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China releases plan to integrate farmers in cities

Longji Rice terraces, above the small village of Ping' an in southern China.
Feargus Cooney | Lonely Planet Images | Getty Images
Longji Rice terraces, above the small village of Ping' an in southern China.

China has announced a sweeping plan to manage the flow of rural residents into cities, promising to promote urbanization but also to solve some of the drastic side effects of this great uprooting.

The plan — the country's first attempt at broadly coordinating one of the greatest migrations in history — foresees 100 million more people moving to China's cities by 2020, while providing better access to schools and hospitals for 100 million former farmers already living in cities but currently denied many basic services. Underpinning these projections would be government spending to build roads, railways, hospitals, schools and housing.

(Read more: Will China's slowdown benefit the rest of the world?)

Formally announced on Sunday, the plan has been one of the most contentious projects in recent years. Originally scheduled to be announced last year, it backs away from more radical proposals, which predicted even more farmers leaving the land for cities. But the plan is still ambitious, with 30 chapters, covering topics that include Internet access, building standards, environmental protection and public safety.

"These are big numbers, but they're not the crazy numbers that came out last year," said Tom Miller, a Beijing-based analyst and author of "China's Urban Billion," a look at what China's cities may look like in 2030. "They're being more realistic than they might have."

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The plan floated last year by the government's powerful planning commission called for 70 percent of the country's nearly 1.4 billion population to be living in cities by 2025. The current plan aims for 60 percent by 2020. It also emphasizes what has been a relatively new phenomenon over the past decade: the state's role in deciding who should move from rural land and where they should live.

The need for urbanization, the plan asserts, is part of a broader move to shift China's structure away from growth based on exports and investment, and toward domestic demand. Many econteromists believe that urbanites consume more than farmers, who tend to be more self-sufficient.

But the plan also sees urbanization as part of China's future. It states that "urbanization is modernization" and "urbanization is an inevitable requirement for promoting social progress," noting that every developed country is urbanilippozed and industrialized.

(Read more: Chinese Premier hints at tolerance for slower growth)

The plan strongly emphasizes the improvement of quality of life for new city residents through increased government spending. It also calls for improvement in the quality of building construction, which has sometimes been criticized by new residents.

"I think it's good because it touches on problems created by urbanization in the past," said Yi Peng, the director of the Urbanization Research Center of the International Finance Forum, a Chinese think tank. "Public services have been lacking and urbanization has not been rational."

The most ambitious part of the urbanization plan is to better integrate former rural residents who are currently living in cities — many of them for years and even decades. Currently, nearly 54 percent of Chinese live in cities, but only 36 percent are registered as urban residents. That disparity — representing about 250 million people — are former farmers living in cities but not permitted to register as city dwellers. That means they cannot send their children to local schools, use hospitals or enjoy other benefits of city life.

The plan calls for integrating 100 million of these second-class citizens, so that by 2020, 60 percent of Chinese should be living in cities, with 45 percent enjoying full urban status, the plan states.

To make this possible, the government is promising huge infrastructure spending. Every city that exceeds 200,000 in population is to be linked by rail and expressways, while every city exceeding 500,000 is to have high-speed rail service.

Separately, state television reported on Sunday night that 4.75 million people living in shantytowns would have their housing improved this year. These areas are often villages that have been swallowed up by cities, and at times have been flash-points of violence between municipal officials who want to demolish them and residents unwilling to move. It is unclear whether the plan will significantly raise relocation compensation for the residents of these areas.

Many urban planners say China's urbanization plan can only succeed when two related reforms are carried out.

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One is tax reform, which would either raise money for the central government to pay for urbanization, or give local governments more rights to raise money to pay for the new schools, hospitals, roads and housing that the plan's goals would require. Currently, local governments have limited rights to levy taxes.

Another is reforming farmers' land rights. Land is owned by the government, with only usage rights available to be bought or sold. Giving farmers more rights over their land would make it harder for bureaucrats to confiscate rural land, requiring more consultation and perhaps higher compensation.

Both of these reforms, however, are still in the planning phase, according to Tao Ran, the acting director of the Brookings-Tsinghua Center for Public Policy and author of several studies on urbanization.

"Without land reform, all of this can only be a plan," Mr. Tao said. "Most important is to break the government monopoly on land."

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