Chongqing's Call to Urban Conversion

(Chongqing) - After seven years of working in Chongqing's Jiangjin Shuangfu New Town, Deng Zonghua, born into a rural family in the outskirts of the city, officially became an urban resident. Deng had crossed a threshold that includes a completely different set of education, healthcare and employment benefits.

Within 10 years, Chongqing plans to convert the farming hukous (户口) of 10 million farmers to city resident hukous. Local officials call it the largest household registration reform ever in the country. According to statistics from the Chongqing Public Security Bureau, as of August 15, 14,000 farmers had already applied for a transfer.

Deng has worked at Chongqing Jiangjin Electric Appliance Co. Ltd for seven years, where he now supervises more than 30 people as a team leader. This August, Chongqing launched its household registration reforms. Deng received his city "hukou" or household registration, meaning he was no longer a peasant. Because his home was scheduled to be demolished, Deng could be relocated to a new home of the same size, an offer that he readily accepted.

In order to enjoy city resident treatment, applicants must give up their lands in the countryside. Chongqing mayor Huang Qifan uses a clothing metaphor to illustrate the process. The residents will "put on their city employment, social security, housing, education and healthcare clothes – five in total" and "take off their homestead, contract and forest land clothes – three in total." Accordingly, local governments will offer compensation.

Moving to Modernity

The Chongqing household registration reform stresses that moving farmers into the city is closely related to the local government's plan for economic development.

As a municipality directly under control of the central government, Chongqing has an urban and rural pattern of "big city, big countryside." Chongqing has an area of 82,000 square kilometers and a population of over 31 million, of which two-thirds live in the countryside. Of the 40 counties in Chongqing, nearly half are poor.

Deputy Director of the Chongqing Development and Reform Commission, Xu Qiang, told Caixin that Chongqing is undertaking the large-scale reform to encourage urbanization, especially to change the existing urban-rural dual structure that limits the flow of key factors from city to countryside. The problem lies in the fact that Chongqing's population is large and its land is limited. The recessive unemployment rate is high in the countryside. Many farmers find temporary work in the city and end up moving back and forth as migrant workers.

This structure has become an obstacle to economic development. Not only do the differences in welfare benefits associated with hukou affect social equality, they limit the flow of essential factors between the city and countryside, hinder industrial development and widen the consumption gap between urban and rural residents. More importantly, the high population density and limited lands has made it difficult for farmers to accumulate wealth.

Meanwhile, the Chongqing local government is planning for economic growth driven by the fast-paced industrialization. Since 2008, Chongqing has been working to become China's western center for economic growth. In May of this year, the State Council approved the city's "Liangjiang New Zone" project. It's the third country-level development zone following Shanghai's Pudong and Tianjin's Binhai district. Chongqing believes that its industrialization plan will not only need a huge amount of labor but also a large amount of land.

Sudden Stream

Many experts believe that the success of Chongqing's plan is subject to two factors: first, whether or not the city can absorb those moving people and offer appropriate treatment to new residents, and second, whether or not the 10 million farmers will choose to move to the city as the government hopes.

After the handover of the land, whether or not the city can afford to give new residents "five clothes" is questioned by many scholars and farmers. Previously, Zhengzhou and Shijiazhuang have experimented with similar household registration reform and found that their infrastructure, particularly schools, were insufficient to handle the large influx of people.

When millions of people move to a city, it needs a huge amount of capital support. Xu Yuming, head of the Urban Economics Institute at the Chongqing Academy of Social Sciences, has estimated that to fully "urbanize" one peasant and provide all of the public welfare that city dwellers enjoy would cost nearly 150,000 yuan at the current rates.

In the mayor's government work report released at the beginning of this year, he points out that to transfer 3 million farmers to the city and provide the same level of benefits, it would cost the government 100 billion yuan.

And when the farmers hand over their lands to the government in exchange for apartments in the city, compensation costs are expected to be colossal.

Emperor's New Clothes?

The land handover is turning out to be the farmers' biggest scruple under Chongqing's urbanization policy. Zhao Hong, a villager of Banan district, believes that the motive behind the household registration reforms is the farmers' lands.

"Currently, the country needs lands to develop the economy. I understand this. The key is to see how much compensation they'll give us," said Zhao, who is skeptical about whether the government will be able to follow through with the rest of the exchange. "The government promises that the pension is sufficient, but who knows if it will be enough when we are old?"

In addition, as the level of public services in the countryside improves, the gap between urban and rural areas is closing. A resident of Anlan village surnamed Ren, who bought a house in Banan district two years ago, told Caixin, " Now, the countryside has a pension system, healthcare is supported by a new rural cooperative and schools don't require extra placement fees. If you want to go to a good school, urban hukous still require you to pay extra sponsorship fees. I think it's pointless to become a city resident."

Ren is representative of what many are thinking. In response, a researcher at the rural department of the State Council's Development Research Center, Liu Shouying said that real urbanization should be based on market demand.

Farmers should do it voluntarily. By removing the government's "fence", urban and rural areas now have the same space for development. They should rely on employment and lifestyle to improve the attractiveness of the city. What requires more attention is the fact that it's difficult to predict future economic growth. This increases the risk of Chongqing's future large-scale conversions of farmers to the cities.

Cui Chuanyi, a researcher at the rural department of the State Council's Development Research Center, explains that urbanization is a process that the market chooses. You can't urbanize for the sake of urbanization.

"The government can't mandate certain groups of people move to the city. It is decided by industrial development. Once it's developed, farmers will come naturally," said Cui.