China's Rural Plan May Add to Cities' Woes

China's rural reform plan may add to energy and environment problems in cities, experts say.
By Michael Lelyveld
2008-10-28
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BOSTON--China's new rural reform plan could degrade conditions in cities unless the government pursues changes in energy and environmental policies, economists say.

The rural reform plan announced by the Communist Party of China (CPC) Central Committee on Oct. 12 would allow limited sales of land rights to create larger, more efficient farms, according to state media reports.

Experts say the new rules for the 30-year-old "rural contract household responsibility system" could cause many of China's 737 million low-income rural citizens to sell their land interests and move to the cities over time.

The CPC has promoted the plan as a way to address the widening gap between farmers and urban dwellers, who earn more than triple the income of rural residents, according to the National Bureau of Statistics. But experts are concerned that many of the newcomers to China's cities will still face disadvantages after receiving a one-time benefit from sales of their limited land rights.

The shift also raises questions about what will happen to China's crowded cities, where wasteful energy policies and pollution are already major concerns.

The influx of millions of new residents is expected to create demand for more housing and infrastructure, giving a boost to the construction boom that has been blamed for many of China's woes.

"There are lot of these issues surrounding urbanization, namely the need for infrastructure development, the need for housing most particularly, and the higher levels of pollution," Harvard University economist Dale Jorgenson told Radio Free Asia. "All these things are subjects for concern."

Runaway investment


China has been struggling for the past five years with power shortages that have been linked to runaway investment in construction, roads, and infrastructure.

In 2004, the National Development and Reform Commission estimated that overinvestment in the steel, cement, aluminum, and auto industries accounted for up to 40 percent of the growth in power demand.

Industries that include steel, oil, power, and building materials are responsible for 70 percent of industrial energy use and sulfur dioxide emissions, the State-owned Assets Supervision and Administration Commission (SASAC) said last year.

In 2005, Premier Wen Jiabao set a goal of improving China's energy efficiency by 20 percent over five years. But so far, the country has been unable to meet of any of its annual energy-saving goals.

The government has pledged to cut emissions of major pollutants by 10 percent under the current Five-Year Plan by 2010, but these efforts have also fallen short. In July, the State Council warned that high-energy consuming industries are developing too fast to meet the target.

Jorgenson said he does not believe that the land plan will lead to a sudden wave of migration that will swamp China's cities and overwhelm current housing and infrastructure capacity. But the rural reform will have to be accompanied by greater efforts to implement the energy and environmental goals that the government has already set.

"It's not as if this is all going to happen overnight. In the meantime, I think the government will have to deal with the serious environmental problems and deal with the needs of infrastructure investment," Jorgenson said. "I think that China's made a lot of strides in both areas, but on the environmental front they could do a lot more, and I think they plan to do a lot more."

The government's plan to reduce rural populations means that it will have to improve urban environments throughout the country, said Jorgenson.

Infrastructure needs

"This is the sort of thing that China needs to continue doing on a very large scale, and not just in the most conspicuous cities like Beijing, Shanghai, and Guangzhou, but in the large cities that make up the industrial heartland," he said.

The cities will need not only more housing but also new infrastructure for clean water and sewage treatment, Jorgenson said.

"These are cities that are still very short on infrastructure, are very polluted, and need to be cleaned up, and that's the work of a generation," said Jorgenson. "The amount of money involved is humungous."

David Dapice, an economist at Harvard and Tufts Universities agreed that greater migration to cities will push the government into dealing with the energy and environment problems created by the development boom.

"The issue is basically is how the cities work. Right now, the urban planning and execution has been somewhat haphazard," said Dapice.

Traffic and congestion have worsened with uncoordinated housing, highway, and industrial projects, he said. As cities grow, it will become increasingly inefficient for residents to use private cars.

"If they planned somewhat more efficiently, what you would find is that energy consumption could be considerably reduced, while the standard of living would still be quite high," said Dapice. "It's something they can do, but [now] it's something they will have to do."

Along with rural reform and urban investment, China will also need political changes to implement the new policies because land has often been diverted for less beneficial purposes, Dapice argued.

"Because land is very often used by party officials as a means of payment or enrichment, it's rather sensitive, and it's politically difficult," Dapice said.


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