Sustainable urbanization

The rich experiences of Germany and other countries can help China avoid traps and overcome problems

When Premier Li Keqiang visited Germany in late May, a number of cooperation agreements were signed between the two countries, and they agreed to implement the China-German urbanization partnership and carry out cooperation to build low-carbon eco-cities. Urbanization therefore is an important field for exchange and cooperation between the two countries, and indeed China and Europe.

But four questions concerning China's urbanization need to be answered.

First, how to increase the urbanization rate?

According to international experience, when a country reaches the middle or late period of industrialization, its urbanization rate is usually around 70 percent. In 2012, China's urbanization rate was officially 52.6 percent, which was more or less the same level as that of Germany in 1950 (52.9 percent), Japan in 1955 (56 percent), and that of the Republic of Korea in 1978 (53.3 percent).

All these demonstrate that, although China's urbanization has been proceeding rapidly in recent years, its urbanization rate is not as high as it should be and it is lagging behind its industrialization. However, it also implies the huge potential of domestic demand will be a future driver for development, which is a major condition to support a medium GDP annual growth rate of 7 to 8 percent over the next decade. That is to say, China's urbanization can potentially develop at an annual rate of 1 to 1.2 percent over the next 10 years. Learning from the urbanization experiences of other countries, Germany in particular, will be very important if China is to achieve smooth and more sustainable urbanization.

Second, how to increase the population level of urbanization?

The official urbanization rate is 52.6 percent, but this includes the 260 million rural migrant workers in the urban population. If rural migrant workers are not included, China's real urbanization rate is only 35.2 percent. This is much lower than the world average of around 52 percent, and it is less than half that of countries such as Germany and the ROK.

Premier Li Keqiang has long been emphasizing that "the essence and the core of urbanization is population urbanization". The low level of population urbanization directly affects not only the quality of urbanization, but also the upgrading of the economic structure and transformation of economic development patterns.

To increase the level of population urbanization, we need to learn from and cooperate with countries like Germany. Especially, we need to learn and draw on their experience in formulating a policy and institutional system for population urbanization.

Three, how to solve the issue of population over-aggregation in big cities?

At present, Beijing, Shanghai, Guangzhou and Shenzhen are the four most populous cities in China. The population in both Beijing and Shanghai exceeds 20 million, more than their planned capacity of 18 million by 2020. On the other hand, the population in medium and small cities has been declining. Although house prices have remained high in big cities, the attractiveness of big cities to migrants is still far stronger than that of the smaller cities.

The Chinese government has been prioritizing the development of medium and small cities and rural towns, and has promulgated many policies for this purpose. Yet it is still a case of "feeling the stones in the river" as Deng Xiaoping observed. In Germany, there is a rational industrial, employment and population distribution, as 60 percent of the population and 80 percent of small and medium-sized enterprises are located in small towns with a population less than 20,000 each.

China can tackle the problem of irrational population distribution by learning from the experience of countries such as Germany.

Four, how to improve the quality of urbanization?

All the big cities in China suffer from "urban diseases", such as serious air pollution and traffic congestion. And there are still bottlenecks that prevent effective efforts to tackle the problems brought about by urbanization. Germany and other developed countries have rich experience in protecting the urban environment and easing traffic jams. Therefore, China will strengthen exchanges and cooperation with Germany and other countries to improve the quality of its urbanization. This is a practical and urgent need for China.

A new type of urbanization in China will not only unleash the biggest potential driver for its future development, it will also greatly contribute to the rebalancing of the world economy. For this purpose, China needs to establish platforms for exchanges and cooperation with Germany and other countries.

The author is president of the Hainan-based China Institute for Reform and Development.