China Urbanization
How Should Chinese Policymakers Do with
The Real Estate Bubble
China’s Urbanization and Real Estate Bubble
China’s urbanization over the past few decades has been so fast that the country’s urban population has jumped from just about 10% in 1949, when the People’s Republic of China was established, to nowadays over 50%. Looking back China’s history of modern urbanization, the rapid urbanization actually began from 1978, when the country opened the door to the world with Chinese leader Deng Xiaoping’s economic reform. According to the official statistics, China’s rate of urbanization was only 17.9% in 1978. Nevertheless, the urban population grew to 52.6% in the end of 2012. Why was the urban development so slow before 1978? Why did the urbanization suddenly accelerate after the open up of economy?
Prior to the economic reform in 1978, the Chinese government in fact exerted a strong influence over the growth of urban population through a household registration (Hukou) system, which restricted unauthorized migration from countryside to urban areas. So the urban development was slow before 1978.
Incontrovertibly, the globalization began from early 1980s played an important role in China’s rapid urbanization in the last 30 years. By liberalizing the trade and foreign investment regime, China successfully embraced the trend of globalization to develop the country’s economy. Although the economic reform did not obsolete the Hukou system, the government did loosen the policy to allow a large amount of temporary migration. With huge number of low-cost labor force and open policy, China managed to attract many foreign firms to setup their manufacturing plants in those cities along the eastern segment, specifically in the Yangtze River Delta and Pearl River Delta. As a result, a large number of people living in the rural areas moved to the cities. And subsequently the urbanization accelerated. That is why China today is the world factory with huge number of
The Real Estate Bubble
China’s Urbanization and Real Estate Bubble
China’s urbanization over the past few decades has been so fast that the country’s urban population has jumped from just about 10% in 1949, when the People’s Republic of China was established, to nowadays over 50%. Looking back China’s history of modern urbanization, the rapid urbanization actually began from 1978, when the country opened the door to the world with Chinese leader Deng Xiaoping’s economic reform. According to the official statistics, China’s rate of urbanization was only 17.9% in 1978. Nevertheless, the urban population grew to 52.6% in the end of 2012. Why was the urban development so slow before 1978? Why did the urbanization suddenly accelerate after the open up of economy?
Prior to the economic reform in 1978, the Chinese government in fact exerted a strong influence over the growth of urban population through a household registration (Hukou) system, which restricted unauthorized migration from countryside to urban areas. So the urban development was slow before 1978.
Incontrovertibly, the globalization began from early 1980s played an important role in China’s rapid urbanization in the last 30 years. By liberalizing the trade and foreign investment regime, China successfully embraced the trend of globalization to develop the country’s economy. Although the economic reform did not obsolete the Hukou system, the government did loosen the policy to allow a large amount of temporary migration. With huge number of low-cost labor force and open policy, China managed to attract many foreign firms to setup their manufacturing plants in those cities along the eastern segment, specifically in the Yangtze River Delta and Pearl River Delta. As a result, a large number of people living in the rural areas moved to the cities. And subsequently the urbanization accelerated. That is why China today is the world factory with huge number of