Transcript: Press conference on new urbanization plan

China Business News: I attended a meeting at Peking University interpreting the reports released during the annual sessions of the NPC & CPPCC, in which a scholar raised the idea that the core of urbanization was creating more jobs, and that the process of urbanization is the process of better meeting the needs of the new labor force. What is your understanding of this, Vice Minister Xu, and how is employment going to meet the people's needs?

Xu Xianping: I will leave questions on employment to Vice Minister Yang Zhiming.

Yang Zhiming: China is a country with rich labor resources and it is a major country for agricultural labor transfer. It is also a large country of rural migrant workers with Chinese characteristics. Under the guidance of the new urbanization plan, we will focus on guiding rural migrant workers to seek outside employment in an orderly manner, encouraging them to seek employment in nearby areas, and supporting them in returning to their hometowns to establish their own businesses. At present, the total number of rural migrant workers heading to cities for employment and business is growing, but the growth rate is declining and the places they choose is changing, which means that the number of rural migrant workers will become limited. From now on, rural migrant workers may have difficulty finding employment, while some big cities and enterprises may have a lack of rural migrant workers. The lack of general workers is due to the limited rural labor force, while the lack of skilled workers demonstrates a lack of skilled rural migrant workers. The difficulties faced by both rural migrant workers and enterprises are caused by the market.

When we carry out the new urbanization plan, we should, first of all, enhance skills training for rural migrant workers to address the lack of skilled workers. Second, we should develop tertiary industry, small and medium-sized enterprises and labor-intensive industries, to resolve the ever-growing demands of rural migrant workers. Third, we should support rural migrant workers with resources to return to their hometowns to start businesses. We call those who come back to China to establish their businesses after studying abroad "overseas returnees." Similarly, we may also call these people "city returnees," who obtain skills, amass capital, know the basics about marketing, have the guts to establish their own businesses and harbor an emotional affiliation to the countryside and then come back to their hometowns after living in the city. Fourth, we should develop the role of the nationwide employment information network to handle information sharing in cross-region employment for rural migrant workers. Overall, the transfer of the rural labor force with Chinese characteristics is employment-driven, preserves ownership of land, and is settling down step by step. We will further carry out our work concerning employment and entrepreneurship for rural migrant workers in the process of promoting the new urbanization in China. Thank you.

Xu Xianping: Let me add one thing. The process of urbanization entails non-agricultural industries and the rural population moving to cities and towns, along with the development of industrialization. I will demonstrate this with two figures. China grew into the second largest economy in the world, with close to double-digit growth for the past thirty strong years since reform and opening up. What was the urbanization rate in 1978？17.9 percent. How many people lived in the urban areas back then? 170 million. Now that number has grown to 730 million. We can see that when we grow our economy, we also create more jobs and concentrate the population.

Financial Times: My question is in regards to the Qingdao Sinopec explosions. One reason cited for the accident was urbanization. As the city expands, nobody knows what kind of pipelines or equipment has been placed underneath its surface. In your planning, how will you deal with such issues? Because I am guessing that there are such problems in other cities besides Qingdao. I don't know which government department can give the answer.

Qi Ji: I'm not in charge of such projects and therefore may not be able to give you a very professional answer. As you already mentioned the Qingdao incident, I will discuss some of my opinions on the matter. I can say that many cities in China are developed and formed gradually, which means some of their infrastructure was initially built in the suburban areas of the city, such as sewage treatment plants or garbage landfills. However, as the city expands, plants and equipment, designed to remain outside the city, are now encircled by the newly expanding city areas and hence become part of the city's inner infrastructure.

Plus, there are a number of so-called "villages within a city," none of them deliberately built "inside" the city. They are just villages that were originally created outside the city and have gradually been surrounded by new city expansions -- hence becoming part of the inner city.

You also mentioned one heavy petrochemical enterprise just now. I actually have been there. The city just developed into a big one over the past decade. At first, the enterprise was indeed located on the outskirts of the city. During that particular process of a city's layout construction, it is a fact that some of these "outside" projects, including infrastructures and industry plants, have evolved into these city centers . Frankly speaking, they are not fit to be situated in the central area of a city, but this is just a matter of evolving progress -- and we do actually see such a development process taking place.

