Great little article in the FT web-based version (Feb 7 2013) on Chinese urbanisation and the two constraints on this. First is the hukou system of household registration. Entitlement to services from education to social benefits is based on place of birht, not residence. Most migrant workers are registered in the rural villages of their birth and struggle to gain access to even the most basic services in the urban areas where they work and leave their families behind in their natal villages. Of the 160m people classified as migrants only 33m have moved permanently to cities with their families. Reform of the hukou system is long overdue and promised by new leader, Xi Jinping.
The second constraining factor is land ownership. The state owns all land and leases it on 30 year leases in tiny plots. Maintaining usage rights depends on working the land. Extended families do this whilst some members go migrant for urban jobs. Rural residents increasingly recognise the value of their land claims and are unwilling to swop this for urban residence permits. Plus access to land gives subsistence possibilities unavailable in the cities. It also conveniently slows the rise of favela-type slums and informal settlements of landless rural people.
China sees urbanisation as a key to creating more sustainable, less export dependent growth, but to do this and create a huge consumer class the article says, ' these ties to the land will have to be broken.' The trick will be ensuring the exchange of land rights is met with an improved offer of social, health, education and other services for migrants who become permanent urban dwellers.
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