Urbanization, Rural-Urban Migration, Government Policies and Socioeconomic Development in China

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1 University of Nebraska at Omaha Student Work Urbanization, Rural-Urban Migration, Government Policies and Socioeconomic Development in China Di Cao University of Nebraska at Omaha Follow this and additional works at: Recommended Citation Cao, Di, "Urbanization, Rural-Urban Migration, Government Policies and Socioeconomic Development in China" (1990). Student Work This Thesis is brought to you for free and open access by It has been accepted for inclusion in Student Work by an authorized administrator of For more information, please contact

2 Urbanization, Rural-Urban Migration, Government Policies and Socioeconomic Development in China A Thesis Presented to the Department of Economics and the Faculty of the Graduate College University of Nebraska In Partial Fulfillment of the Requirement for the Degree Master of Arts University of Nebraska at Omaha by Di Cao A p r il, 1990

3 UMI Number: EP73611 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertation PublisMng UMI EP73611 Published by ProQuest LLC (2015). Copyright in the Dissertation held by the Author. Microform Edition ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code ProQuest LLC. 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml

4 Thesis Acceptance Acceptance for the faculty of the Graduate College, University of Nebraska, in partial fulfillment of the requirements for the Master of Arts, University of Nebraska at Omaha. Committee Name Department Chairman ' q<nw* Date

5 3 A c k n o w le d g e m e n ts I w o u ld lik e to express m y gratitude to D r. Bon Song Lee, who inspired me to choose the thesis option three year ago and guided me on the m ain fram ew ork and the structure o f this thesis. I w ould also lik e to thank D r. A rth u r M. D iam ond, Jr., w ho spent enormous tim e reading a ll versions o f the thesis and took patience to correct errors. He also made constructive suggestions through m y revisions. I re a lly appreciate D r. K im Sosin and D r. Peter S uzuki fo r m aking m any valuable com m ents and suggestions to im p ro ve the q u a lity o f this thesis. I am also indebted to m y frie n d Barbara Scott, w ho did the proofreading fo r the second draft. A b s tra c t T h is thesis is an attem pt to characterize tw o aspects o f Chinese u rbanization and ru ral-urban m ig ra tio n : the in flu e n ce o f governm ent p o lic ie s and the e ffe ct o f socioeconom ic developm ent. Because o f fre q u e n t changes in governm ent econom ic d evelopm ent strategies, id e o lo g y, p o p u la tio n c o n tro l, etc., ru ra l-u rb a n m ovem ent fluctuates s ig n ific a n tly along w ith the p o lic y changes. On the other hand, socioeconom ic developm ent in terms o f higher lite ra c y, m ore in d u s tria l and co m m e rcia l establishm ents, in te n sive

6 4 e m ploym e n t o f a g ric u ltu ra l m achinery, etc., does seem to have a strong e ffe c t on the le v e l o f Chinese u rb a n iz a tio n despite the governm ent policies that have played a negative ro le fo r m ost o f the tim e. A n e m p irica l analysis is done to validate th is argum ent. The outline o f this paper is as fo llo w s: O u tlin e Part One: In tro d u ctio n Part T w o: U rbanization Trends and Patterns 1) N a tu ra l increases 2) G eneral trends 3) R ural-urban d ifferences 4) R egional disp a rity 5) In te rn a tio n a l com parisons Part Three: G overnm ent P olicies and U rbanization 1) The ideology 2) The household re g is tra tio n system 3) The S oviet m odel 4) The great leap fo rw a rd m ovem ent 5) The cu ltu ra l re v o lu tio n 6) Recent governm ent p o lic y

7 5 Part Four: L ite ra tu re R eview 1) The push -p u ll theory 2) The cost-benefit theory 3) The shadow wage th e o ry Part Five: E m p irica l Findings Part Six: Socioeconom ic D evelopm ent and U rbanization 1) The m odel 2) The data 3) E m p iric a l results P art Seven: C onclusions

8 6 Figures and tables used in the paper: Figure 1: Factors a ffecting urbanization F igure 2: Chinese p o pulation grow th ( ) F igure 3: Chinese population change ( ) Table I: China's population totals, annual increases and v ita l rates ( ) Table II: P opulation o f provinces, autonomous regions and m unicipalitie s, 1953, 1964 and 1982, and population density 1964 and 1982 Table III: The total population, July 1, 1982 Table IV : U rban and ru ra l population, July 1, 1982 Table V : G row th o f C hina s total and urban population and im p lie d net m ig ra tio n to urban areas ( ) Table V I: Per capita incom e fo r urban population and ru ra l population (1964, 1981, 1982 and 1983) Table V II: N um ber o f durables owned by urban and ru ra l population (1978, 1980 and 1983) Table V III: R egional d is trib u tio n o f urban popula tio n Table IX : Num ber o f Chinese cities by population size Table X : U rbanization le ve l and its related indices fo r China and selected Asian countries Table X I: Com parison o f Sino-US urbanization le ve l Table X II: Socioeconom ic variables used fo r regression, 29 provinces, m u n icip a litie s and autonomous regions o f China

9 7 Table X III: C orrelation m a trix o f variables used in regressions T a b le X IV : Selected regression results

10 8 Urbanization, Rural-Urban Migration and Socioeconomic Development in China Introduction As a c o u n try moves fro m an a g ric u ltu ra l econom y to w a rd an in d u s tria l econom y, urbanization becomes in e vita b le. The process o f u rb a n iz a tio n, characterized by m assive m ig ra tio n fro m the ru ra l areas to the urban areas, is a result o f socioeconom ic developm ent in terms o f in d u s tria l, com m ercial and educational advancement. C hina is no exce p tio n to the rule. H o w e ve r, u rb a n iz a tio n d iffe rs fro m country to co untry in its nature, extent, rate, and tim in g. In some co u n trie s, there is a co m p le x n e tw o rk o f m a jo r urban centers, se condary c itie s and s m a ll to w n s, w h ile fo r o thers urban deve lo p m e n t is h e a v ily concentrated in a sin g le c ity. Rates o f urbanization va ry w id e ly and tend to be not o n ly closely related to the stage o f u rbanization, but also related to governm ent p o lic ie s. Since about 80% o f the Chinese population is engaged in a g ricultu ra l a ctivitie s, and the country plans to jo in the in d u stria l countries by the year 2050, urbanization becomes an im p o rta n t and c ritic a l issue fo r both econom ists and state p o licym a ke rs in C hina. U nder the current fa m ily planning program, it is predicted that by the year 2000, the Chinese population w ill be in the neighborhood o f 1.25 b illio n, w h ic h is about a 25% increase over its cu rre n t