This time around, in the planning for the new type of cities and towns, we specifically propose a four-line control, including a green, blue, purple and yellow line. The green line stands for a green belt, the blue line ensures a water resource, the purple line signifies cultural relics protection and the yellow line controls infrastructure. Various infrastructures which belong to the yellow line control, including the petrochemical pipelines you mentioned, shall be strictly separated from a city's residential areas and administration areas. In the new plans, we must summarize the lessons we have learned, especially for those colleagues who will participate in city construction. They will know that no matter whether they see a yellow, green, blue, purple or the currently existing red line, these from the limitations that no city construction should go beyond.

Yang Zhiming: I want to add some words to the question regarding the home services industry. The Hong Kong reporter asked a good question. As Vice Minister Xu already said, the new type of urbanization is closely related to the expanding service industry and migrant workers are also closely related to the developing service industry. Nowadays, migrant workers are providing the city with an essential public service. For now, it remains very hard to find technicians in a city's production service and it is also hard to find home service workers.

According to statistics, there are some 20 million migrant workers living in China's cities. And there is still much room for home services, nursing home services, patient care services and community care services to grow. That is, after training the migrant workers, they would have to be willing to engage in these service industries and the families actually looking to hire, would have to be willing to employ them. This way, migrant workers will expand the home service industry in the new type of urbanization, will help raise employment rates, improve people's daily lives and promote domestic needs, as well as adjust the existing economic structures.

Guo Weimin: The Ministry of Construction (Ministry of Housing and Urban-Rural Development) may establish one department solely responsible for city planning. If you are interested in the future, we will invite the relevant leaders and experts of the Ministry's City Planning Department to hold a press conference and briefing.

China News Service (CNS): I would like to ask Vice Minister Qi some questions about housing in the process of urbanization. Will the high housing prices found in the big cities become an obstacle for urbanization? How can we ensure that rural migrant workers can afford housing in the cities? Do we have different measures for different types of cities?

Qi Ji: Your questions concern housing problems during the process of implementing the new urbanization plan. Minister Yang has just elaborated on the issue of how to help migrant workers work to their satisfaction, and talked about his understanding of the plan. We often say, "When one lives well, then one can truly settle down and enjoy his job." Therefore we need to ensure that the new urban residents and rural migrant workers can truly find a place to live in the urban areas. I'd like to call your attention to two points in the National Plan which discuss housing for rural migrant workers.

The first one is to ensure the full coverage of basic housing for rural migrant workers. In other words, all migrant families eligible for the housing guarantee system in the cities they move in will be covered by the system. There will be various categories of assurance available. The second thing I believe you may also be interested in, is to gradually realize the universal coverage of basic public services for the permanent population in urban areas. It means that those who work permanently in cities, with or without a city hukou, will all be entitled to enjoy basic public services. Of course, the basic public services include a guarantee for affordable housing. These are two new policies in regards to the housing of urban residents and the permanent urban population.

You also mentioned the question of housing affordability for farmers in big cities and cities with relatively higher housing prices. Actually there are two types of migrant farmers. Your question doesn't concern those who have already amassed their fortunes. The focus of our government will be on those migrant workers who have worked in cities for quite a period of time, but without a stable home. Their housing needs should be met and guaranteed by the government.

For rural migrant workers, the housing prices in many big cities form a setback they cannot overcome. Therefore, the National Plan on New Urbanization has dedicated an entire chapter to this. Chapter 26, entitled "Improve the Urban Housing System," gives the market a decisive role in resource allocation and gives better play to the role of the government in helping to realize the general aggregate balance. To this end, we propose several principles. The first is a general aggregate balance, referring to the balance of supply and demand.

The second is an appropriate structure of housing supply. This means there will be supplies of both commercial and indemnificatory housing. And for those who neither meet the requirements for indemnificatory housing, nor can they afford commercial housing, we propose developing a type of housing with shared property rights. In this plan, the government and the house buyer share the ownership of the house during a given period of time. This will help solve the housing concerns of China's so-called "sandwich class."

The third is to make sure housing prices match spending power. On the whole, we want to ensure an even market. But this may differ greatly from area to area.

