May 31, 2014

World Bank Suggestions to Improve China's Future Cities with a new model of urbanization

The World Bank and the Development Research Center of China’s State Council have a report Urban China: Toward Efficient, Inclusive and Sustainable Urbanization which has six priority areas for a new model of urbanization.

1. Reforming land management and institutions
2. Reforming the hukou household-registration system to provide equal access to quality services for all citizens and create a more mobile and versatile labor force
3. Placing urban finances on a more sustainable footing, while creating financial discipline for local governments
4. Reforming urban planning and design
5. Managing environmental pressures
6. Improving local governance

China has avoided some of the common ills of urbanization, notably urban poverty, unemployment, and squalor. But strains are starting to show. China's urbanization is projected to reach 70% by 2030 for about 1 billion people in cities. This is up from 20% urbanization in 1978 and about 50% today.






1. Reforming land management and institutions

Because most of the urban expansion in recent years was on converted rural land, the report says currently the amount of farmland available is close to the “red line” of 120 million hectares, which is considered to be the minimum necessary to ensure food security.

More efficient use of land will require stronger property rights for farmers, higher compensation for land requisition, new mechanisms for converting rural construction land to urban uses, and market-driven pricing for urban land allocation.

Legal limits should be set up on rural land taken for public purposes by local governments.





2. Reforming the hukou household-registration system to provide equal access to quality services for all citizens and create a more mobile and versatile labor force

The system should remove barriers to labor mobility from rural to urban areas, as well as between cities, to help boost workers’ wages.

3. Placing urban finances on a more sustainable footing, while creating financial discipline for local governments

The report recommends moving to a revenue system that would ensure a higher portion of local expenditures is financed by local revenues, such as property taxes and higher charges for urban services.

4. Reforming urban planning and design

In cities, basing the government prices for industrial land on market value can encourage land-intensive industries to move to smaller, secondary cities.

Cities can also make better use of existing urban land through flexible zoning, with smaller plots and more mixed land use, which would lead to denser and more efficient urban development.

Linking transport infrastructure with urban centers and promoting coordination among cities would encourage better management of congestion and pollution.

5. Managing environmental pressures

China already has tough environmental laws, regulations and standards, so the most important task for achieving greener urbanization is enforcement.

Market-based tools, such as taxes and trading systems for carbon, air and water pollution, and energy, can also be used more to meet environmental targets.

6. Improving local governance

The performance evaluation system of local officials could be adjusted to give greater incentives for a more efficient, inclusive and sustainable urbanization process.

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