Cost and benefit of urbanization

The China Academy of Social Science recently issued a blue paper on urbanization, saying China needs a large amount of public spending for new urbanites to enjoy the same rights as their neighbors. An article in Beijing News has its own calculations (excerpts below).

About 390 million people from China's rural areas are expected to be urbanized before 2030, according to the Blue Paper on Cities: The Development of Chinese Cities, issued by CASS on July 30.

The blue paper estimated the government needs to spend 51 trillion yuan ($8.3 trillion) to complete the process.

Very good idea, but they may need further calculations. The biggest problem for China's urbanization, as they said, lies in offering equal social welfare to the 390 million new urban residents who come from rural regions, and the government needs to raise money for the process.

However, the blue paper calculated only the cost, but ignored the huge social benefit brought about by the process. According to economist Gu Shengzu, China's domestic consumption capacity might grow from 16 trillion yuan in 2011 to 30 trillion yuan in 2016, if urbanization continues at its current speed. Urbanization will also accelerate infrastructure construction and investment in many related industries.

Therefore, the process of urbanization will bring benefits, too, which might cover part or all of the public spending mentioned in the blue paper. Of course, that requires decision-makers to do delicate planning work.