China's urbanization cruises in fast lane

The Chinese government has steered its urbanization drive into the fast lane with new measures to clear major hurdles.

Government departments have coordinated their efforts in the past few weeks on aspects that have been holding back urbanization, including the household registration (hukou) system, housing renovation and township development.

RAILWAY LAND DEVELOPMENT

The State Council, the Cabinet, on Monday unveiled policies to support the efficient use of land surrounding railway stations and lines, encouraging railway operators to build stations, lines and engage in property development.

The new measures aim for benign interactions between railway construction and urban development, promoting sustainable railway development and urbanization.

Hu Cunzhi, vice minister of land and resources, said development of railway land is a new pattern in urbanization and the ministry will give it full support.

In March, China's urbanization plans for 2014-2020 were released. By 2020, China's ratio of permanent urban residents to total population should rise to about 60 percent from 53.7 percent at the end of 2013, bringing large demand for investment in infrastructure, public services and housing.

Last Monday, a cabinet circular promised financial support for slum renovation, considered key to urbanization. The government has set the goal of subsidizing the rebuilding of 4.7 million housing units this year.

HUKOU REFORM

Late last month, the State Council announced an overhaul of the hukou system, including equalizing rural and urban status, differentiated settlement schemes for migrant workers and the expansion of basic social services for all residents.

About 100 million people will settle in towns and cities by 2020, and the government will remove hukou limits in townships and small cities, relax restrictions in medium-sized cities, and set qualifications for big cities.

"These changes are a big step in breaking down institutional barriers between urban and rural lives," according to a research note from HSBC chief China economist Qu Hongbin.

It will also help China achieve its urbanization target in a sustainable manner and maintain growth by lifting productivity, Qu said.

Soon after release of the guideline, seven ministries announced that they would include more settlements in a list of national level key townships to receive special support from the government. The new list has 3,675 townships, nearly double the 2004 list. The development of those townships should be prioritized by local authorities.

"In the past decade, a large number of townships emerged," said Feng Kui, a researcher with the National Development and Reform Commission, the top economic planner.

The new adjustment adopts higher requirements, including population, growth potential and service functions, and will help raise the overall quality of urbanization, Feng said.