For rural migrant workers who cannot afford commercial housing, if they are qualified, they can apply for indemnificatory housing; if they do not qualify for indemnificatory housing, the new model of commercial housing with shared ownership will become a choice for many of them. This policy covers not only rural migrant workers, but also new urban residents moving into the big cities from other places.

Hong Kong Takungpao and its affiliated website: I have two questions. The first one is for Vice Minister Wang Shiyuan from the Ministry of Land and Resources. We have noticed that some voices out there have claimed that the new urbanization will initiate a new round of "Enclosure Movement." Between increasing land supply in cities and ensuring farmer's rights, what kind of work will be done to balance out both?

My second question goes to Xu, vice minister of the National Development and Reform Commission (NDRC). Many investors are eager to learn more about the investment opportunities in the new urbanization round, especially for the high-end service sector that Hong Kong companies take pride in. Could you brief us about such opportunities? Thank you.

Wang Shiyuan: First of all, I want to thank you for your concern about land management and the protection of arable land. In the compilation process of urbanization plan, we as a member did participate in the drafting and reviewing. For example, we gathered the data taken from the second national land survey (July 1, 2007 - Dec. 31, 2009) and used it as basic data in the compilation, largely because the drafting work happened to appear at the same time.

Secondly, we have jointly predicted the urbanization scale for 2020, especially the planned objective to have the per-capita construction scale reach 100 square meters.

On a third note, at the same time, we conducted policy research regarding reforms in land management, which would concern the urbanization plan. On this basis, we offered 27 suggestions, gathered from seven different perspectives, to facilitate the policymaking. It is fair to say our work has strongly backed up the new urbanization planning.

The CPC Central Committee recently issued a series of requirements for land management undertakings. As you know, after the Party's Third Plenum, the Central Economic Work Conference, Urbanization Conference and Rural Work Conference all raised new requirements for land management efforts. Following the new requirements, we will focus on the work from three aspects:

First, the protection of arable land will be a foundation and precondition for urbanization. We will continue our strictest regulations in preserving the quality and quantity of arable land.

At present, we are working together with other government agencies to pilot the consolidation of regulations that apply to economic and social development, urban planning and land use, which in turn means that we are modifying the overall land use planning based on the second national land census.

We will connect all related regulations to the urbanization plan, which would work as a foundation for all regulations. The plan marks all boundaries of the ecological resources, farmlands and city areas with red lines. The scale of the new construction lands would be under strictly control. Cities that need more space should expand their urban area in a linear layout with combined conglomeration and form a satellite town. This will ensure the protection of both farmland and the ecosystem.

Our next step is to gradually reduce the planned quota for new construction land. After consulting the NDRC, we will reduce the quota for 2014, with a priority to control the country's eastern areas, especially those new urban spaces in cluster cities in the Beijing-Tianjin-Hebeiarea, the Yangtze Delta and the Pearl River Delta.

As Vice Minister Xu just mentioned, in developing these cities, we will continue to excavate their full potential as there is still much room left for the development of small and medium cities in these areas. At the same time, we will establish and improve the responsibility system for farmland protection without neglecting the balance between both the use and retrieval of farmland.

Through the abovementioned efforts, there will be positive results in protecting arable land, both in terms of quality and quantity. Following then, we must view land conservation and the intensive use of land as a key and critical task in driving forward urbanization development. We will always abide by the strictest regulations in land conservation to further raise the efficiency of land use in urban construction.

By following the central government's demands, in controlling the increase in land supply, making the most of the present stock of land, optimizing the land structure and raising the land use efficiency, we will innovate land management system.

In checking the inventory of land, the key lies in the redevelopment of "low efficiency land" in rural towns and villages to improve the intensity of land use. We should refine the standards for various types of land. We shall establish an incentive and encouraging mechanism for non-arable lands to exit, including the land allocated to urban area, the land destined for industry development, rural homesteads and other construction purposes.

We will also standardize land remediation to improve the efficiency of rural land use. Based on land conservation and the intensive use of land, we will promote urbanization which in turn improves the attraction of rural townships to both workforce and industries.

Third, we should regard the preservation of farmers' lawful rights as our fundamental purpose in developing people-oriented urbanization. We should prudently advance the reform of the rural land system while deepening the reform in the urban land system.