11 9 p o p u la tio n. Because the Chinese popula tio n is o n e -fifth o f the total w o rld population, and because China has achieved dram atic econom ic success since its open-door p o lic y began in 1978, the study o f urbaniza tio n has become im p o rta n t. People m ay also w ant to know m ore about the ru ra l-u rb a n d is trib u tio n o f its p o p u la tio n at the n ational and regional levels, since planning fo r the fu tu re caitnot be w e ll-e xe cu te d w ith o u t a balanced awareness o f past trends, patterns and re la tio n sh ip s. W h ile a re tro sp e ctive understanding m ay n o t be s u ffic ie n t, it is im p o rta n t because possible fu tu re deviations fro m the trend can be b e tte r u n d e rs to o d and ta c k le d. U rb a n iz a tio n and ru ra l-u rb a n m ig ra tio n are s ig n ific a n t aspects o f p o p u la tio n re d is trib u tio n that need to be c a re fu lly incorporated in a n ational developm ent p o lic y fo r the future. This thesis is an attem pt in that dire ction. I t examines u rb a n iz a tio n and ru ra l-u rb a n m ig ra tio n as th e y are re la te d to governm ent p o lic ie s as w e ll as to socioeconom ic d e ve lo p m e n t in C hina. The m ain issues that are to be discussed in th is thesis are the fo llo w in g : (1) W hat have the in te rn a l m ig ra tio n trends and patterns been since 1949? (2) To w hat e xte n t has ru ra l-u rb a n m ig ra tio n c o n trib u te d to the g row th o f the urban population? (3) H o w have g o v e rn m e n t p o lic ie s a ffe c te d ru ra l-u rb a n m ig ra tio n? (4 ) W h a t socioeconom ic factors have affected the ru ra l-u rb a n m ig ra tio n? (5)

12 10 W hat suggestions can be p rovided fo r the guidance o f the Chinese u rb a n iz a tio n. W hat is m eant by "urbanization"? There have been several d iffe re n t vie w p o in ts regarding the d e fin itio n o f "u rb a n iz a tio n." A c c o rd in g to D a vis (1965) "u rb a n iz a tio n " refers to the p ro p o rtio n o f the to ta l p o p u la tio n concentrated in urban settlem ents, or a ris e in this proportio n. Some economists cla im that "urbanization" is v irtu a lly the tra n sfo rm a tio n o f ru ra l p o p u la tio n to urban popula tio n. H ow ever, I prefer the d e fin itio n set fo rth by Pernia (1977), "... The le v e l o r degree o f u rb a n iz a tio n is the p ro p o rtio n (percentage) o f the population liv in g in urban places; urbanization as such (o r the process o f) means the rise in the urban p ro p o rtio n ; the rate o f urban grow th is the percentage change in urban p o p u la tio n during an in te rva l (and s im ila rly fo r rate o f ru ra l grow th); the tempo or pace o f urbanization is the difference between the urban and the ru ra l rates o f grow th; and p rim acy is the ra tio o f the popula tio n o f the largest c ity to the com bined populations o f the next three largest c itie s." This defines the meaning o f "urbanization" in a w ay such that it is com prehensive and precise. I w ill la rg ely use and cite this d e fin itio n to guid e m y w ritin g henceforth.

13 11 A t this stage tw o distinctions have to be made. One is the difference betw een econom ic deve lo p m e n t and econom ic g ro w th. E co n o m ic d evelopm ent u su a lly refers to q u a n tita tiv e and s tru c tu ra l changes w h ile econom ic grow th refers to gross increases in national product. A n o th e r one is the d iffe re n c e betw een u rb a n iz a tio n and urban g ro w th. U rb a n iz a tio n studies the change in both urban and ru ra l p o p u la tio n w h ile urban g ro w th deals o n ly w ith urban p o p u la tio n g ro w th. F rom the experience o f m any countries that have gone through the d e v e lo p m e n t, u rb a n iz a tio n is u n a m b ig u o u s ly the re s u lt o f an econom ic developm ent process. B u t we need to understand w h y econom ic developm ent necessarily leads to u rbaniza tio n. There are va rio u s th e o re tic a l explanations fo r the causation. The tw o m ost a p p e a lin g th e o re tic a l d is c u s s io n s e x p la in in g the causes o f u rb a n iz a tio n are the incom e e la s tic ity approach and the openeconom y approach (T o lle y, 1987). The incom e e la s tic ity approach, also called the closed-econom y approach, b a sica lly says that people have to spend th e ir incom e on e ith e r a g ric u ltu ra l or in d u s tria l p roducts. This re la tio n s h ip can be described in term s o f incom e e la sticity as the fo llo w in g : Sa Ea + Si E i = 1, where Sa and Si are shares o f in co m e spent on a g ric u ltu ra l and in d u s tria l p ro d u c t respectively and Ea and E i are incom e elasticities. A t an early stage o f developm ent, the per capita incom e is low. A large share o f incom e has to be spent on the consum ption o f a g ric u ltu ra l p roduct. The

14 12 incom e e la s tic ity o f demand fo r a g ric u ltu ra l products w ill be high and alm ost close to u n ity. As developm ent continues, the incom e e la s tic ity fo r a g ric u ltu ra l products w ill g ra d u a lly d e clin e and the incom e e la s tic ity fo r urban in d u s tria l products w ill increase. As a greater and greater share o f incom e is spent on in d u s tria l product, ca p ita l accum ulation takes place. M ore and m ore people are needed to f u lf il the demand fo r in d u stria l product. The open-econom y approach, how ever, assumes the existence o f in te rn a tio n a l trade. The g ro w th o f urban p o p u la tio n is p rim a rily determ ined by increased e ffic ie n c y in in d u s tria l p roduction. This can be e xp la in e d by co m para tive advantages developed in the urban area. The ra tionale behind this is that sp e cia liza tio n is related to in te rn a tio n a l and dom estic trade. The u rb a n iz a tio n is in te n s ifie d durin g the process o f developm ent in countries that have achieved developm ent by sp e cia lizin g in m anufactured products due to the fact that the transfer o f p roduction technologies between countries is less co s tly fo r in d u s tria l p roduct than fo r a g ric u ltu ra l product. As sp e cia liza tio n in in d u s tria l p ro d u ctio n deepens, the co u n try w ill be m ore c o m p e titive in se llin g its product in the in te rn a tio n a l m arket. This w ill in turn increase fo re ig n demand fo r the specialized product and the p roduction has to be increased. M ore jo b o p p o rtunities are created and th e re fo re m ore people m ig rate to the urban area.

