On Wednesday, the Standing Committee of China’s National People’s Congress will convene. What’s on the agenda? A proposal to fast-track a massive urbanization plan. Beijing is now placing a big bet on cities. The gamble, however, is unlikely to pay off. It could even sink the Chinese economy and create social unrest. Today, the Tokyo metropolitan area, home to 37.1 million, can claim to be the world’s most populous urban region. Beijing wants to top that and build metropolises dwarfing anything seen in Japan—or anywhere else. How about a Chinese city of 260 million people? That’s the size of the proposed Bohai Economic Rim, centered on Beijing and Tianjin. Work has already begun on this project with a high-speed railway linking the two cities, which sit next to each other. There is also a plan to combine Guangzhou, Shenzhen, Dongguan, Foshan, Huizhou, Zhaoqing, Jiangmen, Zhongshan, and Zhuhai in southern Guangdong province. And with those nine cities wrapped into an integrated whole, the adjoining Special Administrative Regions of Hong Kong and Macau cannot be far behind. So instead of a city of 42 million, it would be more like 50 million. On top of these ambitious visions, there’s Beijing’s plan to create city zones with up to 100 million people each and surrounded by clusters of “small” cities of between 10 to 25 million. Chinese leaders in 2011 announced a campaign to build 20 new cities in each of the 20 succeeding years. China’s central government did not create Chongqing from scratch, but it took a rundown transportation hub in the interior of China and created a metropolis of 33 million people by incorporating surrounding areas and spending renminbi like there was no tomorrow. Now, “Chicago on the Yangtze,” as Chongqing sometimes calls itself, has a land area almost three times the size of Belgium. Beijing, by thinking big, is redefining the notion of what constitutes a “city.” Furthermore, Chinese officials have been talking about moving 250 million people from farm to city in the next dozen years. Beijing’s aim is to have 70% of the Chinese people—about 900 million—living in cities by 2025. At the moment, China has an official urbanization rate of 53%, but only 35% of city dwellers have an urban “hukou,” or household registration. In other words, about 18% of those living in cities are formally classified as rural under this outdated system of social control. Beijing’s plans, in the words of Ian Johnson of the New York Times, “will decisively change the character of China.” “Across China, bulldozers are leveling villages that date to long-ago dynasties,” he writes. I know this from first-hand experience. My family’s ancestral community—Rugao in Jiangsu province—has in the last half decade been transformed from a dusty town into one of China’s newest “ghost cities.” What’s the rationale for the rural-to-urban push? Chinese technocrats think that if more citizens lived in cities, consumption would rise, and raising consumption is considered the key to creating a sustainable economy over the long term because exports and investment-led growth are obviously faltering. “If half of China’s population starts consuming, growth is inevitable,” Li Xiangyang of the Institute of World Economics and Politics told the Times. “Right now they are living in rural areas where they do not consume.” The premise of Chinese planners is deeply flawed. They look at more developed societies and realize they are far more urbanized than China. Therefore, they think that if they create more Chinese cities, China will naturally become a developed country with a vibrant economy. They forget that cities in other societies grew organically, not created through fiats issued by geniuses in planning ministries. Urbanization, in reality, can even inhibit growth. By taking neighboring cities that have historically competed and forcing them not to, growth in a region can be derailed. That’s the big concern observers have for the Guangdong megacity plan centered on Guangzhou. Moreover, there is an even more basic objection to Beijing’s program. “The huge expenditures associated with urbanization—new schools, roads, apartments, hospitals, etc.—are typically presented as a source of future growth but they are not,” writes Peking University’s Michael Pettis. “They are simply transfer payments from one part of society to another.” As he explains, there can be a hit to economic expansion when the Chinese government raises funds through forced transfers from the household sector and from taxation and borrowing. How does Beijing actually plan to move hundreds of millions of peasants to shiny cities? Premier Li Keqiang urbanization push is based upon forced evictions of rural residents. The taking of land, usually held by families for hundreds of years and often seized without adequate compensation, is reminiscent of Mao Zedong’s Great Leap Forward, history’s most disastrous attempt at economic development and social engineering. Even smaller-scale experiments can go awry, as seen in the urbanization plans of other countries, notably Mexico and Brazil. And in China, there is already a real risk of creating a permanent underclass. Migrants, especially older ones, are generally having trouble finding work in the new Chinese cities. It appears nobody in Beijing has quite worked out the social consequences of forced migration. Apparently, the premise of the urbanization push is that the state will be able to control rural migrants in the new cities. People will be concentrated in small areas where block committees and Communist Party members can keep tabs on the arrivals from rural areas. “Thus the sea in which fish can swim becomes much smaller and more controllable,” writes Eric Kalkhurst, a China trade consultant. June Teufel Dreyer of the University of Miami, the noted China watcher, suggests that the breakup of clan ties that inevitably results when rural residents move to cities can contribute to social unrest. And Kalkhurst adds a hint of caution as well. “They may achieve a concentration of control, but if that does not work?” he asks. “Interesting thing a pressure cooker.” Interesting indeed. Fei-Ling Wang of Georgia Institute of Technology argues Beijing’s urbanization programs are moving around men, women, and children as “objects” with consequences easy to predict. “No wonder some Chinese ‘insiders’ are now simply speculating that this scheme may be a ‘plot’ by some trying to accelerate an explosive revolution in the People’s Republic,” he writes. “Another social engineering only the likes of the Chinese Communist Party is capable of, indeed, yet now without Mao’s control and power.” China’s latest 1950s-style experiment is underway, touching the lives of hundreds of millions of uprooted and disoriented Chinese peasants. The consequences—good or bad for the Communist Party—are bound to be ones history will remember. Follow me on Twitter @GordonGChang
Reported by Forbes.com 6 hours ago.
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