BEIJING – Around 100 million Chinese live in extreme poverty, and roughly 275 million spend less than $2 a day. The overwhelming majority of China’s poor live in rural areas, and, for most, hope for a better life lies in the cities, where better-paying jobs are easier to find. Indeed, over the past three and a half decades, a staggering half-billion Chinese have already made the move, raising the urban share of the country’s population from less than 20% in 1980 to one-half today. By 2030, 70% of all Chinese are expected to live in cities.
China’s urbanization has undoubtedly supported the country’s impressive growth and rapid economic transformation. Its cities have provided cheap land and abundant labor, while local governments have been eager to attract investment and create jobs.
But strains are starting to show. China’s growth model, driven by investment and exports, is running out of steam. Urban sprawl and congestion are spreading, fueling unrest among farmers who feel undercompensated for the loss of their land – a vital source of collateral for local-government debt (which now amounts to 30% of GDP).
Moreover, the widening urban-rural divide has increased the country’s income and wealth disparities. Stark inequalities also exist within cities, mainly between those with a hukou (a record in China’s official household-registration system) and migrants without one. Although migrant wages have now caught up, inequality in public services (access to which requires an urban hukou) ensures that this divide persists, risking migrant children’s lifetime prospects and welfare, and deterring future migration.