Clouds Thicken Over China's Urbanization Plan

An analysis by Michael Lelyveld
2014-03-31
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china-shanghai-skyline-oct-2013.jpg
Clouds hover over the Shanghai skyline, Oct. 29, 2013.
AFP

China's revised urbanization program will have environmental costs and consequences in coming years, with the possibility of conservation benefits only in the longer term, experts say.

The government's "national new-type urbanization plan" would build massive amounts of housing and infrastructure for millions of rural dwellers moving to China's cities by 2020, according to state media reports on March 16.

The ambitious plan of the ruling Chinese Communist Party's Central Committee and the State Council, or cabinet, stresses social mobility and access to urban services for rural residents and migrant workers with development following a "human-centered and environmentally friendly path," the official Xinhua news agency said.

The long-delayed master plan would raise the urban share of the population to 60 percent by 2020 from 53.7 percent now, with relocation of some 109 million people from the countryside over seven years, based on National Bureau of Statistics (NBS) data.

The target is actually lower than one floated last year by the National Development and Reform Commission (NDRC), China's administrative agency, calling for 70 percent of the population to reside in cities by 2025, The New York Times reported.

The revised plan is an attempt to coordinate "one of the greatest migrations in history," the paper said.

The sweeping social experiment includes an overhaul of the hukou, or household registration system, with details that have yet to be fully explained.

But the plan is also being promoted as a new source of growth at a time when China's long run of economic expansion has started to lag.

Demands for investment

Despite the environmental assurances, some aspects of the urbanization push may be hard to distinguish from the highly-polluting economic stimulus programs of the past.

"It will also bring about large demands for investment in urban infrastructure, public service facilities, and housing construction, thus providing continuous impetus for economic development," Xinhua said.

The program includes new railways, expressways, and airports to serve scores of growing cities, opening the door to local building campaigns.

The plan also calls for spending 1 trillion yuan (U.S. $160 billion) this year to replace urban shantytowns with new housing, Bloomberg News reported.

The result is likely to be more construction and consumption of energy-intensive materials like steel and cement with more pollution, at least in the near to medium-term.

"It's going to require massive investment, and the question is how do you do it in a way that doesn't just dig their environmental hole deeper," said Peter Ogden, director for international energy and climate policy at the Center for American Progress in Washington.

Share prices in development and cement companies surged after the government unveiled the plan, according to Bloomberg.

The heavy investment may raise doubts about government efforts to shift the basis of the economy to consumption-led growth.

"It looks like they [government leaders] think it is time to support investment growth a little bit. Otherwise, growth is likely to slip further," economist Shen Jianguang of Mizuho Securities Asia told The Wall Street Journal.

Deputy Finance Minister Wang Bao'an said the plan will require 42 trillion yuan (U.S. $6.75 trillion) of investment over the seven-year period, the official English-language China Daily reported on March 21.

Better efficiency standards

In the longer term, energy and environmental savings are possible in theory, if China does a better job of enforcing efficiency standards than it has in the past.

"You can provide electricity, heating, and transportation to people in urban settings in many ways a lot more efficiently than you can to people spread out across the country," Ogden said.

But China will have to overcome a legacy of excess investment, breakneck building, and energy waste that has fueled pollution and covered cities with smog.

In comments reported by Xinhua, an official said the plan recognizes "mistakes" made in urbanization since 1978.

These include allowing land development to proceed at a faster pace than population shifts and "urban diseases" such as traffic jams, said Xu Hongcai, head of the information department at the China Center for International Economic Exchanges, which is under the supervision of the NDRC.

In an extensive report released with the Development Research Center of the State Council, or cabinet, the World Bank warned that current development practices have created urban sprawl, "which is raising the cost of public service provision and locking in wasteful energy consumption in many Chinese cities."

The new plan emphasizes "construction of green cities, using ecological advancements in urban development to create green production modes, green lifestyle, and green consumption modes," Xinhua said.

Effects of past practices

But even if China pursues greener policies, the effects of past practices could persist for years.

In 2011, a senior housing official said that 95 percent of China's new buildings were "energy-guzzling" projects that failed to meet efficiency standards, state media reported at the time.

Buildings account for 30 percent of the country's energy use, said Tang Kai, chief planner of the Ministry of Housing and Urban Development.

The quality of construction also promises to pose a continuing pollution problem.

In 2010, a senior researcher at the Ministry of Housing and Urban-Rural Development estimated that over half of China's residential structures would have to be replaced within 20 years due to poor construction, according to Southern Metropolis Daily.

In the same year, Housing Vice-Minister Qiu Baoxing said buildings in China were made to last only 25-30 years, compared with a 74-year average life in the United States, China Daily reported.

The complaints about buildings suggest that more construction for urbanization will add environmental pressure to a baseline of problems.

Even if new projects meet improved standards, it may be years before existing buildings can be upgraded or replaced.

While pledging greener practices, the government appears to be sending mixed signals to construction-related industries like steel, which have been ordered to cut overcapacity as part of the drive to reduce smog and promote more sustainable development.

The urbanization plan may be seen as a boost for development interests at a time when the residential real estate sector has shown signs of cooling down.

David Bachman, a China expert and political science professor at University of Washington in Seattle, said the stimulus component of the plan may dash hopes that the government will deal with the environmental costs of development.

More pollution feared

The revised urbanization plan suggests that support from development interests is needed to sell the policies of social change.

"Consequently, the coalition that you can put together ... and get everybody on board is going to have to be a growth coalition," said Bachman, noting that 13 ministerial agencies had participated in composing the plan.

"That gave you a hint that there were lots and lots of people who were going to sign up for this as long as it provided benefits," he said.

But the result is that another wave of construction is likely to worsen pollution.

"I think that we were foolish to think that they were ever going to make the huge tradeoff necessary to actually do something about the environment in the short term," Bachman said.