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Moving to the city

China has more political and legal space to urbanise than India

Written by Ashutosh Varshney
August 23, 2012 2:07:55 am

In 1950,with 12-14 per cent of the total population in cities,India and China were overwhelmingly rural and equally urban. In 1990,too,at 25-26 per cent of the total,the urban proportions were similar. By 2011,however,a dramatic gap had appeared. At the end of 2011,the Chinese government said,China was 51 per cent urban,whereas that figure for India was only 32 per cent. Urban China has stolen a big march over urban India in the last two decades.

Scholars have always been sceptical about official Chinese statistics. It is also unclear how “urban” is defined in China. During my recent visit,I,for example,could not get a clear answer from Chinese experts about the definition of the urban. Urban is what the Chinese government calls urban,it seems.

But however one may cut the statistical cloth,driving along China’s industrialised eastern coast tells a clear tale. Not even the most urbanised states of India look comparable: not Tamil Nadu,not Gujarat,not Maharashtra. The partial exception is greater Delhi. Pictures and accounts from the Chinese interior also do not look,or sound,as rural as those from India’s least urbanised states. China today is undoubtedly much more urbanised than India.

Why is that so? And who has paid for China’s urban transformation? While firmer answers must await careful scrutiny,we can begin to generate some early ideas for reflection and debate.

The first question,some might say,is straightforward. As my seminar interlocutors in Beijing and Guangzhou argued,China’s per capita income,compared to India’s today,is roughly three times as high. At higher levels of income,societies tend to be more urban (and also generally less poor).

But this argument begs an important query. Is China more urban because it is richer,or is China richer because it has pursued urbanisation more vigorously? What is the cause? What is the effect?

Development theory and historical experience make it clear that agricultural and rural incomes simply cannot grow as fast as industrial and urban incomes. In developing countries,when agriculture grows at 3 per cent per year,the performance is called good; when industry grows at that rate,we call it disappointing. Industry is known to have grown at 8-10 per cent per year for several decades in successful developing economies. No developing agriculture has ever grown at that rate for more than a few years. Agriculture simply cannot grow as fast as industry on a sustained basis.

It follows that the greater the industrial or urban growth rate,the greater an economy’s overall output. An unrelenting focus on agriculture and a neglect of cities simply hurt the pursuit of larger incomes and welfare. An elementary principle of development is that for societies to become richer,agriculture must decline and cities must rise. The debate can be on: how should agriculture decline? What are the best terms? But decline it must. Gandhi’s village republics can only be poor and contented,not rich and happy. India’s past lived in villages. Its future will reside in cities.

Therefore,it makes sense to ask how China urbanised so rapidly. No society in history has ever added 350-400 million people to its cities in a matter of two decades,as China has done since 1990. And no society has pulled more people out of poverty as quickly.

A stark difference between India and China has to do with the ownership of land. In India,a large proportion of land is privately owned. In China,there is no private property in land. Rural land belongs to collectives,urban land to governments. Citizens,firms,organisations have only user rights over land,no ownership rights. As a consequence,once the government sponsors an industrial or urban project — factories,metros,high-speed trains,bridges,roads,housing,commercial buildings — it faces little legal contestation.

Chinese governments can easily claim that urbanisation is in the public interest and individual interests must be sacrificed for the greater good of society. Confident that no legal challenges can deter them,60 per cent of the provincial cities are currently planning to build metros. From an Indian perspective,that is truly staggering. Only Delhi metro — and to some extent,Kolkata — have gone smoothly.

If legal contestation is ruled out,can Chinese citizens mount political challenges? Considerable protest in China has indeed emerged over “land grabs”,leading to the reversal of government plans. But lacking opposition parties and a free press,such “citizen successes” have only been episodic,not systematic. Things can change in the future,but that is where they are at the moment.

India’s democracy allows routine challenges to the government’s plans. Big urban projects often get entangled in legal or political contestation — over change of land use,compensation terms,rehabilitation plans,corruption. China is perhaps not less corrupt,but an Anna Hazare-style movement is impossible.

Clearly,the Chinese system offers greater political and legal space for urbanisation. But who uses this space and how? The answer points to another great difference between the two countries.

In China,local governments have led the drive for urbanisation. They receive a proportion of taxes collected from commercial activity,but most of all,they keep a large part of the revenue that transformation of land use — from rural to urban — generates. The more local governments convert rural lands for commercial purposes,the greater their incomes. Moreover,as the land becomes urban,government benefits of urban planning — better sewerage,water,power,schools — also arrive. In rural areas,these public services,provided by the rural collectives,are rickety.

Thus,the incentives for Chinese local governments are all geared towards urbanisation. Again,the contrast with India could not be sharper. India’s cities may be engines of economic growth,but politically,India’s democracy is weighted towards the countryside. Elections are decided in the villages,not in the cities. As a consequence,public resources flow towards the countryside in greater magnitude. The rural population is currently about two thirds of India’s total population,and the urban population a third. But the budget of India’s ministry of rural development is five to six times larger than that of the ministry of urban development.

Equally important,in India,the revenue from the transformation of agricultural land to commercial land does not go to local governments. As a result,unlike China,India’s rural local governments have a vested interest in staying rural. To become urban is to disown a potential entitlement to greater public funds — for example,allocations from the mammoth NREGA programmes.

Under these conditions,India’s urbanisation is bound to be slower. But a final question remains. Who has paid for China’s urban transformation? Are there only winners,or also some losers?

China’s urbanising experience relates directly to the Nobel Prize winning theory of W. Arthur Lewis,a development economist of the 1950s. His basic insight was as follows: labour can be pulled out of agriculture for use as cheap industrial labour,allowing profits to be made,and the profits so made can be reinvested,leading to a virtuous cycle of rising investment and higher economic growth — not forever,but for quite long. China appears to have followed this route. Its transformation is manufacturing-led. Peasants have been turned into industrial workers.

But this process has been policed via the Chinese hukou system. In India,a rural resident can get on a train in Azamgarh; head towards Mumbai; find a place to sleep,if necessary on Mumbai’s sidewalks or in an already crowded slum; and look for a job. In China,the movement is tightly regulated.

The hukou system is a residence permit system. Also,an urban hukou comes with health,education,retirement,housing and unemployment benefits; a rural hukou has fewer benefits. Beijing today has 19.6 million residents,only 13 million have an urban hukou.

It is estimated that carrying rural hukou,200 million migrants work in China’s factories today. Compared to urban hukou holders,they pay more for healthcare and for education of their children,and enjoy virtually no unemployment and retirement benefits. Indeed,in stark contrast to the free public schooling for urban hukou holders,the education of the migrant workers’ children is mostly private and so expensive that a whole generation of children is growing up in the countryside with grandparents,where they can afford education but are deprived of parents,who are busy earning wages in urban factories.

China,thus,has two kinds of citizenship: an urban citizenship,and a rural one. The hukou system also allows China to ensure that slums do not exist in the middle of cities,only in the periphery.

The Chinese government appears to be saying to its rural folk: we promise you a manufacturing job,but you are not free. In contrast,India is telling its rural citizens: you are free to move,but we can’t promise you a job.

The writer is the Sol Goldman Professor of International Studies and the Social Sciences at Brown University,where he also directs the India Initiative at the Watson Institute. His books include ‘Democracy,Development and the Countryside:Urban-Rural Struggles in India’,express@expressindia.com

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