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Urbanizing China

BEIJING – Measured by the percentage of people living in its cities, China’s urbanization rate currently stands at about 48%, according to official statistics. Given that the share of city dwellers was only 18% just 30 years ago, this is remarkable progress.

But it is still unsatisfactory, because most other countries at a similar stage of development experienced faster urbanization than industrialization. China’s urbanization has lagged behind its industrialization, which now is around 70% when measured by the percentage of the labor force whose income is derived mainly from non-farm activities.

Another striking difference between China and some other developing countries is that Chinese cities, large and small, lack any sign of significant urban poverty or slums. People often attribute this to China’s hukou, or household registration system, which separates the urban privileged and the rural poor from the start of their lives. But, although the hukou system may prevent rural people from enjoying some urban benefits and public services, such as public education, health care, or employment insurance, it has never kept rural laborers from moving into cities.

Indeed, China’s government has actually been encouraging rural laborers to move to cities to find better jobs. That is why more than 40% of China’s labor force, some 300 million people, has shifted over the past 30 years from agriculture to industrial and service sectors, which are now increasingly concentrated in cities. As a result, migrant workers with a rural hukou now outnumber workers who hold an urban hukou on average in Chinese cities.