About 100 million rural migrants can get urban hukou in six years, according to the national new-type urbanization plan

China's urbanization is always considered as a double-edged sword. While the number of permanent urban residents has increased to the point where the urbanization process is almost complete, residents with city household registrations make up only a third of the total population. The percentage of permanent urban residents, 53.7 percent of the country's nearly 1.4 billion population by 2013, up from 17.9 percent in 1978, is in sharp juxtaposition to only 36 percent of the population holding city household registrations.

Standing in the gray zone are the world's largest migrant population - 269 million rural residents working in cities. Owing to their living conditions, these people have less access to public services than their urban counterparts, since China adopted the hukou, a dual household registration system between urban and rural residents. Even after living in cities for a year, non-urban hukou holders can never fully integrate into city life. Social tension from the inequality has increasingly plagued the country, which is something China is determined to change.

The State Council, China's cabinet, released a new urbanization plan on March 16, announcing assistance to 100 million rural migrants in obtaining residency status in cities over the next six years.

People first

The plan projects 60 percent of Chinese people living in urban areas by 2020, and increasing urban hukou holders to 45 percent of the total population.

China sees an influx of 10 million rural residents into its cities every year. They cannot become full fledged city residents, as even those born in the city face difficulties in getting education due to the hukou barrier, which results in around 58 million rural children left at home by their migrating parents.

Li Wei from the Development Research Center of State Council said that China's urbanization has been expanding too fast and that future attention should be paid to quality rather than speed.

In addition to an increase of 100 million urban dwellers with city household registrations, the 2014-20 urbanization plan also focuses on expanding the coverage of basic public service to reach both urban and rural households, including pensions, medical insurance and education.

Meanwhile, the plan includes programs for improving the technical skills of migrant workers to get them into employment. By 2020, each migrant worker will enjoy technical training subsidized by the government, with 10 million people trained each year to upgrade the majority of migrant workers from junior workers to technical workers.

One of the basic principles for pushing forward urbanization before 2020, the plan said, is putting people at the center and making sure that all people can enjoy the country's modernization achievements.

Balanced development

To remove the restriction imposed on the migrant population, the reform of the household registration system has been carried out in a group of small cities in some provinces, aiming at “gradual elimination” of the hukou system. However, the Central Government is cautious when it comes to the big cities.

Currently, over 85 percent of migrants are concentrated in Beijing, Shanghai, and some coastal provinces. The three city clusters, namely, the Beijing-Tianjin-Hebei region, the Yangtze River Delta and the Pearl River Delta, are home to 18 percent of the country's total population and create 36 percent of the national GDP on only 2.8 percent of the country’s land.

In the new plan, the government announced to further tighten control over newcomers to cities with a population over 5 million, in order to ease the pressure on traffic and the environment. The new plan will focus on increasing small and mid-sized cities in central and west China, where the urbanization rate is 13-17 percentage points lower than the east.

To accommodate the increase of migrants, the government has promised an increase in social housing and improvement in living conditions of 100 million disadvantaged people. Meanwhile, railways will connect all cities with more than 200,000 residents by 2020, and high-speed rail will connect those with above 500,000 residents, according to the plan. About 90 percent of the population will have access to a nearby airport.

Considerable government spending, at least 50 trillion yuan ($8 trillion), according to the China Development Bank, will be necessary to realize the new urbanization plan. In securing capital for urbanization, the Ministry of Finance (MOF) said it will improve the current system of local government bonds and explore means of local government bond issuance, as well as a cooperative model of government and social capital.

To avoid local government debt risks, the MOF will further strengthen the management of local government financing companies, regulate local government borrowing, sort out the relationship between enterprises and governments, correctly guide market expectations, and prevent and diffuse financial risks, said Vice Minister of Finance Liu Kun at the March 19 press conference.

Correcting the past

The scale of China’s urban expansion is unprecedented. From 1978 to 2013, the number of permanent urban residents rose from 170 million to 730 million and the number of cities grew from 193 to 658. The fast expansion, outstripping many developed countries, has been the fundamental drive of development of the world's second largest economy. The increasing number of urban residents are also expected to spur the economy by boosting domestic consumption.

However, out of Pandora's box sprang "urban disease." Most big cities were plagued with congestion and pollution and many local governments related urbanization to housing construction, which migrants cannot afford.

One alarming story is Ordos City. Called a "ghost city" by mass media for its countless unoccupied houses, the city in north China’s Inner Mongolia Autonomous Region is reported to be buckling under the weight of an estimated debt of over 200 billion yuan ($32 billion) in 2013.

With a misunderstood concept of urbanization, this approach has resulted in countless unoccupied neighborhoods and over-occupied cultivated land.

According to Xu Xianping, Vice Minister of the National Development and Reform Commission, the drive toward urbanization has now reached a crucial stage. The former extensive expansion approach is no longer appropriate. "We must find a new way out," he said at a press conference on March 19.

He added the new plan will improve water safety and air quality by targeting environmentally friendly growth based on green production and green consumption. Scientific and rational urban development patterns will become the mainstream.

"China's urban population has reached approximately 700 million, and what kind of urbanization path China chooses will have a profound impact on the world," said Li Tie, Director General of China Center for Urban Development.