Urbanisation is a key driver for the mainland's economic growth, as people from the rural areas, especially farmers, move to the cities to find better jobs with higher pay. At a Politburo meeting in December, China's incoming leaders unveiled a plan to promote urbanisation.
Everything on the mainland tends to happen on a large scale, and investors might wonder if there is a way to play this urbanisation initiative.
To get a sense of the scale of this plan, consider first that 160-200 million migrant workers live in cities but have no formal residency status, or .
Without , these workers have no entitlement to most social and public services, including education, health care, and retirement benefits, effectively raising their cost of living and lowering their income.
One way to encourage more people to move to the cities, therefore, is to grant to migrant workers. This would raise the rate of urbanisation as the workers are joined by their families. The programme would also increase consumption, as the workers gain access to social programmes, leaving more money for discretionary spending.
Moreover, city residents consume more than their rural counterparts, given differences in lifestyle and income. The annual consumption of an average urban resident in the mainland is about 19,000 yuan (HK$23,300), while that of an average rural resident is 6,000 yuan. If the urban population grew to 65 per cent in 2030, the country would have 300 million more people living in urban areas.
