China's urbanization has moved at an incredibly fast pace in recent years. But there are still problems that risk leading the process awry.

Urbanization is undoubtedly crucial to the long-term healthy development of the country, where about two-thirds of its population now live in rural areas.

It can help increase farmers' incomes by reducing the number of farmers and improving farm productivity. The drive will also help the development of the service industry, which in return creates jobs for the 150 million redundant rural labourers. As urbanization continues, consumption will be boosted as farmers become urban residents. This will help accelerate the growth of the national economy.

Experts estimate that the additional growth rate of the gross domestic product driven by the newly-created consumption may reach 0.8 percentage points if 200 million farmers could be transferred to urban areas.

Despite all the benefits of urbanization that have been acknowledged by both policy-makers and the public, in practice, the "go urban" drive in some places has deviated from the right course.

Some cities are ardent about making blueprints to expand urban horizons and demarcate new development zones. While they are busy mapping out new urban areas, they are slow in supporting the transfer of farmers into those newly developed districts. Some have even set up administrative barriers to block the migration of farmers-turned-workers.

Experts estimate that among those farmers whose land has been requisitioned as a result of urbanization, only about 1.5 per cent have secured jobs in the new areas and just 5.8 per cent have become new, legal urban residents.

Some cities take urbanization as an opportunity to build "image projects," such as broader roads, extravagant squares, green projects and large city statues. If the money comes from the public coffers, less capital will be available for public services. If the money comes from bank loans and the projects do not generate returns, there is a risk of losses.

Another problem is that city planning is not always based on sound investigations and so creates more problems than benefits.

For example, the designs by some local authorities in some areas have not taken water supply into account, with the resulting risk of water shortage.

Those problems, in part, stem from misunderstanding.

Urbanization is a convergence of various resources in a special region. The process involves the rural population moving to urban areas and means the changes in their production and lifestyles will eliminate the traditional rural-urban dual structure.

Population movement is the core of the process. In the past two decades, however, urbanization has been mainly carried out by transforming counties into cities. The change of status from farmer to urban resident has been largely ignored.

In the past 20 years, the number of cities has doubled, and the number of towns increased by six times. But the number of legally registered people living in urban communities has not grown proportionately.

The slow progress of "population urbanization" is ostensibly a result of the country's rigid household registration system.

But the real cause is the different social security, medical care, education and infrastructure service systems between rural and urban areas.

From the perspective of urban governments, an increased population means more public service expenditure and a heavier burden on local coffers. They are therefore unwilling to accept the new farmer-turned-worker population.

If this trend continues, it is inevitable that farmers, whose number has not declined significantly, will rely on less and less farmland, which will exacerbate rural problems. Meanwhile, in urban areas, without access to resident registration and various social benefits, migrant farmers will have uncertain expectations towards future income and tend to save rather than spend. This will affect consumption.

The acceleration of urbanization must be based on population movement. Urban construction should not be blindly emphasized and local authorities must remove obstructive policies blocking the free flow of farmers. It is of vital importance to give migrant farmers access to urban infrastructure and services.

Another issue of urbanization that policy-makers should pay attention to is the proper handling of relations between the government and market.

Urbanization has its intrinsic development laws that are independent of government regulations. The government should respect the laws of urbanization. Its role does not lie in strictly regulating the urbanization process, but reforming the rural-urban dual system, mapping out development strategies and supervising its implementation and improving management of public affairs.

Policy-makers should promote urbanization in accordance with local conditions. The scale of cities should not be decided by administrative will, but by local social and economic conditions.

In essence, the government should make systematic reforms to lay down a solid foundation for the rapid and healthy development of urbanization.

First of all, the rural land transfer system should be reformed. Farmland, which is collectively owned, is usually requisitioned by the government at a low cost and then sold to commercial developers if it is to be used for industrial and commercial purposes. Farmers, as contractors of the use of the farmland, only get a small sum of compensation. If they move to cities and lose the use of their land, the small sum of money is not enough for them to start and sustain a new life in the cities.

The government should establish a land-use contract transfer system to facilitate the transfer of rights from farmers to urban developers so that farmers can directly negotiate with developers in the process. The government should retreat from the transaction process and stop reaping profits from land-use deals.

Other measures the government should take to promote urbanization include a residence management system that accommodates free migration of farmers, an equitable labour market that respects the rights of farmers-turned-workers and the establishment of a unified national social security system.

(China Daily June 10, 2005)