Sunday, Apr 30, 2017, 3:08 PM CST – China

Commentary

Local governments’ hunger for land threatens sustainable development

The enthusiasm for urban overexpansion may have catastrophic consequences

According to a report released by the State Council on urbanization that covered 12 provincial capitals and 144 major cities, each provincial capital is planning to build an average of 4.6 new districts, with prefecture-level cities planning the construction of an average of 1.5 new districts. At the national level, the urbanization plans for all Chinese cities could accommodate a population of 3.4 billion, almost three times China’s current population of 1.3 billion.

In contrast to these ambitious goals set by China’s city governments, it is estimated that China’s total population will reach its peak in 2017 and then rapidly decline as the population ages. China’s urban planners’ obvious detachment from this reality indicates that the country’s urbanization policies have become ridiculously out of control.

In the past three-plus decades, China has experienced unprecedented urbanization, as its urban population increased from 18.9 percent of the population in 1978 to 54.7 percent in 2014. As the urban proportion increased by about one percentage point each year, 657 new cities sprung up in the process.

While urbanization is often hailed as a major driving force of China’s economic development, it has come at a great cost. In just the seven years between 1996 and 2003, China’s arable land reduced by 100 million mu (16.5 million acres), mostly due to urbanization. Between 1990 and 2013, the total built-up urban area of Chinese cities expanded from 12,900 square kilometers to 47,800, an increase of 370 percent. Over the same period of time, the urban population increased by a mere 27.3 percent, which has led many to call China’s urbanization the urbanization of land, instead of the urbanization of people.

Indeed, local governments’ zeal for ambitious urbanization plans is mostly driven by the hunger for rural land. As the government plays a dominant role in land appropriation and distribution, more urban lands means more government revenue. That explains why even city governments in northeastern China, where the local population has declined by 1.8 million, continue to urban expansion plans.

This rapacious land-grabbing is behind many of China’s major social and economic problems, ranging from widespread corruption, environmental deterioration, increasing social tension and local governments’ mounting debt.

In recent months, the central government has launched various measures to tamp down this craze, such as releasing a guideline that put a “permanent boundary” over the geographic limit of a city. But so far, there is no evidence that such measures have taken effect. In the midst of an economic slowdown, expansive urban policies have even become a financial solution for some local governments.

To address the problem, the Chinese government must take a systematic approach and restore the role of the market in the process of urbanization. The key issue is to take away local governments’ power to appropriate land and make arbitrary urban-planning decisions so that the true value of rural land can be reinstated through a market-based system. More importantly, governments need to be made subject to the rule of law, a declared goal of the Chinese leadership.

If China fails to address the problem of its urbanization, it will result in further catastrophic and irreversible consequences. 

 The author is a partner and chief researcher with Anbound, a Beijing-based public policy think tank. 

 

While urbanization is often hailed as a major driving force of China’s economic development, it has come at a great cost

 

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