In the last 30 years, China’s record economic growth lifted half a billion people out of poverty, with rapid urbanization providing abundant labor, cheap land, and good infrastructure. While China has avoided some of the common ills of urbanization, strains are showing as inefficient land development leads to urban sprawl and ghost towns, pollution threatens people’s health, and farmland and water resources are becoming scarce. With China’s urban population projected to rise to about one billion – or close to 70 percent of the country’s population – by 2030, China’s leaders are seeking a more coordinated urbanization process. Urban China is a joint research report by a team from the World Bank and the Development Research Center of China’s State Council which was established to address the challenges and opportunities of urbanization in China and to help China forge a new model of urbanization. The report takes as its point of departure the conviction that China's urbanization can become more efficient, inclusive, and sustainable. However, it stresses that achieving this vision will require strong support from both government and the markets for policy reforms in a number of area.
The report proposes six main areas for reform:
1. Reforming land management and institutions
- Because most of the urban expansion in recent years was on converted rural land, the report says currently the amount of farmland available is close to the “red line” of 120 million hectares, which is considered to be the minimum necessary to ensure food security.
- More efficient use of land will require stronger property rights for farmers, higher compensation for land requisition, new mechanisms for converting rural construction land to urban uses, and market-driven pricing for urban land allocation.
- Legal limits should be set up on rural land taken for public purposes by local governments.
2. Reforming the hukou household-registration system to provide equal access to quality services for all citizens and create a more mobile and versatile labor force
- The system should remove barriers to labor mobility from rural to urban areas, as well as between cities, to help boost workers’ wages.
3. Placing urban finances on a more sustainable footing, while creating financial discipline for local governments
- The report recommends moving to a revenue system that would ensure a higher portion of local expenditures is financed by local revenues, such as property taxes and higher charges for urban services.
4. Reforming urban planning and design
- In cities, basing the government prices for industrial land on market value can encourage land-intensive industries to move to smaller, secondary cities.
- Cities can also make better use of existing urban land through flexible zoning, with smaller plots and more mixed land use, which would lead to denser and more efficient urban development.
- Linking transport infrastructure with urban centers and promoting coordination among cities would encourage better management of congestion and pollution.
5. Managing environmental pressures
- China already has tough environmental laws, regulations and standards, so the most important task for achieving greener urbanization is enforcement.
- Market-based tools, such as taxes and trading systems for carbon, air and water pollution, and energy, can also be used more to meet environmental targets.
6. Improving local governance
- The performance evaluation system of local officials could be adjusted to give greater incentives for a more efficient, inclusive and sustainable urbanization process.
Click here to download the full World Bank report 
English PDF (20.66Mb)
English PDF (20.66Mb)
Source: World Bank Group