The Impact of China’s Urbanization

We argue that urbanization in China improves people’s living quality in many ways, including increasing income and job opportunities of workers. First of all, urbanization in China have greatly influenced the floating population and actual population that has a registered residence.

Before 1978, there was not an urbanization in China as industrialization was then based in the development strategy of the heavy industry in the capital. With the launching of the reforms in 1978, it was driven the de-collectivization of lands through the family responsibility system (bao-can daohu), through which it was to deliver lands among the small families in smaller portions, which translated in surplus of working hands which displaced the non-agricultural sector; besides, there was a progressive augmentation of the intensive productive activities of working hands, translated in the current process of industrialization and therefore in the biggest absorption of workers in the cities. Therefore, if China is still predominantly rural it is obvious that the proportion of inhabitants in the cities has been growing within these years.

Since the nineties, the central and local governments have adopted a number of ways to stimulate labor mobility between the rural and urban zones, basically to an intra-provincial level, through the relaxation of the family registry system (hukou), a system created officially in 1958 as geographical distinction among the inhabitants of the rural and urban areas, that from the eighties will pass to be a control media to avoid the free mobility of the peasants to the cities.

Once it is completely eliminated the institutional barriers against labor mobility, it is evident that the migration movements will multiply even more vertiginous than at present. Effectively, the number of immigrant workers increased quickly from 38.9 million in 1997 to almost 103 million in 2004. During this period, around 40% of the total migrating workers were interprovincial. Currently, they take up 52.6% of the total amount of jobs in the commerce at retail and at wholesale in services of hostelry, 57.6% in the secondary sector, 68.2% in production and process, and 79,8% in construction (CIIC 2004).

To better value the effect on the increasing rates of urbanization, it is convenient to have an idea of the origin and destination of the displacements: the rural-urban migration includes the majority of the total, a 40,7%, while urban-urban migration represents 37.2% in 2000. Meaning, these two types of displacements are the most common during the process of current transition in China.(Chatterjee) Rural-rural migration represented 18.2% of total migration and urban-rural migration was not over 4% of the total. (CaiFang)

While the increasing of jobs in the non-agricultural sectors has motivated peasants to leave agriculture in the last years, it has increased the labor mobility from the agricultural sector to the non – agricultural and from the rural areas to the urban areas, with which inevitably the labor markets start at last to develop. This shows that the migration flows have supposed a significant source of economic growth, “China’s growth has come largely from a rising labor supply and rapid capital accumulation. “ (HBR)at approximately a 20% of the GDP, according to Harvard Business . It is estimated for example, that around 50% of the world productive capacity is concentrated in zones like the region of the Yangtzé river (Shanghai, Jiangsu and Zhejiang) or the delta of the river Pearl (Guangdong), converted in these last years in the main industrial and commercial centers of China, by having transformed in the main focus of foreign investment. In the first region is focused the 20% of the total population, that is very possible that produces around 30% of the GDP up to 2020; while in the second region, under the influence of Hong Kong and Taiwan, has a permanent population of 60 million inhabitants and around 60 million non-permanent inhabitants, which it is calculated to produce around 40% of the total of exportations and attract 25% of the direct foreign investment.

While the pace of economic growth in China has been staggering in recent years, it has also increased the capacity of absorption of two especially contentious labor profiles in recent periods, that is, both migrant farm workers and Workers dismissed from government-owned enterprises . So, with the rapid growth of economy in China, they tend to have a greater absorption of employment, which constitutes an opportunity for an effective absorption of workers, based in the quality of human capital. The growing proportion of non-state enterprises (which currently contribute more than 60% of GDP) is another way of showing how the movement of labor to the cities has contributed to the expansionary effect of urbanization. Immigrant workers tend to concentrate mainly on private enterprises, which means it is more labor intensive.

In sum, the hukou is today a unique element that gives a distinctive character to the urbanization in China. It is therefore essential that government authorities relax their intervention in the work distribution in cities and urbanization can be developed in a much more realistic context.