All eyes around the globe are focused on China as She modernizes and grows at an almost formidable rate. Since 1978, China has been enjoying a steady 10% annual economic increase. On top of that, there are the upcoming 2008 Olympics in Beijing and the constant incoming flood of foreign capital investments. Nevertheless, internally, China still has a lot to work on to keep up with and sustain the big strides in economic advancement. One of the major concerns has been issues dealing with urbanization. China has an extremely large population of 1.2 billion, but a predominant 70 percent is in the countryside. With the ongoing economic expansion, production from the rural side is no longer deemed sufficient; many of the rural laborers are also finding themselves unemployed as more people grow into their working age. Therefore, the Chinese officials have been planning and enforcing policy-changes to encourage migration to the cities from the countryside. Some of the policy reforms include amending the existing household registration system, improving the public transportation, and building more living facilities in the cities. However, these policy amendments do not nearly sum up the urbanization in China.
During the initial stage of the Maoist era (1949 - 77), or the reform era,
acts of urbanization was sprouting as young Chinese from the countryside
seek higher education in and better employment in the cities. However, the
dominating Premier Mao Zedong opposed urbanization; actually, he instead
believed in the opposite side, or what you might call "ruralization".
He made it a requirement for the city young scholars to experience the rural
system by sending them, by force if required, to the countryside to learn
the essence of labor (LaoDong in Chinese). No one could defy Mao not just
because of his dominating power, but also because of the many observable
unfavorable facts about urbanization. For example, the level of growth rate
of urbanization was very low because of migration controls such as food
rationing and household registration. Also, most of the industrial and urban
development centers were established in inland areas at the expense of coastal
areas in order to pursue spatial balance in urban development. Moreover,
the Chinese economy at this time was isolated from the rest of the world,
so there was no involvement of foreign capitals. However, as China ventured
into the time after Mao's rule, rate of urbanization has been accelerating.
In 2000, urban population has increased rapidly and the level of urbanization
doubled to 35 percent (Zhang, 2002). Compared with the pre-reform period,
many changes have taken place. First, food rationing and job allocation
became more leniently regulated although the household registration system
remained the same. Secondly, coastal areas, where most of the big cities
are, have been getting better treatment in urban growth. Economic zone,
financial institutions, and industrial factories were built in these areas
to create more jobs as well as attracting foreign capital. Furthermore,
China has gradually opened up to the world, and soon enough, foreign direct
investment (FDI) began to flow inbound increasingly. "Since 1993, China
has become the largest recipient of FDI in the developing world and the
second-largest among all nations" (Zhang, 2002). As a result, FDI have
played an important role in shaping national urbanization and regional urbanization.
With national urbanization, factors that strongly propelled urbanization
include the internal economic development, the shifts of the rural agricultural
labor force into urban industry and service sectors, and the strong external
forces of the foreign capital inflows. On the other hand, with regional
urbanization, FDI effect still played as one of the significant determinants.
Besides that, there were the respective provincial economic development,
sectoral structure, and geographical-historical factors. Although foreign
direct investment has brought to China an increasing new phase of economic
expansion, it has also caused a serious downside of the coastal-inland divide.
In 1982, this coastal-inland difference in urbanization levels was only
4 percentage point; however, the gap in 2000 had increased to 14 points
(Zhang, 2002). The dire result of this FDI distribution divide has been
the imbalanced situation in which the coastal provinces are receiving a
higher level of urbanization as well as experiencing a faster rate of urban
population growth, while the in-land provinces are far behind in relative
economic growth.
As urbanization keeps on expanding, hundreds of millions of rural laborers
are adding to the growing urban population. Increasing concerns have been
dealing with the overflowing of cities labor supply, and whether or not
the cities has the capacity to absorb this large surge of labor supply that
has agglomerated with the urban economy? This capacity, in turn, is generally
measured by examining the cross-time productivity in urban areas. Some empirical
studies on the agglomeration effect have demonstrated that productivity
is only higher in large cities. They estimated a 5 to 6 per cent increase
in industrial productivity with every doubling of urban size for U.S. cities
(Pan & Zhang, 2002). In contrast, other studies are looking into the
localization and comparing that to urbanization. The localization hypothesis
assumes that firms derive benefit principally from spatial proximity to
other firms in the same industry, while the urbanization hypothesis considers
the specialized system of cities to be the main source of agglomeration
advantage (Pan & Zhang, 2002). These studies have discovered that with
every doubling of city size, a 3.6 gain in firm productivity would occur.
However, most of this 3.6 gain in agglomeration advantage comes from localization
economies of groups of firms respectively concentrated in their local areas.
The urban economies have not depicted a relatively speedy productivity growth
as its labor supply from the rural areas increases. It is suggested that
the main reasons are the difficult cultural differences, the more complicated
urban labor structural system, and mainly, because of the overflow of workers,
many Chinese urban industries have already reached the optimal industry
size.
So, does this means that more resources should be poured into rural industrialization
instead of encouraging urban migration? The answer is clearly a "no"
as we look into the relationship between rural, small town industrialization
and migration from rural areas. Not long after the rolling of the urbanization
tide, China, perceiving the potential of urbanization-led city crowding
, has actually already started a special strategy of urbanization called
" 'urbanization from below'"(Liang, Chen & Gu, 2002) in which
industries are built in small towns and peasants are encouraged to work
in these rural industries instead of migrating to cities. Evidences have
shown these enterprises serving as a major source of economic development
as well as providing new opportunities for the unemployed country people.
