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China’s leaders have revealed a plan for a multiyear round of state-led infrastructure construction that they hope will prop up the economy amid flagging growth, as they move 100m more people from the rural hinterland into the country’s growing cities.
The Chinese government’s “National New-type Urbanisation Plan”, revealed on Sunday, envisions a massive building programme of transport networks, urban infrastructure and residential real estate from now until 2020.
“Domestic demand is the fundamental impetus for China’s development, and the greatest potential for expanding domestic demand lies in urbanisation,” the plan stated.While promising to make China’s urbanisation more “human-centred and environmentally friendly”, the plan also explicitly targets the boosting of headline growth at a time when China’s economy is slowing after years of frenetic credit-fuelled infrastructure and property investment.
Over the longer term, China’s leaders want to shift the country’s growth model to make it less infrastructure driven and more reliant on services and consumption, but they insist that they must keep investment levels high in the short term to guarantee employment and political stability.
About 54 per cent of China’s population lives in cities, compared with 80 per cent in developed countries and roughly 60 per cent for developing countries with similar per capita income levels as China.
The government’s plan aims to lift the urbanisation rate to 60 per cent by 2020, but this task will be complicated by the fact that many city dwellers are excluded from permanent resident status by China’s strict hukou household registration system.
Those who are born in the countryside and move to cities without securing urban hukou permits are usually not eligible to use any social services, including health, housing, education or pensions in their new urban homes.
That means that about 270m of China’s urban residents are rural migrants who live in a kind of limbo in their new homes and often return to their villages if they lose their job in the city.
This means that much of China’s urbanisation to date is reversible – a problem the government’s new plan hopes to address by gradually granting 100m of these migrant workers permanent urban hukou permits by 2020.
As part of the planned infrastructure construction, the government plans to ensure that every city in China with more than 200,000 residents will be connected by standard rail and express roads by 2020, while every city with more than 500,000 residents will be accessed by high-speed rail.
New airports will be built to ensure that the civil aviation network covers about 90 per cent of China’s population.
The plan also calls for the redevelopment of 4.75m household units in rundown shantytowns this year alone, with an expected total cost of Rmb1tn ($163bn), according to state media reports.
The urbanisation plan was originally expected to be published more than a year ago, but deep divisions between government departments and dissatisfaction from Li Keqiang, the Chinese premier, who has been a strong champion of the scheme, delayed the plan’s publication until now.