beijing, april 29 (xinhua finance) -- the national development and reform commission (ndrc) has released a document calling for the relaxation of urban residency requirements, which has drawn intense attention from domestic and overseas media. from the perspective of international experience, urbanization and rapid economic growth are highly correlated, and accelerating the development of urbanization will help stimulate china's economic growth potential.
elliot sklar, director of the center for sustainable urban development at columbia university's earth institute, told xinhua that urbanization is inextricably linked to economic development and that higher levels of urbanization can make many economic activities more efficient.
'in a sense, the history of the world is the history of urbanization,' mr. sklar said. historically, no matter the first industrialized countries such as the united kingdom and the united states, or the newly emerging asian economies such as japan and south korea, their rapid economic growth was accompanied by the rapid increase of urbanization rate.
for example, more than 80 percent of the u.s. population now lives in cities that make up only about 3 percent of the country's total land area, up from about 45 percent a century ago. similarly, japan urbanized rapidly during the period of rapid economic growth that followed the end of world war ii. in 1960, japan's urbanization rate had reached 63.3%, and in 1975, it rose to 75.9%.
a world bank urbanization study found that nearly all middle-income countries are more than 50 percent urbanized. in all high-income countries, the urbanization rate is over 70%.
therefore, analysts are generally optimistic about china's urbanization development prospects, because china still has huge potential for urbanization. statistics from the national bureau of statistics show that by the end of 2018, the urbanization rate of permanent residents in the chinese mainland was 59.58 percent, while that of registered residents was 43.37 percent.
if china's urbanization rate rises to 70%, it will mean hundreds of millions of people will move to cities. this means the rapid increase of labor productivity, the rapid expansion of the consumer market and the huge release of economic growth potential.
michael spencer, a nobel prize-winning economist and co-author of the world bank study, said "structural change" was a key driver of rapid economic growth, and that urbanization was a "structural change" similar to industrialization and technological progress.
he goes on to explain that urbanisation is seen as a "structural change" in economic growth for two main reasons. first, there is a huge gap between urban and rural labor productivity. the labor productivity of urban workers in manufacturing or service industries is three to five times that of workers in agriculture and other industries. thus, when people move from low-productivity rural areas to high-productivity cities, economic growth inevitably increases.
second, urban labour productivity is rising faster. in big cities, efficiency comes from the convergence of people. at the same time, the higher the population density, the lower the unit cost of infrastructure and the larger the economic scale effect.
from 41st to 59th streets in manhattan, new york employs 600,000 people, more than in new hampshire or maine, writes edward glaeser, a professor of economics at harvard university, in "the triumph of the city".
"the only reason we can afford the higher labor and land costs that cities bring is because of the productivity advantages that cities bring to offset those costs," glaeser writes.
the worry, though, is that urbanisation is not always welcome. citing a united nations survey, spencer said the vast majority of policymakers around the world tend to reject urbanization rather than welcome it. this is mainly because urbanization brings about a series of "side effects" : traffic congestion, environmental pollution, street crime, polarization between the rich and the poor, the spread of disease...
urbanization is like a "catalyst", which brings about rapid economic growth but also intensifies social and political contradictions. this makes people ambivalent about urbanisation: they welcome its economic benefits and dislike its social and political problems.
moreover, such contradictory emotions are often easily converted into "expedient" policy choices: restraining urbanization and controlling the problems caused by urbanization during the period of rapid economic development; in the economic downturn, urbanization is encouraged and expected to stimulate economic development. but urbanisation is an economic law, not a policy expedient. even in advanced economies, where urbanisation is over 70%, people are still slowly moving to the big cities.
"more than 70 percent of the world's population will be living in cities by 2050," sklar told xinhua.
source: china financial information network