15 13 M a n y studies have been done about u rb a n iz a tio n in d e ve lo p in g countries. M a jo r fin d in g s revealed in the past in clu d e the fo llo w in g tw o features. F irst, since W o rld W ar II, urbaniza tio n in developing countries has been m a in ly caused by a high rate o f natural increases in the e xistin g urban p o p u la tio n, accom panied by the w orsening o f p o ve rty and in e q u a lity. Second, u rbanization in d e ve lo p in g nations has been view ed as p roblem atic because it takes place at a faster rate than econom ic developm ent. The term s 'p se u d o -u rb a n iza tio n ' and subsistence u rb a n iz a tio n w ere d e ve lo p e d to d e scrib e th is s itu a tio n. There have been m any suggestions fo r a v o id in g these problem s. One o f them is an equality-oriented developm ent p o lic y to slo w dow n ru ra l-u rb a n m ig ra tio n. T his idea has in flu e n c e d m any policym akers o f developing nations, inclu d in g China. H ow ever, one o f the sig n ifica n t fin d in g s o f research on rural-urban m ig ra tio n in LD C s is th a t ru ra l-u rb a n m ig ra tio n co n trib u te s to, ra th e r than retards, e conom ic d e velopm ent. A recent study o f K o re a n ru ra l-u rb a n m ig ra tio n by Lee (1987) has shown that ra pid ru ra l-u rb a n m ig ra tio n in K orea d id not lead to increasing urban unem ploym ent. Rather it helped ru ra l areas achieve s ig n ific a n t im provem ent in standards o f liv in g th ro u g h re d u cin g the f e r t ilit y le v e l. A study o f T a iw a n m ig ra tio n by Spear, L iu and Tsay (1988) has also indicated that rapid ru ra l-u rb a n m ig ra tio n in T a iw a n d id n o t b rin g a b o u t any u n e m p lo ym e n t problem s. T h e ir study shows th a t the m a jo rity o f m igrants to T a ipei become b e tte r-o ff fin a n c ia lly several years after

16 14 th e ir m ig ra tio n in com parison to the lo ca l residents and those w ho d id not m igrate. In th is thesis, I w ill explore u rb a n iza tio n fro m several d iffe re n t p e rspective s. H o w e v e r, we ought to be aw are th a t firs t, the u rb a n iza tio n process in v o lv e s the w hole p o p u la tio n, not ju s t those w ho liv e in tow ns, cities and m etropolitan areas; second, p o litic s and g overnm ent p o lic ie s can g re a tly a ffe ct the le v e l o f u rb a n iza tio n, e s p e c ia lly in a c o u n try w here the c e n tra l p la n n in g econom y dom inates; and th ird, the g row th o f urban p o p u la tio n is considered re la tive to the ru ra l population rather than in absolute terms. Figure 1: Factors A ffe c tin g U rbanization Government Policy,. Population Growth Urbanization Rural-Urban Migration Socioeconomic Development

17 15 I have deve lo p e d a d ia g ra m to dem onstrate the re la tio n s h ip s between u rb a n iza tio n and the factors that can a ffe c t the le v e l o f urbaniza tio n and the in te rre la tio n sh ip s among these factors. The d ia g ra m e x h ib its th a t u rb a n iz a tio n is b a s ic a lly in flu e n c e d d ire c tly by fo u r factors: governm ent p o lic y, p o p u la tio n grow th, ru ra l- urban m ig ra tio n and so cio e co n o m ic d e ve lo p m e n t. Each plays a d iffe re n t ro le and affects u rbaniza tio n in d iffe re n t w ays. Some o f these factors, how ever, tend to have in teractions w ith one another, such as the in flu e n ce between population grow th and socioeconom ic developm ent. This is ty p ic a lly true fo r the case o f C hina. The fo u r com ponents o f the d iagram are described b e lo w. P opulation G ro w th B o th the fast population g row th and the higher fe r tility could have a d ire ct p o s itiv e e ffe ct on u rbaniza tio n in tw o ways: (1) an acceleration in population grow th is usually faster in the ru ra l sector than in the urban sector. The ru ra l surplus labor force is a push fa cto r c o n trib u tin g to urbanization; (2) h ig h e r fe r tility is a ru ra l push factor to rural-urban m igration. On the other hand, higher fe r tility allo w s a la rg er dependency burden w h ich tends to retard m o b ility. In d ire c tly, p o p u la tio n g ro w th has a n e g a tive e ffe c t on socioeconom ic developm ent.

18 16 S ocioeconom ic D e ve lo p m e n t---t h is can a ffe ct u rb a n iz a tio n in three d iffe re n t w ays: (1) d ire c tly, because socioeconom ic developm ent in term s o f higher per capita in d u s tria l p ro d u c tiv ity, in te n sive use o f a g ric u ltu ra l m a chin e ry, h ig h e r lite ra c y and b e tte r c o m m u n ica tio n system s tends to s tim u la te ru ra l-u rb a n m ig ra tio n ; (2 ) d ire c tly, because urban d e v e lo p m e n t in term s o f m ore in d u s tria l and c o m m e rc ia l in v e s tm e n t, w h ic h in tu rn cre a te s m o re jo b o p p o rtu n itie s, co u ld a ttract ru ra l people to urban areas and could increase the capacity o f urban areas; and (3) in d ire c tly, through its negative e ffe ct on p o pulation grow th. R u ra l-u rb a n M ig ra tio n ---T h is c o u ld be c o n sid e re d as p a rt o f urbanization its e lf. Greater and faster ru ra l to urban m ig ra tio n w ill increase the u rbaniza tio n le ve l. H ow ever, as a country reaches an advanced econom y, ru ra l-u rb a n m ig ra tio n and u rb a n -ru ra l m ig ra tio n can be reversible. This holds true in countries lik e the U n ite d States, Canada, Japan and m any European countries. G overnm ent P o lic y -T his is a som ewhat co m plicated fa c to r due to the flu c tu a tio n o f p o lic y. (1) I t can a ffe ct u rb a n iz a tio n in both p o s itiv e and negative ways. A governm ent can adopt a p o lic y w hich speeds up the pace o f urbanization through m ore capital investm ent and by a llo w in g la b o r m o b ility. A p o lic y can also be made to d isco u ra g e u rb a n iz a tio n, such as using system s lik e household

