China urbanisation hinges on land use, financial reforms

A new World Bank report finds that China’s urbanisation would be more efficient, inclusive and sustainable if the government changes how it allocates land, people and capital across the country.

Written together with the Development Research Center of China’s State Council, the report lays out concrete suggestions to counter the environmental degradation and urban sprawl that China is now suffering from as a result of rapid urbanisation. For instance, China should build denser, rather than larger, cities to help cut down on traffic congestion, air and water pollution and maintenance costs for infrastructure services. As a World Bank article explains, this would save some 1.4 trillion dollars in infrastructure spending – 15 per cent of last year’s GDP – and also preserve the amount of farmland still available to ensure future food security.

China should also provide its cities with subsidies to help them transition to a registration system based on residency, enforce existing environmental laws, regulate local government borrowing, and encourage cities to generate more revenue through property and car taxes. “The proposed reforms would accelerate the shift of industry to secondary cities in China, reduce the migration pressure on large cities, and eventually lead to higher wages for its citizens and more equitable growth,” said Axel van Trotsenburg, World Bank East Asia and Pacific regional vice president.

The report comes as China is seeking a new urbanisation approach. As the article explains, while cities have played a key role in lifting half a billion people out of poverty in the last 30 years, they are now showing the strains of urbanisation, including rising inequality.

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