We all know urbanization is important: Nearly 80% of gross domestic product is generated in cities around the world. Countries must get urbanization right if they want to reach middle- or high-income status.
But urbanization is challenging, especially because badly planned cities can hamper economic transformation and cities can become breeding grounds for poverty, slums and squalor and drivers of pollution, environmental degradation and greenhouse gas emissions.
That’s why it’s important for us to build cities that are livable, with people-centered approaches to urbanization and development. That will allow innovation and new ideas to emerge and enable economic growth, job creation and higher productivity, while also saving energy and managing natural resources, emissions and disaster risks. When the process is driven by people, it can lead to important results, the same way London and Los Angeles addressed their air pollution problems.
We now have firsthand knowledge of the Chinese experience that can help the world’s cities better handle challenges posed by urbanization. For 15 months, the World Bank conducted a comprehensive urbanization study with the Development Research Center of China’s State Council.
The study, which focuses on efficiency, inclusion and sustainability, provides a comprehensive agenda for China’s urbanization process, as Sri Mulyani Indrawati, managing director and chief operating officer of the World Bank Group, said in an earlier post on this blog.
First, the new model of urbanization will boost efficiency. With better use of land, higher mobility of people and healthier incentives for local officials, the largest cities will move their economic structure up the value chain, while smaller cities can attract more industries, and can generate employment for migrants closer to their place of origin.
Second, the process will boost social inclusion, an issue that resonates from New Delhi to Latin American cities. The government has adopted the report’s recommendation to reform the rigid hukou household-registration system. Land reforms will give stronger property rights to rural citizens, and eventually provide compensation at market-based land prices to help reduce the urban-rural divide.
Third, it will lead to a more sustainable urbanization process, because the new reforms will boost domestic demand, improve productivity and raise people’s living standards. The new model also opens the broader discussion on how to pay for urbanization. As local governments become less reliant on land conversion to generate revenue, our report suggests that cities turn to new sources, such as property taxes or environmental fees, to help fund new services to more migrants.
For me, the launch of the report in March in Beijing, with ample openness and analytical rigor, is another example of the successful collaboration on critical issues of China’s future development between the World Bank Group and the Development Research Center of China’s State Council. Just over two years ago, we jointly published the China 2030 report, and many of its recommendations already are being implemented.
The urbanization report was suggested by Premier Li Kequiang in late 2012, during Jim Yong Kim’s first visit to China as World Bank Group President. The government published its urbanization plan earlier this year, and several top officials shared their insight at our Spring Meetings in April. And China has just passed revisions to an environmental law that will allow tougher fines for polluters.
And just this afternoon, our China Country director Klaus Rohland presented the Urban China report at the UN, and discussed its relevance to the world with experts from UN Habitat and other countries.
We found that the collaboration with Chinese colleagues with deep knowledge is key to the success of the report, while also providing an efficient pathway to providing policy options for our client countries. As many countries in East Asia Pacific and other regions are rapidly urbanizing, the China model will provide valuable lessons on how to address the daunting challenges posed by the process.