19 17 re g is tra tio n in C hina to lim it ru ra l-u rb a n m ig ra tio n. (2) It can also a ffe c t u rb a n iz a tio n b o th d ir e c tly and in d ir e c tly. I t a ffe c ts u rb a n iza tio n d ire c tly because im p o s itio n o f p o lic ie s and regulations can sometimes achieve e ffe ctive results. B y issuing food coupons only to urban residents, fo r exam ple, ru ra l people w ill fin d it d iffic u lt to stay in cities. This w ill be analyzed in detail later on in this paper. It a ffe cts u rb a n iz a tio n in d ire c tly because governm ent p o lic ie s could in flu e n c e p o p u la tio n g row th, socioeconom ic developm ent and ru ra l- urban m ig ra tio n, w h ich in turn affect urbanization. A fte r an in tro d u c tio n about the Chinese u rb a n iz a tio n trends and patterns, m uch attention w ill be paid to analyzing tw o m a jo r factors o f u rb a n iza tio n, governm ent p o lic y and socioeconom ic developm ent. Since rural-urban m igration is in fact a part o f urbanization, it w ill be discussed along w ith these tw o factors. H ow ever, some th e o re tica l discussions are p ro v id e d fo r ru ra l-u rb a n m ig ra tio n its e lf in the section o f lite ra tu re review. I hope the lite ra tu re re vie w w ill enrich the theoretical background o f this paper. Since population grow th is a b ig to p ic in its ow n rig h t, less attention w ill be p a id to it here. H ow ever, it w ill be m entioned fro m tim e to tim e when necessary.

20 18 Urbanization Trends and Patterns N a tu ra l Increase Table 1 is designed to p ro vid e some basic c h ro n o lo g ic a l statistics about the Chinese population and Table 2 contains population census surveys at three d iffe re n t tim es. Since 1949, the Chinese governm ent has conducted three p o p u la tio n censuses. They were in 1953, 1964 and 1982 re spective ly. The 1953 census reported a to ta l o f m illio n ; the 1964 census revealed a total o f m illio n and the 1982 census reported a to ta l m illio n. B etw een 1953 and 1964, the annual p o p u la tio n g ro w th rate was 1.48 percent and betw een 1964 and 1982, i t was 2.17 percent. H o w e ve r, the p o p u la tio n grow th rate was estim ated to be over 2.6 percent a year fro m 1964 to the highest le v e l since O f the to ta l p o p u la tio n increase o f some m illio n between the end o f 1949 and the census o f 1982, about 130 m illio n, or 28 percent, occurred during these six years. Though part o f this was due to the fa ll o f the death rate, the m ain com ponent o f this population boom was the rise in b irths. Betw een 1963 to 1965, the b irth rate was about 40 per 1,000. The 1960s stand out as China's firs t "true" baby boom period even though the b irth rates fo r the rest o f the 1960s were either the same as or s lig h tly lo w e r than those o f the 1950s.

21 19 The Chinese P o p u la tio n co n tin u e d to increase d u rin g the 1970s, reaching m illio n by the end o f the decade. A t the beginning o f o f the 1980s, the rate o f natural increase was lo w e r than at any tim e since 1949 due to the governm ent fa m ily p la n n in g program. The annual increase in absolute num bers has gone up s u b s ta n tia lly because o f the large base p o p ulation. Table 1 is given to show the change o f the Chinese p o p u la tio n fro m 1949 to 1982, in c lu d in g annual increases and v ita l rates (statistics pertinent to live s). Table 3 is the to ta l p o p u la tio n by sex surveyed in 29 p rovinces in 1982, w h ile Table 4 gives population by residence. G eneral Trend Since 1949, the grow th o f the urban population and the increase in the le ve l o f urbanization in C hina have undergone change in several stages. On the w hole, the increase o f urban le v e l has been steady over the years. I f we exam ine Table 5 and F ig u re 3, we w ill fin d out that the general trend can be sum m arized as the fo llo w in g : 1. The urbanization le ve l has been quite lo w d uring the three decade period. The grow th has been steady but slow and the increase o f the le v e l o f u rbaniza tio n was sm all. In 1949, C hina's urban p o p u la tio n was o n ly about 10.6% o f the total population. B y 1982, this fig u re w ent up to 15.06%. This num ber was much lo w e r than both average levels o f developed countries and even fa r behind the average level

22 20 o f the developing nations. D u rin g the same period, urban population had an annual increase o f about 3.0%, w hich is higher than the 1.92% rate o f annual increase o f the to ta l population. 2. The grow th o f the urban p o pulation in C hina since 1949 can be characterized as c y c lic a l corresponding to its so cial, p o litic a l and econom ic developm ent rather than as a lin e a r progression. Such a trend is clearly demonstrated in Figure 2 and Figure 3. B a sica lly, we can observe an in cre a sin g tre n d betw een 1949 to 1960, when econom ic developm ent was guided by a Soviet m odel. The decreasing trend was shown during 1961 to 1964, when the n a tio n a l econom y suffered fro m the fa ilu re o f the G reat Leap F o rw a rd m ovem ent and the three year n a tu ra l disaster. A g a in, a d e c lin in g tre n d was observed d u rin g the ten year C u ltu re R e v o lu tio n ( ). B eginning in 1977, an increasing trend is evident w h ich is due to the governm ent p o lic y tow ard econom ic reform. R u ra l-u rb a n D iffe rence s B esides the so cio e co n o m ic d e ve lo p m e n t th a t causes ru ra l-u rb a n m ovem ent, the d is p a rity between life in cities and in the country, along w ith a rapid increase in ru ra l population, are a d d itio n a l forces th a t stim u la te ru ra l-u rb a n m ig ra tio n process. The m a jo rity o f the ru ra l p o p u la tio n have lo w e r incom es and less access to p u b lic services and entertainm ent fa c ilitie s com pared to the p o p u la tio n in

