Promoting the real urbanization with job transformation
Recently, the National Development and Reform Commission released a report covering both the progress and the goals of China's urbanization efforts. According to the report, the authorities will remove restrictions on obtaining an urban hukou, starting with smaller cities and counties, and then move to loosen restrictions in bigger cities.
For a long time, under the household registration (hukou) system, farmers are hard to enjoy the same public services like education, medical services and even permits for purchasing houses as urban residents. But farmers own their lands —— though the lands cannot be sold and bought freely. Therefore, loosening urban residency on the one hand means breaking through the welfare gap between farmers and urban residents, and on the other hand, it means the loss of lands for farmers.
Under the current urbanization model, after local governments have gained low-cost lands, through fiscal expenditure or local government finance platforms, a large scale of investments are carried out, driving the growth of GDP.
But with the accumulation of financial risks, such a model is unable to continue. Therefore, Li Keqiang indicates to promote the “new-type urbanization”. But if the new type of urbanization is regarded as promoting people’s identity change with welfares, then through the newly increased urban residents for expanding consumption and pulling sustained economic growth, the above purpose is also impossible to be achieved.
In fact, in China, urbanization has always been carrying out. In 1950s of the last century, with the starting of the national “156” big industrial projects, more than 20 million farmers went into towns and became urban residents. At the same time, these projects had also promoted the development of cities, and some cities became prosperous because of these factories.
Judging by appearance, for factors of this round of urbanization, the first is the job opportunities created by the demands of industrial projects on labor force; the second factor is that there are primary welfares, dormitories, house distribution, and facilities such as kindergartens, schools and hospitals are also provided by factories; the third factor is that skill trainings are provided, the technical schools, night schools and in-plant trainings all have urged the change from farmers to workers.
But essentially, the change from farmers to workers and from countryside to cities is not only the citizenization of farmers’ welfares, but also the urbanization of professions, and it is in the long run the urbanization of production. In fact, in all ages, the essence of urbanization has never been changed, it is all the combination of people and advanced technologies, and is the gathering of groups who have mastered new technologies and new skills and have more efficient productivity. In modern times, urbanization is the result of industrialization.
What needs to be specially pointed out is that such combination with high technologies and new skills are seen from the group angle. For example, for the same job as a nanny for others, the income that can be gained in the countryside is obviously lower than the income in Beijing, Shanghai and Guangzhou. If we expand the scope a little wider, we may find that the income of a plumber in China’s mainland is certainly much lower than the income of a plumber in North America. The former can’t afford to urbanized life, but the latter can. Though these types of work are not something new skills, the throngs for which they serve are engaged in jobs with much higher efficiency, thus this part of high benefits may overflow to other throngs.
After the reform and opening-up, China has begun a new journey of another round of industrialization. Under the continuous stimulation of foreign funds, industrial transfer, technology transfer and WTO, a huge world factory has been formed. In the vast inland countryside of China, young people can be relatively free to go to cities and search for job opportunities. From the foreign trade merchandisers in Shenzhen, to female textile workers in Dongguan, then to the assemblers working for production lines, urbanization at various levels are being carried out on China’s ground. In another round of urbanization in the past thirty years, China’s urbanization rate has zoomed from less than 20% at the beginning of the reform and opening up to more than 50%, and over 400 million people have moved from countryside into cities.
For these young workers, through professional updating, the agricultural work has been changed into industrial labor and increased incomes, then they can afford the life with higher consumption. Thus the urbanization of people has been completed and then urbanization has been promoted. The final driving force for such a change lies in job transformation. Viewing as a whole, in the process of the integration of people and advanced technologies, the labor trainings on production lines are enough, what really works is the technical injection from outside. For a farmer, after simple trainings and combination with advanced technologies, even working for a screw on a production line, his income can also be raised obviously. Therefore, from the angle of expanding domestic demands and driving economy, though the consumption ability of urban residents is 3 to 5 times that of rural residents, it’s same with their change into urban residents, and it’s just a result but not a reason for industrialization.
However, such time has gone forever. With the development of China’s economy and the related rising labor costs, the technical injection to China from the outside has been slowed down. The reindustrialization that is headed by the U.S. can be regarded as a surface feature for this process.
Then, such job transformation can only rely on the industry upgrading of China itself and the spreading of the extra value added brought in by innovation. And the process of industrial transformation and upgrading is a relatively slow process, so the urbanization itself is also a long process. Then, such kind of job transformation and the spontaneous transfer of families accompanied by also cannot be completed within several years. In a long time, maybe within one or two generations, such high quality urbanization process can be completed. In the long process, some people certainly go back and forth among cities and countryside. They can not only reserve lands but also can gain the welfare through paying taxes. Their choices should be respected. Such amphibious urbanization transition form not only conforms to laws of economics but also conforms to rights of farmers.
Originally published on Tencent Dajia Column | 2013-7-3