The Ministry of Land and Resources is joining hands with other government organs in setting an overall agenda for reform and pilot proposals This would include how to deepen the reform of state-owned land and how to expand its different uses.

For the land with collective ownership in rural parts,, we should adhere to such ownership and the protection red lines of the arable land and stick up to the rights and interests of farmers. Under the precondition of legitimacy in city planning and land use regulations, we will allow commercial land with collective ownership to enter the land market. Apart from that, we will release reform measures for land requisition and the use of land for homesteads.

Now that we have outlined these reforms and measures, I think that as long as we can strictly implement them, we can ensure reasonable land use in new urbanization development while at the same time safeguard the country's food security and farmers' rights and interests.

Thank you.

Xu Xianping: Please allow me to answer your second question. The service sector is closely related to urbanization. As cities and towns are gathering growth in both their economy and population, there will be a rising demand for production services -- such as financing, scientific development and intermediary services -- as well as life-related services, including medical service, healthcare and senior care.

Last year, the service sector accounted for 46.1 percent of China's overall economy. But in developed countries, this proportion is usually higher than 70 percent. This gap means there is still much room for the development of the service sector in China.

In boosting new urbanization, Hong Kong companies are welcomed to participate in the development of the service sector on the mainland. We will continue to open up this sector to international investors. Thank you.

Die Welt: I have two questions. The first is about expenses. We see from the analysis from the central authorities that it costs between 60,000 and 130,000 yuan to convert one person's hukou (household registration). How did you come up with that figure? Who is going to pay for the expenses? Second, you mention at the beginning that the World Bank is your advisory body. What advice have you taken from the World Bank? Thank you.

Xu Xianping: Liu Kun, vice minister of Finance, will answer the first question.

Liu Kun: Securing funds is important for the process of urbanization, and we address it mainly by making institutional innovations. We will speed up the reform in the financial and taxation system and the investment and financing mechanisms, make innovations in financial services, open up market access, and build a diversified and sustainable financial guarantee mechanism.

Regarding granting urban residency to people from the countryside who have moved to cities, the Ministry of Finance has improved its balanced transfer payment method, taken the migrating population into account when estimating regional fiscal spending, in order to resolve the discrepancy in public services between the areas that the migrants are leaving and arriving in, which is caused by the floating population. We will follow the principles laid out in the Decision of the Central Committee of the Communist Party of China on Some Major Issues Concerning Comprehensively Deepening the Reform during the Third Plenary Session of the 18th Central Committee of the Communist Party of China, and the National New Urbanization Plan (2014-2020), establish a mechanism linking fiscal transfer payments with the urbanized agricultural population, further improve the fiscal transfer payment system, and promote equitable and universal public services including social security, medical treatment, education, culture and so on.

The Ministry of Finance will mainly deal with the following things in terms of securing capital for urbanization: first, it will reinforce the power of local government bonds in promoting urbanization, give more rights to local governments to issue bonds in accordance with the law, improve the current system of local government bonds, and explore a means of local government bond issuing that combines general and special bonds. Second, it will promote the cooperative model of government and social capital, or the PPP model, in which the government, by means of franchise rights, fair pricing, fiscal subsidies and other open and transparent measures, clarifies the benefit-cost mechanism in advance and attracts social capital to participate in the construction of urbanization infrastructure. Third, it will further strengthen the management of local government financing companies, regulate the local government borrowing, sort out the relationship between enterprises and governments, correctly guide market expectations, and prevent and diffuse financial risks.

Xu Xianping: Let me add one thing. As Vice Minister Liu mentioned just now, the government pays for part of the expenses incurred from the transfer of the rural population to urban areas. Apart from that, enterprises and rural migrant workers are also responsible. For instance, enterprises should pay for the rural migrant workers' social security, and invest in their skills training. Rural workers themselves should also pay a part of the costs according to the relevant rules and regulations. Hence, the expense is shared by governments, enterprises and individuals. The governments are responsible for the public cost.

As to what advice the World Bank and the Asian Development Bank gave when we drafted the Plan, they mainly focused on energy conservation and environmental protection, building smart cities, raising the management level of city planning and construction, improving social security and so on. We have studied and adopted the advice.