23 21 c itie s. Table 6 reveals the per capita incom e fo r urban and ru ra l p o p u la tio n s in 1964, 1981, 1982 and In 1964, the average annual incom e fo r the urban p o p u la tio n was 222 yuan, but fo r the ru ra l population was only 97 yuan, w h ich was even less than h a lf o f the urban incom e. I t is also fa r below the n a tio n a l average. This phase continued u n til 1983 when the incom e difference d id shrink in term s o f percentage, b u t the d iffe re n ce s betw een the ru ra l and urban average increased in term s o f absolute term s. Table 7 gives a more precise picture than Table 6 o f the urban-rural differences in the quantity o f durables they have, w h ich is sig n ifica n t since durables in C hina u su a lly re fle c t a person s or a household s w ealth. I t is true that ru ra l residents ow n more investm ent durables w h ile urban residents own m ore consum ption durables. H ow ever, the selected item s are considered com m on durables fo r b oth ru ra l and urban residents except T V sets. The com m on durables include sewing m achines, b ic y c le, watches, radios and T V sets. The tim e periods chosen are 1978, 1980 and The durables are m easured in num ber per hundred people. Between 1978 to 1983, the q u a n tity o f durables ow ned by urban d w e lle rs is g e n e ra lly m any tim es that ow ned b y ru ra l p o p u la tio n. T h o u g h the percentage increase in durables fo r the ru ra l popula tio n was higher than that o f the urban p o p u la tio n, the increase in durables in absolute term s was s till far behind th a t o f the urban in h a b ita n ts. In a d d itio n to m oney wage differences and w ealth d isp a rities, state em ployees, w ho are m ostly

24 22 in citie s, also get a v a rie ty o f benefits that are not enjoyed by the ru ra l p o p u la tio n such as free m edical care, subsidized housing and assured pensions. R egional D isparities T he g e o g ra p h ic d is trib u tio n o f the p o p u la tio n in C h in a is u n b a la n c e d. G e n e ra lly s p e a k in g, th e eastern p ro v in c e s and m u n ic ip a litie s along the coast are densely populated. These densely populated areas have three d is tin g u is h in g characteristics. F irs t, m ost o f them are situated along the coast. Second, m ost o f them surround the three largest p ro v in c ia l le ve l m u n ic ip a litie s, B e ijin g, T ia n jin and Shanghai; T h ird, m ost o f them are centered along the lo w e r part o f the m a jo r rive rs lik e the Y e llo w R ive r, the Y angtz R iv e r and the Pearl R ive r. On the other hand, p o p u la tio n is sparsely d is trib u te d in the west re g io n s, w here the w eather is c o ld and d ry and the la n d is m ountainous and covered w ith m uch desert. Exam ples are provinces lik e T ib e t, Inner M o n g o lia, N in g x ia, Gansu, Q inghai and X in g jia n g, whose p o p u la tio n densities range fro m 1.6 to 59 people per square k ilo m e te rs in In the same year, these six p ro vin ce s and autonom ous regions were o n ly 6 percent o f the to ta l p o p u la tio n but conta in e d about 55 percent o f the n a tio n s land. Because o f the p o p u la tio n im balance, fo r years the governm ent has trie d to take

25 23 steps to f i l l the western rem ote regions w ith the surplus population fro m the cities and fro m the densely populated areas. The firs t largescale p o p u la tio n tra n sfe r was in itia te d d u rin g the 1950s, when people were settled in Gansu, Q inghai, X in g jia n g and Inner M ongolia. Because o f the rough soil and harsh clim ate, m any o f these settlers have re tu rn e d to th e ir eastern hom es. The second la rg e-sca le p o p u la tio n tra n s fe r was d u rin g the te n -ye a r C u ltu re R e v o lu tio n ( ), when m illio n s o f young people were sent fro m urban areas to rem ote ru ra l areas. M any o f these young people have also gradually returned to th e ir home cities after A ll this indicates that using m andatory p o licie s and a d m in istra tive orders rather than using m arket forces to m ove people fro m the densely populated areas to the re m o te sparse ly p o p u la te d p ro v in c e s does n o t a u to m a tic a lly lead to the expected result. H ig h population density in the provinces along the coast reflects both the large ru ra l popula tio n and the concentration o f urban population. In 1983, there were 166 citie s; o n ly a fe w o f w h ic h were in the sparsely inhabited provinces in the western part o f C hina and m ost o f these were sm all citie s. For reasons o f n a tio n a l security and to have balanced econom ic developm ent, the g o vernm ent decided to relocate and b u ild the factories that were related to the national defense away fro m coast cities. This action had an im pact on the d is trib u tio n o f the urban p o p u la tio n by the late 1950's. Table 8 show s th a t in 1947, n e a rly tw o -th ird s o f the C hinese urban

26 24 p o p u la tio n liv e d in the eastern coastal provinces and m u n ic ip a litie s. B y 1973, m ore than h a lf o f the urban p o p u la tio n in h a b ite d the w estern part o f the country. Table 9 provides the num ber o f Chinese c itie s by p o p u la tio n size fro m 1957 to D u rin g this period, the num ber o f citie s doubled fro m 178 in 1957 to 353 in In 1957, there were o nly 10 cities over 1 m illio n p o p u la tio n. In 1986, alm ost 30 years la te r, this num ber became 23, an increase by 130%. D u rin g the same period, the increase fo r cities w ith p o pulation o f 500,000 to 1 m illio n went up fro m 18 to 31, a 72% increase; fo r citie s w ith p o p u la tio n o f 200,000 to 500,000, the num ber was increased by 59, fro m 36 to 95, an increase o f 164%; fo r cities w ith p o p u la tio n under 200,000, the num ber increased fro m 114 to 204, a 79% increase. In term s o f percentage, the c itie s w ith p o p u la tio n between 200,000 to 500,000 had the fastest grow th. In terms o f absolute num ber, the cities w ith p o p u la tio n under 200,000 gained most. C o m p a ris o n C h in a has a re la tiv e ly lo w u rb a n iz a tio n le v e l as a re s u lt o f g o v e rn m e n t p o lic ie s since 1949 a im in g at c o n tro llin g urban p o p u la tio n. F ro m 1949 to 1982, C hina's to ta l p o p u la tio n increased fro m 542 m illio n to 1015 m illio n, a to ta l increase o f 87.27% w ith an annual g ro w th rate o f 1.92%. D u rin g the same p e rio d, urban

