The symposium of President Xi Jinping, how did Professor Lu Ming suggest the benefits of urban-rural development

Publisher : MBA Office       Oct.19,2020

Being in the key year of the country's 14th Five-Year Plan for economic and social development, General Secretary and President Xi Jinping attended the symposium with experts from those sectors on the afternoon of  24 August, in Beijing. Nine experts spoke at the symposium, offering significant opinions and suggestions on the advancement of environment, ideas, tasks and measures for the 14th Five-Year period (2021-2025).


Lu Ming, the Distinguished Professor of Antai College of Economics and Management (ACEM) at Shanghai Jiao Tong University (SJTU), was one of the experts. Devoting himself to the study of China's economy, urban-rural and regional development and labor economics for years, he has published books like Big Nation, Big Cities (Da Guo Da Cheng) and The Power of Space (Kong Jian De Li Liang).


At the General Secretary's symposium, focusing on the way how urban-rural and regional development tackles longstanding problems and nurtures new drivers while facing the possible downward pressure of China's economic growth, Lu Ming proposed: Considerable 'institutional benefits' will be gained, once part of institutional and structural problems of urban-rural and regional development are addressed.


There is still much to improve for structural adjustment in the urban-rural and regional advancement, hence the development strategy of center-driving metropolitan areas and urban agglomerations should be fast implemented, he said. It had been suggested that a focus on promoting the household registration system reform in large cities with a population of more than 5 million in urban areas was required, to speed up the settlement process of long-term stable residents and employees.


Caixin reporters interviewed Lu Ming about this symposium.


Caixin reporter: How would you comment on the situation faced by the urban-rural and regional development at the beginning of the country's 14th Five-Year Plan for economic and social development?

Lu Ming: Statistically,  the urbanization and urban development in China are still lagging behind in a lot of ways.  Compared with other countries at the same development stage, the rate of urbanization in China is approximately 10% lower; the development scale of Top 30 metropolis in China does not match that of populous countries; about 30% of the permanent resident population in cities is foreign population, especially in some megacities. Half of the non-local household registration foreign population has resided for more than 5 years, and around 20% for more than 10 years. Although there came policies like 'point-based household registration system', the number of people being granted is limited, thus the citizenship of a large number of long-term residents needs to be resolved as soon as possible.


Caixin reporter: In response to these 'long-existing questions', what improvements can be done during the 14th Five-Year period?

Lu Ming: The mismatch reveals a space for the structural adjustment of the urban-rural and regional development in China.


There is a huge gap in  GDP per capita among different regions in China, which is caused by the lagging-behind of the spatial agglomeration of population to economic agglomeration. Compared to areas with the resource endowment, the relatively geographical-disadvantaged areas with excessive population find hard to boost per capita income, which also imposes a limit on the scale and modernization of agriculture; however, those geographically advantaged areas are facing a labor shortage. This reflects a need for enhancing population agglomeration.


Meanwhile, the correction to the mismatch of land and housing space is required,  in company with the population agglomeration. In the past, a large number of land use plans of urban construction were allocated to population-outflowing areas. Behind the empty 'ghost cities' and industrial parks, there were idle local land and housing, low return on investment and high debt ratios of local governments. On the contrary, in the population-inflowing areas (especially coastal metropolis and megacities), they often face insufficient supply of construction land, which directly leads to the shortage of abnormally high housing prices.


We must face up to the effect brought by the low-density urban construction mode and household registration system on China's industrial structure for a long term. China's service sector accounts for 10% of GDP lower than that in  in the same historical period of developed countries, which is related to the low-density urban construction model. The research finds that the urban migrant population lacks the expectation of long-term settlement, which is 16-20% lower than the average consumption of the local urban household registered population. Some relevant studies show that consumption can be promoted through the intensive and compact development of cities and the promotion of the citizenization of foreign population, to reach 1 3-5% increase of the proportion of service industry.


Caixin reporter: Do you have any suggestions on giving full play to the growing role of metropolitan areas and urban agglomerations?


Lu Ming: The inevitable trend of population urbanization is to gather towards the metropolitan areas around the central city and the coastal areas, to vigorously develop the metropolitan areas and urban agglomeration with the drive of the central city, to promote the reasonable flow and efficient gathering of various production factors, and to create a balance in development.