For example, in 1990, the output from rural enterprises accounted for 22
per cent of the total production of China. In 1993, 25.4 per cent of the
rural labor force was employed in rural industries as compared with a much
lower 14.5 per cent in 1984 (Liang, Chen & Gu, 2002). However, with
rural establishment of industries, people nevertheless would migrate. In
fact, rural industrialization also has the high possibility of promoting
migration as investments in faster and more productive machines reduce the
number of human capital needed for a unit of output. Many of these migrations
did start to happen in an increasing rate. However, the migrants are not
necessary all moving to the overcrowded urban areas, some of them are migrating
"intra-provincially," while some other are migrating "inter-provincially."
Intra-provincial migrants are those who move within the same province, and
inter-provincial are those who move from one province to a different province.
Available data has shown that most of the migrants are intra-provincial,
while the number of inter-provincial migrants is only about one-third of
the total number of migrants. Detectable causes of this difference lie in
household registration status and reasons for migration. "Among inter-provincial
migrants, almost 70 per cent are temporary migrants, as compared with just
over half for intra-provincial migrants. Also, among inter-provincial migrants,
we see a larger proportion (46.6 per cent) who stated 'to do business or
factory work' as their reason for migration; in contrast, the corresponding
percentage for intra-provincial migrants is about 33 per cent." (Liang,
Chen & Gu, 2002) Moreover, it is easier to secure household registration
in one's native province than in other provinces. Relating these two types
of migration back to the establishment of rural industries, it is discovered
that a 10 per cent increase in rural enterprises employment actually reduces
intra-provincial migration by around 5 per cent, but the same change increases
inter-provincial migration by around 12 per cent (Remembering the aforementioned
that only one third of all the migrants are inter-provincial). Therefore,
overall, there is no systematic evidence that rural industrialization reduced
migration. In addition, it has been recorded that China's rural economic
enterprises have produced excessive amount of waste and pollution; furthermore,
the limitation of proper roads and railroads has added an extra layer of
difficulty to the operation of these rural industries.
The predicted city crowding through excessive urbanization actually has
not played out as intense because of the observed behavior of migrants who
actually do engage in evaluating different aspects of cities and then make
their choice of their final destination. As a result, some cities are growing
faster than others. Concerning the rural-to-urban labor mobility, the "pull"
and the "push" factors are identified. The "push factor"
deals with out-migration of rural laborers to urban areas with attractive
resources and opportunities; and the "pull factor" deals with
migrants returning, or being pulled back to their rural origins because
of information transfer, entrepreneurship and change in previously isolated
rural localities (Chen & Coulson, 2002). As the census data of migrant
population, the "push factor" has been much stronger, meaning
than the population of rural people migrating to the cities is larger than
the population of returnees back to their native rural area. The method
of statistical reclassification, which is used as part of the counting of
the urban migrant population, further enhance the record of high level of
migrant population who stay in the cities. Specifically, the statistical
reclassification includes everyone who change their hukou (or household
registration) status from agricultural to urban non-agricultural. However,
city people who hold this kind of kukou even include people who set up businesses
in small cities and town, rural students go to college and never return
to their hometown, and when city limits expand to include areas that were
previously rural, all the agricultural kukous in that area are converted
to urban kukou (Chen & Coulson, 2002). So, ultimately, what are the
major factors that rural workers are looking for in a city that they would
choose to settle down? Studies have demonstrated that the structure of a
city's economy, more than anything, attracts migrants. Cities with a better
developmental environment of private businesses that offer self-employment
and high service-sector job opportunities, usually made it to the top of
migrants' choices. Also, migrants generally look at the overall income per
capita of a city rather than the individual salary. However, the quality
of life in a city does not shown to be affecting migrant's decision about
which city to migrate to. It is interpreted that in the early stage of the
just-nullified long-controlled population mobility, migrants are more concerned
about having a high chance of finding employment and a long-term lucrative
salary than concerning about urban quality of life.
The road to urbanization in China has been the subject of hot debate. Some
argue that more incentives should be imposed to encourage a continuing high
level of urbanization, while others believe that high level of urban migrant
population would only stagger the economic development, and that the ideal
step should be concentrating resources on industrializing rural areas and
small towns. Despite these back and forth arguments, many people are concerned
about what is really driving the urbanization in China? Concluding from
this paper, we could say that major determinants of Chinese urbanization
are foreign direct investment. Specifically, foreign direct investments,
improving the economic development of corporations in many big cities much
better than state-owned enterprises, are creating more job opportunities
and better salaries that attract many migrants. However, it is imperative
that China has to get on negotiations and policy changes so that foreign
direct investments could also move to in-land areas instead of solely remain
investing in coastal areas. Finally, issues of the balance between China's
long-rooted agricultural production and urbanization have also been widely
spoken. China, before its great leap into industrialization and economic
development, had been a major dependent on agricultural economy. Now, with
the increase in urbanization and the boom in economy, the agricultural sector
still plays an important role in many people's employment and consumption
as well as the country's trade. Therefore, with the rising rural industrialization
and urbanization, China needs to also be careful with not endangering its
agricultural sector.
Chen, Aimin; Coulson, N. Edward (2002), "Determinants of Urban Migration:
Evidence from Chinese Cities", Urban Studies v39, n12 (November
2002): 2189-2197
Liang, Zai; Chen, Yiu Por; Gu, Yanmin (2002), "Rural Industrialization
and Internal Migration in China", Urban Studies v39, n12 (November
2002): 2175-2187.)
Pan, Zuohong; Zhang, Fan (2002), "Urban Productivity in China",
Urban Studies v39, n12 (November 2002): 2267-2281.
Honglin (2002), "What Explains China's Rising Urbanization in the Reform
Era?", Urban Studies v39, n12 (November 2002): 2301-2315.