Jun 17, 2013

    Urban revolution looms in China

    CHINA is pushing ahead with a sweeping plan to move 250 million rural residents to newly-constructed towns and cities over the next dozen years - a transformative event that could set off a new wave of growth or saddle the country with problems for generations to come.

    The government, often by fiat, is replacing small rural homes with high-rises, paving over vast swathes of farmland and drastically altering the lives of farmers.

    This will decisively change the character of China, where the Communist Party insisted for decades that most peasants, even those working in cities, remain tied to their tiny plots of land to ensure political and economic stability.

    Now, the party has shifted priorities, mainly to find a new source of growth for a slowing economy that depends increasingly on a consuming class of city dwellers.

    The shift is occurring so fast - and the potential costs are so high - that some fear rural China is once again the site of radical social engineering.

    "It's a new world for us in the city. All my life, I've worked with my hands in the fields," said Mr Tian Wei, 43, a former wheat farmer in Hebei who now works as a night watchman at a factory.

    The primary motivation for the urbanisation push is to change China's economic structure, with growth based on domestic demand for products, instead of relying so much on exports.

    In theory, new urbanites mean vast new opportunities for construction companies, public transport, utilities and appliance-makers, and a break from the cycle of farmers consuming only what they produce.

    "If half of China's population starts consuming, growth is inevitable," said Dr Li Xiangyang, vice-director of the Institute of World Economics and Politics, part of a government research institute.

    The costs of this top-down approach can be steep. In one survey by Landesa in 2011, 43 per cent of Chinese villagers said government officials had taken or tried to take their land. That was up from 29 per cent in a 2008 survey.

    But the coming urbanisation plan would give farmers a permanent stream of income from the land they lose.

    Besides a flat payout when they move, they would receive a form of shares in their former land that would pay the equivalent of dividends over a period of decades, to make sure they do not end up indigent.

    "I think it's OK, this deal," said Mr Huang Zifeng, 62, a farmer who gave up his land. "It's more stable than farming your own land."