It is particularly necessary to emphasize the role of metropolitan areas as growth poles. For a long time, the popular view is that urban disease is a sure result of population growth. Measures have been taken to control urban population growth and land control, hoping to reduce the development speed of big cities by slowing the land supply of megacities and first-tier cities. This, however, is creating a spatial mismatch between population and land.


To correct the mismatch, we should build metropolitan areas with radii ranging from 30 to 80 kilometers around the central cities based on the differences in scale and functional positioning, and connect the central cities in the metropolitan areas with the surrounding small and medium-sized cities by rail transit, to strengthen their roles as growth poles. Meanwhile, in population outflowing areas, we should strengthen our own comparative advantages and specialization, improve the per capita resource occupation and per capita income, promote the scale and modernization of agriculture, and enhance the global competitiveness of agriculture.


Caixin reporter: The migration and gathering of population will definitely face the challenge of China's household registration system. Currently, China has fully lifted the restrictions on the settlement of cities with a population of less than 5 million in urban areas. What will you suggest for the coming step?


Lu Ming: It had been suggested that a focus on promoting the household registration system reform in large cities with a population of more than 5 million in urban areas was required, to speed up the settlement process of long-term stable residents and employees.


A freer migration of population between urban and rural areas as well as different regions can offset against the negative impact of the decline in the total demographic benefits, help to improve the efficiency of the use of labor resources, and alleviate the labor shortage in cities (especially large cities in developed areas). With the improvement of economic development, the proportion of service industry will continue to increase, which can create a large number of jobs and benefit the full employment of low-skilled labor and poverty alleviation in particular.


The complete cancellation of household registration is surely the ultimate goal, which may not be possible at current stage since the public service infrastructure is not ready. For example, the full-time high school education opens only to students with local household registration, especially in Shanghai and Beijing. Caixin reporter: The household registration plays a significant role in many cities for its relation to the education of the next generation. What breakthroughs need to be made to optimize the public services of the city?


Lu Ming: One key point is to promote educational investment for the younger generation of the migrant population. It is suggested to implement 12-year compulsory education as soon as possible, with the focus on rural registered children. Education equalization should be realized in the population-inflowing areas, to allow better education for the left-behind children and the children of migrant workers in the city, which will be beneficial to the reunion of migrant families and the construction of a country with abundant competent personnel. Especially in megacities, aging population and industrial agglomeration boost the demand for rich labor force, but educational resources provided for the children of migrant workers are seriously insufficient. Therefore, it is suggested to increase the investment in education through the coordination and collaboration of the government, the market and the society. Simply shutting down some grass-roots schools for children of migrant workers does no help to enroll these children at the formal education system.


In addition, the supply of public services and infrastructure needs continuous optimization. There exists a tight connection between our social governance and the supply of public services, while the supply of public services links to the household registration of permanent resident population who own a strong and non-ignorable demand for fair public services.


Optimizing the quantity, quality and structure of public services and infrastructure is also important to optimize the investment structure in large cities and metropolitan areas where population continues to flow in. The investment can obviously boost the economic growth, gain sustainable returns, alleviate urban disease, reduce the pressure brought by the citizenization of foreign population, and achieve win-win results in economic growth, livable life and social harmony.


Caixin reporter: The housing prices still remain high in the first-tier cities. How could we realize a more scientific land and housing supply in the urban development?


Lu Ming: We should enhance the flexibility in land and housing management. The supply of land and housing should be in line with the population migration. We will increase the supply of construction land in cities with sustained population growth and high housing prices, strengthen the flexible shift of inefficient industrial and commercial land to residential land, build much commodity housing and public rental housing, moderately lift the control of floor-area ratio, and improve the tolerance of low-cost residence on the premise of security. In population-outflowing areas, a reduction plan could be developed, to carry on trans-regional trade and reallocation for the idle construction land and the land use plans of construction  generated by the reclamation of rural homesteads.  The core crux of China's real estate lies in the spatial mismatch of supply and demand, not in the excessive issuance or bubble of currency.