Not Getting Urbanization Right Could Lead To Biggest Migration In China, Writes Tom Miller
In his book "China's Urban Billion", Tom Miller warns that if China doesn't tackle its urbanization problems in the correct manner, it may witness the highest number of migration, the land has ever seen.
According to Miller the number of migrants may increase from 700 million to 1 billion by 2030 and its cities would be filled with giant slums.
Talking to Reuters about his new book and the on-going issue, Miller said, "In a sense, economic development equals urbanization as people move out of unproductive rural jobs. The urbanization rate in the U.S. and UK is around 90 percent and 70 percent in Italy and Japan. China passed the 50 percent mark in 2011 and on the current trajectory you'd expect it to hit the 70 percent rate by roughly 2030. If they can do that - and a lot can go wrong - then that will certainly put a floor under economic growth."
Addressing the common belief that China is already overbuilding when Miller feels there is housing shortage he says, "Some of the comments are foolish. They're based on a misunderstanding of just how large China is. Hedge fund managers like Jim Chanos look at the investment numbers, and they're so huge they just don't seem to make sense. But they're coming at China through the experience of much smaller countries.
"China bears don't really understand how China works. They're constantly looking at it as though China functions like a normal market economy. It doesn't. The government here has the power to create markets that wouldn't exist without their intervention. Pudong is a very good example. (Pudong, Shanghai's financial district, was farm land until the mid-1980s.)
"If you're looking at companies that have done well feeding off China's huge growth in heavy industry and investment, then you can say Chanos was right to be skeptical. But he made the broader point that the entire economy was going to hell. He made the mistake of looking as an investor rather than looking at the macro economy, which are two different things.
"'Ghost cities' gives the impression of cities being created out of nothing. That is simply not the case. Normally we're talking about ghost suburbs - big new developments on the edge of existing cities that have been growing very fast and need room to expand."
The book was a collaboration with Beijing-based research company GK Dragonomics and published by Zed Books.