Chinese Urbanization Update

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China’s rapid urbanization will continue for 15 to 20 years and China will become an urban society in five to six years, with the urbanization rate reaching or exceeding 50 percent.

Li Shouxin, director of the Development Planning Department under the National Development and Reform Commission, disclosed on March 29 that China’s urban population had reached 622 million by the end of 2009, with the urbanization rate standing at nearly 47 percent.

At present, China’s urbanization rate is close to the average urbanization rate of middle-income countries. China’s urbanization rate grew by almost 1 percent annually over the past five years. Currently, an urban system combining big cities, small and medium-sized cities and towns has taken shape in China.

McKinsey Consulting view of China’s urban future in 2030

* Based on current trends, China in 2025 will have 221 cities with more than one million people compared to Europe with 35. 25 of China’s cities will have more than 5 million people
* China’s cities in 2025 will generate about 95% of its GDP (versus 75% today)
* Of the 350 million people added to chinese cities by 2025 (about the population of the USA) 240 million will be migrants
* More concentrated higher density cities will have higher per capita GDP and require less infrastructure

China’s actual urbanization level is probably higher than official statistics. More people in the cities increases China’s GDP. People in the cities make three times as much as people in rural areas. So 1% more people in the cities means a 2% increase in GDP as the 1% are making 3 times more per capita. It takes some years for an actual person to get a new city job and become more productive, but it is like a line of people who get moved up to higher productivity.

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