27 25 p o p u la tio n w ent up fro m 57.7 m illio n to m illio n, a to ta l increase o f 165% and an annual grow th rate o f 2.997%. Though the g ro w th rate o f urban p o p u la tio n is fa ste r than th a t o f to ta l p o p u la tio n, we do n o t observe any s ig n ific a n t change in the u rb a n iz a tio n le v e l o f C hina s im p ly because the m a jo rity o f its population s till liv e in the ru ra l area. The urbanization level in China was 10.6% in 1949 and was 20.8% in Part o f this increase is due to a d m inistrative change. For examples, tow ns were upgraded to c itie s in the late 1970 s and early 80 s. A c c o rd in g to R. K irk b y s (1985) estim ation, China's urban p o p u la tio n was o n ly 15.06% rather than 20.8% o f its total population in Table 10 perm its com parison o f C hina s urbanization le ve l w ith some o f the le v e l o f selected A sian countries. I have selected three c o u n trie s, T h a ila n d, South K o re a and Japan, w h ic h have s im ila r cu ltu re s and had som ew hat s im ila r econom ic backgrounds in the e arly 50 s, because at that tim e C hina, South K orea and Japan had ju s t recovered fro m the w ar. C olum n 2 o f the table shows that in 1950, the urban population in China was 11.2%, w h ich was m uch the same as the urban level in Thailand and about 7% lo w e r than that in South Korea. Japan, how ever, had the highest urban p o p u la tio n level, 37.4%, because its in d u s tria liz a tio n began m uch e a rlie r than most A sia n countries. B y 1980, the percent o f urban p o p u la tio n in China had increased only 3%, fro m 11.2% to 14.2%. D uring the same period, urban p o p u la tio n in Thailand increased 6.5%, w h ich was h igher than

28 26 the increase in C hina, though it was not an im p re ssive fig u re com pared to the increases in South K orea and Japan. South K orea experienced a record grow th rate o f its urban population, fro m 18.4% in 1950 to 57.3% in 1980, a total increase o f 38.9%. Japan also had a very high urban population grow th rate, fro m 37.4% to 76.2% during the same period. In fact, Japan's urbanization le ve l was even higher in 1970 and was lo w in 1980 because o f the suburbanization. One c h a ra c te ris tic a ll three countrie s had in com m on was th a t th e ir annual percentage change o f urban popula tio n had showed a faster g ro w th rate in com parison w ith th e ir annual percentage change o f ru ra l p o p u la tio n. T h is phenom enon can be observed b y com paring colum n 5 and colum n 6 o f the table. China, on the other hand, had o n ly a s lig h tly h ig h e r urban p o p u la tio n change o ve r its ru ra l p o p u la tio n change. Betw een 1960 and 1970, the annual percentage change o f its urban p o p u la tio n was even lo w e r than its ru ra l population change. This had led its urban population increase to be a negative num ber, -0.29%. (The reasons are the Great Leap Forw ard m ovem ent and the C u ltu ra l R e v o lu tio n w h ic h w ill be discussed in d e ta il la te r.) The co m parison not o n ly dem onstrates that C hina's u rb a n iza tio n process had been unusually slow but also that China was fa r behind the neighboring countries that had s im ila r econom ic conditions in the e a rly 50's. The co m parison also suggests that C h in a had slow

29 27 e conom ic g ro w th between since the u rb a n iz a tio n le v e l reflects a n a tio n s econom ic achievements. Table 11 compares the urbanization levels o f C hina and the U.S. using some h is to ric a l data. The reasons I chose the U.S. are that the tw o nations are very m uch the same in terms o f land size o f; also China and the U.S are the fir s t and the th ird largest nations in the w o rld in term s o f p o p u la tio n ; and m ost im p o rta n tly the U.S. has experienced its ow n u rb a n iz a tio n --fro m a lo w urban le v e l to h ig h ly urbanized. C hina can learn m uch fro m the experience o f the U.S. T able 11 shows that in 1949, C hina s u rbaniza tio n le v e l was o n ly 10.6%, a level that occurred in the U.S. more than 100 years ago. The urban level o f the U.S. was 15.3% in 1850, even higher than C hina s urban le v e l, 15.1%, in The d iffe re n ce in tim e p e riod is 120 years. In 1982, C hina s urban le ve l reached 20.6%, a 10% increase after 33 years. H ow ever, this num ber is o n ly equivalent to the U.S. urban le v e l in the e a rly 1860s. I t to o k 33 years fo r C hina's u rb a n iza tio n le v e l to increase about 10% fro m 10.6% in 1949 to 20.6% in H ow ever, it to o k o n ly about 20 years fo r the U.S. to have the sim ila r increase. C olum n 4 shows that a 10.4% increase o f urban le v e l occurred d uring the 20 year p e rio d Even at the e a rly stage o f u rb a n iz a tio n, the U.S. had m uch b e tte r perform ance than C hina did. F ro m the above com parison, we may conclude that C hina s u rbaniza tio n le ve l is about 100 years behind

30 28 the U.S. urbanization level. T his num ber also gives us a rough idea about the d iffe re n ce in terms o f liv in g standard between these tw o n a tio n s since u rb a n iz a tio n le v e l re fle c ts a c o u n try 's e conom ic achievem ents. The above co m p a riso n also p roves a s ig n ific a n t in flu e n c e o f Chinese a n ti-u rb a n p o lic ie s. As the re m a rk made by K irk b y (1985) that C hina's anti-urban p o licie s ro o t in the peasantry background o f the Chinese leadership and the M a rxia n doctrine.

