Incentives needed to boost urbanization's full benefits

China must overcome hesitancy on the part of both municipal governments and rural residents in order to boost the numbers of migrants settling in cities, the country's top economic planner said.

It's a challenge being addressed through incentives, according to Hu Zucai, vice-chairman of the National Development and Reform Commission, who spoke at a news conference on Friday.

Hu said a key document passed by the State Council a week ago includes incentives in support of the 2014 landmark Blueprint for New-Style Urbanization. The document asks all cities, except for a few of the largest such as Beijing and Shanghai, to ease restrictions to allow college graduates, skilled workers and overseas returnees to obtain household registration permits, or hukou.

Hu acknowledged that although 771 million, or 56.1 percent of the Chinese population, worked and lived in cities by the end of 2015, those with urban hukou accounted for less than 37 percent of the population. That means nearly 20 percent of population lives in cities but is not entitled to public services such as healthcare.

That rate falls short of the progress Beijing had hoped would be made by now toward its 2020 goal. Authorities set a target of having 60 percent of its citizens living in cities, with 45 percent having urban hukou, by 2020. Hu said current progress suggested that while the urbanization target could easily be reached or surpassed by 2020, the percentage of those with permits would be "difficult to achieve".

"The hukou holder rate increase was impeded by two factors: local governments' reluctance and rural residents' wariness," Hu said.

Raising the rate would require local governments to pour money into new residents' healthcare, housing and education, without immediately palpable benefits. Prospective rural migrants are hesitant because they worry that if they have an urban hukou, they would have to give up their entitlement to rural homes, he said.

To persuade the two groups, the new document linked the number of migrant workers a local government assimilates to three prized quotas: the central government's transfer payments to local governments, permission to make more land available for construction and construction funding.

Transfer payments are a key revenue source for local governments, contributing 30 percent of many local budgets in 2014 - and a much higher figure in underdeveloped regions. Urban construction land is increasingly scarce in major cities.

The document promised that even if rural residents get an urban hukou, they could sell their land rights back home, or hold onto them if they prefer.