Urbanization Should Be Led by Market Rules
March 31, 2015

The Knowledge Series lecture “Chinas New Urbanization” was successfully held at the New York campus of the Cheung Kong Graduate School of Business

Large-scale urbanization in China during recent decades has led to astonishing accomplishments in its economic development, continuously improving the lives of its people. Recently, the State Council released the National New Urbanization Plan providing macroscopic guidance for the healthy development of urbanization during the period from 2014 to 2020. At the same time, leftover problems related to the old administrative system could still become restricting factors.

For this reason, the Cheung Kong Graduate School of Business together with the National Committee on United States-China Relations held a lecture at Cheung Kong’s New York Campus titled China’s New Urbanization: Macroscopic Planning and Potential Improvement. Dean of Beijing Normal University’s Emerging Markets Institute and Professor of Economics Dr. Hu Biliang was invited to explain the new direction of Chinese urbanization. He examined how to carry forward the National New Urbanization Plan in this new period from the angles of residency permit (hukou) reform, urban carbon emissions reductions, and other initiatives. He also looked at effective measures for neutralizing their restricting factors. This event was part of the Knowledge Series lectures of the Cheung Kong Graduate School of Business – New York Campus. It attracted the active participation of many scholars and a large number of professionals.

Population Movement Should Be Determined by Market Rules

China’s achievements in urbanization are remarkable. In 1949, the urbanization rate was 10.6%, and in 2013 it had reached 53.7%. However, large-scale urbanization left behind many problems. “For example, 270 million rural residents have migrated to cities and towns but have no way of obtaining a household registration. Another example is how more and more farmland has become zoned for construction,” Professor Hu Biliang said. “This new-style urbanization planning was launched in order to solve these two issues and will use people-centric policymaking.”

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Picture 1: Dean of Beijing Normal University’s Emerging Markets Institute and Professor of Economics Dr. Hu Biliang

In his lecture, Professor Hu Biliang called on China to conform to the objective patterns of urban development and to change its model of singular government leadership while implementing its new urbanization policy, allowing the market and government to act in concert. He advocated reforming the household registration system, eliminating social exclusion and discrimination, and creating a new path towards a sustainable, new type of urbanization.

“To bring about a new type of urbanization, household registration system reform must take the path of emphasizing market rules,” Professor Hu Biliang pointed out. “Through reform, the current household registration system is expected to attract more people to small cities, and thus the household registration controls in small and medium-sized cities are being lifted first. On the other hand, at the same time, the development of large cities is being encouraged, which results in people moving towards the large cities. Therefore, the final result might be conflicting and contradictory with the goal.” Professor Hu Biliang proposed that the restrictions of administrative policy on the flow of the labor force should gradually change. He added that controls on the household registration system should be completely lifted and market rules and price signals should be allowed to determine the movement of population. While comparing the administrative mechanisms of globalized metropolises, he mentioned: “The household registration system should be determined by the free market. For example, many people want to come to New York or London in search of opportunities, but whether or not you have the ability to come here and find work, earn money, and rent an apartment should be the factors that determine if you can stay in this city.”

Old Ways of Thinking Spur the Creation of “Ghost Cities”

 “For a long time, China’s urbanization has used government planning as the single leading factor, neglecting coordination with market patterns. The ‘ghost cities’ that have appeared across China, which have lots of housing but no residents, are the result of not respecting the power of the market,” Professor Hu Biliang pointed out. “The thinking behind the National New Urbanization Plan is to try hard to increase the ability of cities to sustainably develop, slowing down the speed of urbanization to create an environment for industry and employment, and not to artificially create a city.” At the same time, Professor Hu Biliang criticized past urbanization policies for excluding farmers and creating social inequalities. Attention to environmental protection should also be strengthened. He said: “Excluding some people and giving others special privileges is really a form of social discrimination. Now this old-style thinking in the new plan must be improved. Aside from this, the new plan does not value the critical environmental issue of carbon removal enough. These parts must be unceasingly supplemented and perfected.”

Finally, he added that: “In past urbanization, we did not consider the history, culture, and characteristics of each city. Demolishing houses and relocating people at will, destroying places of cultural significance, this caused all cities to look very similar in the end. I hope that in future planning and construction, cities everywhere will learn from this lesson.”

National Committee on United States-China Relations Chairman Steve Orlins stated: “I hope that this lecture held together with the Cheung Kong Graduate School of Business will help more Americans understand what is happening in China and what the impetus of China’s economic development is. This way they can better handle US-China relations and have more business opportunities.”

The Cheung Kong Graduate School of Business strives to drive economic development and social progress through interaction with communities of high-level academics and business elites, thus becoming a catalyst of positive social transformation and an advocate of new business culture. This lecture was one of the “Knowledge Series Lectures” conducted by the Cheung Kong Graduate School of Business. This series is centered on hot topics in China and Asia. It is hosted by the Cheung Kong Graduate School of Business and its world-class New York resident professors, together with scholars from first-rate global partner organizations. Each month it will present different topics in different forms, including lectures, discussions, etc., with the purpose of spreading cutting-edge knowledge and perspectives related to China and promoting deep dialogue in Chinese, Asian, and global academic and business circles.

For more information, please contact Julie Zhu at juliezhu-pt@ckgsb.edu.cn or +1(607)379-5783 and/or visit our New York office.

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