31 29 Government Policies toward Urbanization There has been a g ro w in g consensus that u rb a n iza tio n is s p a tia lly bound and m anipulable. A n d therefore the study o f urbaniza tio n and focus on the g o ve rn m e n t s ro le in m a n ip u la tin g u rb a n iz a tio n are becom ing im p o rta n t approaches to the study o f u rb a n iza tio n. The usefulness o f these approaches in g u id in g developm ent p o lic y m ay be another reason fo r th e ir in cre a sin g p o p u la rity. A num ber o f s ig n ific a n t w o rk s have show n su cce ssfu l re s u lts in a n a ly z in g g o ve rn m e n ts ro le in u rb a n iza tio n. In order to o b ta in a precise measure o f C h in a s u rbanization, it is im p o rta n t to take account o f g o v e rn m e n t p o lic ie s a im e d at ru ra l-u rb a n m ig ra tio n, u rb a n p o p u la tio n c o n tro l and re la te d issues. T h is is because C hina's urbanization has been greatly influenced by and, to a certain degree, d isto rte d by the central governm ent p o licie s in term s o f regulations on ru ra l-u rb a n m ig ra tio n, u rban e m p lo y m e n t and th e u rban re g is tra tio n system. A n y a tte m p t to stu d y C h in a s u rb a n iz a tio n w ith o u t ta kin g C h in a s governm ent p o lic ie s in to co n sid e ra tio n m ay b rin g out a biased conclusion. There have been cases where some econom ists tend to use o n ly socioeconom ic factors to evaluate C hina s u rbaniza tio n, and som etim es they fin d them selves unable to e xp la in some o f the test results. These people fo rg e t that the Chinese case is som ew hat d iffe re n t fro m that o f m any other deve lo p in g countries w here the m a rke t econom y dom inates. A s lo n g as the ce n tra l p la n n in g econom y p re v a ils in C hina, m ig ra tio n designed by the

32 30 central governm ent can have a large e ffe ct on its urbanization. W ith this in m ind, I include this section in the thesis, w ith the hope that m y e xp la n a tio n re la tin g g o vernm ent p o lic ie s to u rb a n iz a tio n w ill m ore fu lly e x p la in C hina's u rb a n iz a tio n than a study lim ite d to socioeconom ic factors. The Id e o lo g y F o r years, urbaniza tio n has occurred s lo w ly in C hina. T h is is very m uch due to governm ent policies and p o litics. The m ain id e o lo g y that has been e m p lo ye d by the C hinese g o ve rn m e n t is the slogan "E lim in a tin g the Three D iffe rence s." These three differences are the d iffe re n c e betw een fa c to ry w o rk e rs and fa rm e rs, the d iffe re n c e between m ental and m anual laborers and the d iffe re n ce between the c ity and the co u n try. U n d e r the guidance o f th is id e o lo g y, the governm ent's intentions have been focused on e q u a lity and balanced d e v e lo p m e n t w h ic h conce rn s lo c a tio n o f in d u s trie s and ru ra l d e ve lo p m e n t. In the late 50's, the Chinese g o vern m e n t began a num ber o f p o lic ie s aim ed at balanced d e ve lopm ent to encourage in d u s tria l d e ce n tra liza tio n, hoping the p o lic ie s w o u ld in tu rn help ru ra l d e velopm ent. These p o lic ie s in c lu d e d exp a n d in g elem entary education in the ru ra l areas, establishing m ore c lin ic s in the ru ra l areas and encouraging the developm ent o f ru ra l in d u strie s through tax cre dit policies. M ost im portant o f a ll was the m oving o f hundreds o f large fa cto rie s fro m b ig c itie s to sm all tow ns, and fro m the

33 31 re la tiv e ly d e ve lo p e d coast areas to the re m o te w estern areas. M e anw h ile, the household re g istra tio n system was set up to re s tric t ru ra l-u rb a n m ig ra tio n. The H ousehold R egistration System Here I w o u ld lik e to e xp la in a little b it m ore about the Chinese household re gistra tio n system. B a sica lly, it is the system under w hich a ll households are registered in th e ir lo c a lity and are d iv id e d in to tw o categories: ru ra l fo r those engaged in a g ric u ltu ra l a c tiv itie s and urban fo r those em ployed in state-owned units, w h ich are usu a lly in citie s. U nder the household re g istra tio n system, neither a household nor an in d iv id u a l can m igrate w ith o u t getting an o ffic ia l perm it. It is extrem ely d iffic u lt fo r those registered ru ra l to change th e ir status to urban. A person registered ru ra l w ill fin d it d iffic u lt to liv e in a c ity because o f the system o f a llo c a tio n o f housin g, coupons, fo o d s tu ffs and jo b s w ith sta te -o w n e d u n its are tie d to one's household re g istra tio n status. This system serves as a barrier to free perm anent m ig ra tio n since o n ly urban households have access to fo o d s tu ffs and urban housing at the governm ent subsidized prices. A t the same tim e, the practice o f the state em ploym ent p o lic y has created trem endous d iffic u ltie s fo r the ru ra l peasants to m igrate to cities. Even the in fo rm a l sector has been la rg e ly restricted in terms o f its scale. Instead o f a llo w in g the m arket forces to w o rk and having to face a h ig h urban u n e m p lo ym e n t rate, the state e m p lo ym e n t

34 32 p o lic y has been used to avoid problem s in this regard. F o r these reasons, it was lite ra lly im possible fo r a person w ho is registered ru ra l to stay in urban areas fo r a p ro lo n g e d p e rio d. The m ain purpose o f th is p ra ctice is to c o n tro l the g ro w th o f the urban p o p u la tio n. H ig h e r education, m ilita ry service and state re c ru itm e n t are the o n ly m a jo r le g a l channels fo r changing one s household re g is tra tio n status. The Soviet M odel Betw een 1949 to 1957, the periods o f P ost-w ar R econstruction and the F irs t F ive -Y e a r Plan, the S oviet econom ic m odel was adopted by the Chinese governm ent. B a sica lly, the S oviet m odel proposes that the key to a nation's econom ic success is to develop the heavy in d u s try firs t, then the lig h t in d u stry, and fin a lly a g ricultu re. The Chinese im ita tio n o f the S oviet m odel resulted in large emphasis on urban in d u s tria l developm ent, accom panied by thousands o f S oviet experts com ing to C hina to help establish heavy in d u stry plants and a n u m b e r o f h e a vy in d u s try centers. T h is d e ve lo p m e n t p o lic y re c ru ite d m any ru ra l fa rm e rs to the n e w ly e s ta b lis h e d and expending factories in cities. The p o lic y continued u n til 1960, when S in o -S o vie t relations suffered fro m a series o f disputes. The ru ra l- urban m ig ra tio n trend is very m uch reflected in colum ns 6 and 9 o f Table 5 as w e ll as in F ig ure 3.

