China’s economic miracle over the past 30-plus years owes much of its success to the country’s internal migrants — rural residents who streamed to the cities en masse to work in China’s new factories. Bradley M. Gardner details this process, and its implications for China’s future and the world, in his new book, China’s Great Migration: How the Poor Built a Prosperous Nation. Below, Gardner talks with The Diplomat about the past, present, and future. migration and urbanization in China.
You note that urbanization is expected to reach an equilibrium in the mid-2020s. What will that mean for China’s economic growth, which in the past was largely driven massive rural-to-urban migration?
China has never been a particularly efficient economy. Whether you look at the country’s large state sector, the regular problems in its financial sector, or its energy input per unit of GDP, growth in China has always been driven more by the mobilization of resources rather than the efficient use of resources.Enjoying this article? Click here to subscribe for full access. Just $5 a month.
For a country with a large pool of underutilized resources, this is a perfectly effective development policy. If you’re growing at 10 percent a year, you can grow out of a lot of problems with non-performing loans and government deficits. When you slow down to 6 percent, 4 percent, 2 percent, the story is different.
The good news is that the various inefficiencies in the Chinese economy are fixable, and the government still has a cushion to make mistakes. The industrial base that China built during the Great Migration is also not going anywhere — China will continue to have the world’s largest labor market, and the world’s largest consumer market. The bad news is that the politics of this transition is difficult. The Chinese government has shown a stubborn commitment to maintaining a large state-role in the economy, and it’s not at all clear that slowing growth and growing non-performing loans will make them change their mind.
What’s your take on the Chinese government’s current “people-oriented,” new urbanization drive? To what extent can the Chinese government encourage planned internal migration?
It’s so far a bit unclear what this policy entails. The two biggest concrete proposals that I’ve seen are to discourage urban sprawl — which has become a serious problem in recent years — and to redirect workers from coastal China to the inner regions — which I’m not particularly convinced is a good idea.
On the first point, it should be noted that local officials have significant incentives to expand urban areas that don’t seem to have gone away. China’s tax code puts a lot of spending stress on local governments with most of the money recouped through land seizures, land-use fees, and a turnover tax on urban industry and especially construction. My concern is that this attempt to restrict sprawl is more an effort to redirect migrants toward areas where governments have, following these incentives, already overbuilt, and away from areas where governments are less dependent on land revenues. If there are actual efforts to restrict urban sprawl then that’s great, but the incentives all continue to be there.
The government has had some notable successes recently using migrants as a lever for inland development — Chengdu, Chongqing, and Zhengzhou have all attracted sizable manufacturing investments based on the premise of encouraging migrant workers to stay in the province. This is, in theory, good for people who are either unwilling or unable to migrate, because it brings more wealth to these regions. In practice it means that migrants from these provinces are making less money than what they could be making in Shanghai and sending home, have less opportunities to work with top companies and make use of the knowledge they gained, and, perhaps most importantly, sometimes the government invests a lot of money, and seizes a lot of land, and migrants never show up.
At the moment, China’s attempts at hukou reform seem to be focused on loosening restrictions for smaller cities, while keeping it difficult for migrants to gain residency permits in “Tier 1” megacities like Beijing and Shanghai. Will this policy be effective in steering migration to other cities? What other factors are drawing migrants to central and western China, away from the coastal megacities?
When I went to Zhengzhou for research, I met a number of people who had recently moved from Shanghai despite significantly higher wages on the coast. The three things I kept hearing were that it was easy to find a job in Zhengzhou, housing was cheaper, and they would be closer to home, so could visit family and send remittances easier. Housing is a somewhat new issue in this area, as the people we usually think about as migrant workers — unskilled men and women between the ages of 18-30 — typically live in dormitories until they are well established. The growth of white-collar employment has created a lot of demand for somewhere off company property for these workers to live.
Much of the narrative of my book focuses on the gradual decline of importance of the hukou, and its pretty clear that — until you have kids — the hukou is a minor issue. Once you have kids it becomes a much bigger issue. Migrants face substantial restrictions putting their kids into local schools, which often leads to families being split apart and kids living with grandparents. Some on the ground research has found that this is a major issue that has pushed people to move to places where it is easier for them to get a hukou, but usually not until their 30s and 40s. Until that point, people are mostly looking for a job that pays for the cost of living.
You note that land rights issues, one factor in China’s great migration, have been an issue for centuries, and are on the current government’s agenda. What should we expect in the near term in terms of land rights reform in China, and what would the impact be on migration trends?
One of the things pushing reform forward in China is the leadership’s interest in having a modern industrialized agriculture system — something similar to what we have in America. That means fewer people living in the country, larger landholdings, and (hopefully), people with full rights to that land.
A big sticking point is the Chinese government’s official policy of maintaining self-sufficiency in grain. Absent substantial increases in output, the country needs to maintain a certain amount of land under cultivation, requiring the government to arbitrate any trade in land, as well as determining how the country’s land is used. A secondary problem is that the government is still dependent on land seizures for income, which makes it difficult to guarantee people’s rights to land.
My preferred policy solution — ending the policy of self-sufficiency so China can import cheap rice from Thailand and land can be used as the market dictates — does not seem to be on the menu. Instead it looks like the use of rural land will continue to be restricted, but the government is developing a number of market mechanisms to allow the transfer of rural land to urban land, or rural construction land (villages) to rural cultivation land (fields) without direct government intervention. There has also been some progress made on allowing migrants to rent land to non-migrants, which is great. They would need to reform the hukou system before allowing migrants to sell land to non-migrants, which seems to be something they’re seriously considering.
How is China handling the potential social stability issues tied to migration and urbanization, such as grievances over land seizures, hukou discrimination, and strained social safety nets?
Poorly! Land seizures are easily the most significant source of social instability in China, and by the government’s own admission most land seizures are done in contravention of China’s own laws. This is often treated as a good cop/bad cop story, where the central government occasionally takes action to rein in corrupt and reckless local government officials, but as I show fairly clearly in the book, this problem is built into the Chinese tax system.
China’s social services system more or less collapsed in the 1990s, and has been only slowly rebuilt since then. The biggest problem is in education, where there has been a significant decline in secondary education among rural dwellers. A lot more money has gone into this recently, but mostly in urban areas, not the rural areas that really need it.
There have been concerted efforts to rebuild the pension and health care systems, but the government has struggled to keep down costs. It remains to be seen what will happen when they don’t have a growing population of young migrants paying into the system more than they are taking out.
Bradley M. Gardner is a Research Fellow at the Independent Institute and a Foreign Service Officer at the U.S. Department of State. The opinions expressed here are his own and not necessarily those of the U.S. government.