 41 Urban expansion must be managed 28 Oct 2015 Centre for Cities, London
  • 42. Current practice is characterised by • extreme functional segregation, • the development of very large superblocks, • poor internal connectivity, and • inadequate investment in public transport. Desirable steps include • building economic indicators into planning processes, • designing road networks to better support foot traffic and public transport, and • managing density at smaller scales. This could allow more transit-oriented development, more multi-functional urban spaces and greater competition among developers. 28 Oct 2015 Centre for Cities, London 42 Better planning can make cities greener, more efficient and more liveable
  • 43. • Generous but credible urban growth boundaries allow policy-makers to plan realistically for the land, infrastructure and amenities that will be needed. • Selective protection of non-urban land, which is probably more credible in such places than very tight growth boundaries. • An arterial grid of roads spaced about a kilometer apart that can support public transit. • Reservation of land for public infrastructure. • Reforms to urban planning. Best practice in China is already impressive: day-to-day practice is not. Extreme functional segregation and short-termism are common. • Fiscal incentives probably matter more here than technical capacity. • Governance matters, too: long-term decisions are typically taken by people who will not remain long in the city. 43 Changing the way China builds cities 28 Oct 2015 Centre for Cities, London
  • 44. • Generous but credible urban growth boundaries allow policy-makers to plan realistically for the land, infrastructure and amenities that will be needed. • Selective protection of non-urban land, which is probably more credible in such places than very tight growth boundaries. • An arterial grid of roads spaced about a kilometer apart that can support public transit. • Reservation of land for public infrastructure. • Reforms to urban planning. Best practice in China is already impressive: day-to-day practice is not. Extreme functional segregation and short-termism are common. • Fiscal incentives probably matter more here than technical capacity. • Governance matters, too: long-term decisions are typically taken by people who will not remain long in the city. 44 Changing the way China builds cities 28 Oct 2015 Centre for Cities, London
  • 45. • Big cities are growing more – the authorities wish to take the pressure off the big four. • The aim is to create satellites around the largest cities. Networks of cities may be allow some de- concentration. BUT • The econometric evidence suggests that Chinese cities have not exhausted potential agglomeration economies. • Policy still favours the mega-cities, which may indeed lead to over-concentration. • Size-neutrality may be a policy worth trying. 45 How many mega-cities? 28 Oct 2015 Centre for Cities, London
  • 46. 5. A WORD ABOUT MONEY 4628 Oct 2015 Centre for Cities, London
  • 47. • Reform of the financial system and capital markets will greatly affect urbanisation: Big-city bias contradicts stated national goals but reversing it will be unpopular. Some studies find that productivity performance has been better in non-administrative cities. Most Chinese cities are relatively “under-specialised” ( reduced benefit from agglomeration). Some evidence that the financial system plays a role here, too. Chinese savers need new instruments. 47 “Urban policy” is broader than you think 28 Oct 2015 Centre for Cities, London
  • 48. • Local governments’ own-revenue sources are limited. • In the absence of a property tax, the one-off conveyancing charges from land conversion procedures are a huge source of income. • Increased central transfers – and changes in transfer allocation formulae – are needed. • Public services with strong spill-overs may need to be re-centralised some degree (e.g., compulsory education, skills training, affordable housing). • The argument that farmers should not capture the rents from land conversion begs the question of who should capture them. 48 Fiscal reform is essential 28 Oct 2015 Centre for Cities, London
  • 49. TO SUM UP… 4928 Oct 2015 Centre for Cities, London
  • 50. • The sociological and spatial dimensions of urbanisation have to be addressed together. Land reform and the status of rural dwellers are linked. It is not about the “citizenisation” of migrants but about the citizenisation of the rural population. • Neither can be addressed without addressing the fiscal resources of cities, which will be profoundly affected on both revenue and expenditure sides. • The bias in the allocation of both fiscal resources and capital towards the largest cities must also be addressed. • Currently policy seeks to preserve big-city bias while simultaneously promoting urban deconcentration. This will fail. • Bottom line: incentives trump rules. It all has to fit together 5028 Oct 2015 Centre for Cities, London
  • 51. A new approach to urbanisation to match a new economic model: • Economic policy shift: greater reliance on consumption, productivity, efficient resource use. • The changes in urbanisation outlined here policies reflect and reinforce that shift. 28 Oct 2015 Centre for Cities, London 51 Urbanisation and economic policy
  • 52. THANK YOU FOR YOUR ATTENTION. 5228 Oct 2015 Centre for Cities, London