35 33 The Great Leap Forw ard M ovem ent In 1958, the begin n in g o f the G reat Leap F o rw a rd m ovem ent, the com m une system was established. The ru ra l com m unes were a w ay to stem the d r ift to cities. Urban communes were also established in citie s to re s tric t m ig ra tio n among cities. Though m any w orkers were re cru ite d fro m the ru ra l area to w o rk in thousands o f factories in cities, m ost o f them had to return to the country three to fo u r years la te r due to the fa ilu re o f the m ovem ent. This flu c tu a tio n is cle a rly evident in Figure 3. B e g in n in g in the late 50 s, the governm ent ca lle d on young urban h ig h school graduates to settle in the country. One reason fo r doing th is was p ro b a b ly to solve the urban u n e m p lo ym e n t p ro b le m that was not adm itted by the governm ent. A nother reason was to reduce the urban ru ra l d iffe re n ce, based on the hope that the young can c o n trib u te to ru ra l developm ent. The C u ltu ra l R e vo lu tio n In 1966, the reversal o f rura l-u rb a n m ig ra tio n reached its peak. A n a tio n w id e cam paign urged m illio n s o f young urban h ig h school graduates to settle in the country, especially in the rem ote areas lik e T ib et, X in g jia n g, Inner M o n g o lia, Yunnan, Q inghai, N in g x ia G uizhou. This tim e every young person was forced to go, w ith no exceptions.

36 34 A c c o m p a n ie d b y th is m o vem e n t was the re lo c a tio n o f m any universities fro m the cities to sm all tow ns in the ru ra l areas w ith the in te n t to im p ro v e ru ra l e d u ca tio n and to e lim in a te ru ra l-u rb a n differences. M a n y doctors were also relocated, whose roles were to p ro vid e m ore services to the ru ra l area and to tra in m ore barefoot doctors there. M a n y factories and plants were also m oved fro m big cities lik e Shanghai and T ia n jin g to the southwest o f C hina and other part o f the country. I f we again lo o k at Table 5, we can fin d the net ru ra l-u rb a n m ig ra tio n s in colum n 9 were m o stly negative during the te n -ye a r C u ltu ra l R e v o lu tio n ( ). In F ig u re 3 also, this trend can e a sily be seen. The urban p o p u la tio n g ro w th rate was lo w e r than the ru ra l and the to ta l p o p u la tio n g ro w th rates d u rin g th is p e rio d. T h is m o vem e n t had g reat in flu e n c e on C h in a 's urbanization le v e l and pattern even m any years later. The Recent G overnm ent P o licy C o n tro l o f the b ig citie s and developm ent o f the m edium cities and sm all tow ns have been the obje ctive requirem ents o f the social and econom ic developm ent o f China, and have also served as a basic state p o lic y on urban p la nning. The governm ent has repeatedly advocated the establishm ent o f sm all tow ns and sa te llite citie s and p ro b a b ly w ill continue to do so many years in to the future. H ow ever, since the econom ic re fo rm began in 1978, the governm ent has lifte d previous re s tric tio n s and is now a llo w in g the coexistence o f the in fo rm a l

37 35 sector along w ith the state-owned fo rm a l sectors. Farm ers w ho have s u ffic ie n t capital now can set up th e ir own businesses in cities. The governm ent even provides lo w -in te re s t loans to those w ho have the p o te n tia l to grow. M o s t fo o d coupons w ere abandoned a fte r the reopening o f the free m arket. Once again, part o f the im pact o f the p o lic y changes is e x p lic itly shown in Figure 3. T hough these p o licie s have increased the free m ovem ent o f labor, m any farm ers in the in fo rm a l sector s till re m a in ru ra l in th e ir re g istra tio n s and are u sually given tem porary urban residentship as lo n g as they keep th e ir business in cities. A fte r a ll, the new p o lic y does have a p o s itiv e im p a c t on ru ra l-u rb a n m ig ra tio n. T h is is re fle c te d by the urban percentage change b e g in n in g fro m 1976 in F igure 3. O ve ra ll, the change in governm ent p o licies is the m ain cause o f the flu c tu a tio n in urban p o p u la tio n g row th. C h ro n o lo g ic a lly, the w hole process reveals ups and downs, w h ich may be explained by changes o f p o lic ie s and tu rn s o f events, a ffe c tin g the n a tu ra l rate o f popula tio n increase and the movem ents o f people in and out o f the urban areas o f the country. B efore 1960, governm ent p o lic ie s served as a p o s itiv e fa c to r fo r ru ra l-u rb a n m ig ra tio n. B etw een 1960 and 1976, governm ent p o licie s were generally aim ed at discouraging and c o n tro llin g urban p o p u la tio n g row th. U rban p o p u la tio n g ro w th rate was negative d u rin g this period. Since 1977, the urban p o p u la tio n

38 36 g row th rate has gone up trem endously and has been faster than the ru ra l and to ta l p o p u la tio n rate due to the econom ic re fo rm, w h ich has s o fte n e d som e e a rly r e s tric tio n s and p ro v id e d m ore o p p o rtu n itie s fo r ru ra l-u rb a n m ovem ent. I t m ust be noted that d e s p ite the re la x a tio n o f g o ve rn m e n t c o n tro l o v e r m ig ra tio n, perm anent ru ra l-u rb a n m ig ra tio n is s till as d iffic u lt as before. The household re g is tra tio n system and other state p o lic ie s re s tra in in g ru ra l-u rb a n m ig ra tio n have not yet changed. A s a re sult, rural-urban m ig ra tio n is tem porary in nature.

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