Sustainable urbanization as driver of poverty reduction in East Asia
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Speech at “Global Partnerships for Poverty Reduction”
Davide Giglio, Head of the North-East Asia Office, Directorate General for Global Affairs, Italian Ministry of Foreign Affairs and International Cooperation
April 28, 2017, Rome, Italy
I would like to offer some remarks on the relationship between poverty reduction and urbanization in the context of East Asia and China specifically.
Urbanization has historically served as an essential engine for economic development, proving that it is impossible to reach high-income status without undergoing a successful urbanization process. Therefore urbanization is a vital part of a successful development process. As development occurs, workers move out of agriculture and into industrial and service jobs that can be performed much more efficiently when they are concentrated in cities rather than dispersed in the countryside.
Historically, the increasing proportion of East Asian countries populations living in urban areas has come hand in hand with corresponding high rates of industrialization and economic growth. The rate at which urbanization has taken places in East Asian countries has been of the order of five to ten times faster than that experienced elsewhere: what industrially developed nations in Europe and North America have achieved in two to three hundred years, in East Asia has been achieved in just 40 to 50 years.
In China the pace and scope of the process have been even faster and bigger, as it befits the Middle Kingdom’s continental proportions: the numbers for the country’s urbanization over the last three decades are unprecedented in scale: 260 million migrants have moved to cities from rural areas, supporting the country’s rapid economic growth and development progress, beside lifting 500 million people out of poverty. No other country has achieved such a level of poverty reduction in such a short period. Remarkably, despite the enormity of this transition, China has avoided some of the ills often associated with urbanization, particularly large-scale urban poverty and unemployment.
Today China is no more a predominantly rural country. Indeed, according to the 2011 census for the first time the number of cities dwellers exceed that of the rural areas. China has reached its present stage through a trajectory that is peculiar. In most developing countries the pace of urbanization is determined by the decision-making process of millions of separate individuals who assess their own life chances and decide to leave the countryside and go to the city. But China’s past process of urbanization was determined primarily by government policies that, until recently, tightly constrained the scope for individual choice.
Demographic history reveals China’s specific history of urbanization. As a matter of fact, between the 1950s and 1978 China de-urbanized at that same time that the rest of the world was steadily urbanizing. For instance in 1978 China’s urbanization rate was just 17.9.% compared with 31% for all developing countries (World Bank). Since then China has caught up and become a normal urbanized country. Urbanization rate reached 53.7% in 2014.
As with other phenomena, urbanization too in China has taken place “with Chinese characteristics”. This process over the past 40 years has been extremely broad-based. Indeed a pattern of “urbanized countryside” has emerged reflecting a blurring of the boundaries of urban and rural communities. Cities have sprawled into the countryside and new urban settlements have grown up in formerly rural areas. Sprawl in China is different from America, but no less land hungry and equally visible from outer space, as shown by satellite imagery. Thousands of square miles of agricultural land have been lost to development with a severe impact on China’s self-sufficiency as an agricultural producer.
Today China is facing the challenge of a new stage of urbanization. Chinese authorities foresee that under the so-called “New Normal” a more sustainable spurt of economic growth will be achieved by the Chinese juggernaut. The country’s urbanization is projected to reach about 70 percent— or around 1 billion people—by 2030.
This new stage of Chinese urbanization will be different from the past. Strains have begun to emerge in the form of rising inequality, environmental degradation, rapidly aging population shrinking the workforce, and the quickening exhaustion of natural resources. In broad terms challenges facing Chinese policy makers can be summed up to two: addressing the current urban-rural divide and implementing ways of environmentally sustainable urbanization.
As concerns the urban-rural divide, gaps have opened up during the breathless development process initiated in 1978. In comparison with urban residents rural people enjoy today lower educational and health standards. Urban resident earn higher incomes than rural dwellers. The Chinese government has taken action to address the widening of the urban-rural income gap by systematically adopting policies designed to improve rural incomes and to help farmers’ livelihoods. A more inclusive strategy is called for. Barriers to migration have kept China’s urbanization rate too low, resulting in exacerbating urban-rural income inequality. Unequal access to public services between citizens with urban household registration (hukou) and those without, although diminishing, remains as a barrier to mobility. At the same time, the large influx of migrants, the so called “floating population” (liudong renkou), puts pressures on urban services. Urban citizens perceive an erosion of service quality.
As concerns sustainability, urbanization in the past relied excessively on land conversion and land financing, causing inefficient urban sprawl and, on occasion, ghost towns and wasteful real estate development. Furthermore, despite progress in environmental standards and policies, the cost of pollution to the nation’s health is rising as China’s population is increasingly concentrated in cities. And land-intensive urbanization has reduced the availability of farmland, resulting in competition for scarce water resources, and adding to pollution that affects the quality of farm produce and food production capacity.
Today’s conditions are vastly different from three decades ago. China is reaching a stage in its development in which efficient use of resources is becoming more important for growth than simply mobilizing resources. The services sector is playing a larger role in growth and domestic demand is expected to grow faster than external demand. New models of urban agglomeration are called for: denser cities providing enhanced sustainability; less urban sprawl with is characterized by greater energy use for transport and higher costs for energy and water supply infrastructure.
How China’s cities develop in the future—either as compact and dense cities or as large sprawling metropolises—will determine the magnitude of their carbon footprint. Decisions made today will affect China’s cities and the quality of life of its urban residents for generations to come. As China reaches upper-middle and high-income status citizens increasingly demand and expect a clean environment and livable cities. China has already introduced a comprehensive set of environmental laws and regulations, but these have not yet brought all the expected improvements in environmental quality. As China prepares for the next wave of urbanization, addressing environmental and resource constraints will become increasingly pressing.
Green urbanization in China is of global interest. The European Union and Italy are committed to be partners of China in this new stage of urban development. While the Chinese suburban landscape is different from Europe’s and Italy’s in particular, we have the ambition to propose an alternative vision of city dwelling lifestyle centered around human needs particularly those that revolve around participation and inclusiveness. Italy has institutional know-how and companies able to address challenges that are similar to those experienced by China, albeit on a smaller scale. Urbanization is therefore one of the sectors that the Italian and the Chinese government have chosen as a priority in the general framework of their bilateral cooperation.
China’s new phase of urbanization will have to be more efficient, inclusive and sustainable. Environmental degradation, rising employment and a swollen property market are just some of the many pending issues. None is more critical to China’s stability than the widening gap between have and have-nots, both within cities and between regions.
How China handles the next ongoing wave of urbanization will shape not only many aspects of China’s evolving society but will also have far-reaching regional and international implications.
Thank you.