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This paper examines the transformation of urban-rural linkages in China since 1949, with a focus on the social dimension in four stages: policy-forced urban-rural cleavage, labor-driven urban-rural interface, land-driven urban-rural tension, and attempted urban-rural integration. While the rapid urbanization under the growth-oriented policy over the last two decades has helped strengthen the urban-rural economic linkages, it has also weakened the urban-rural social linkages and resulted in a number of social issues such as inadequate social insurance of migrant workers, left-behind children and elderly, and informal urban housing. The paper makes a case for a new policy priority to be given to the improvement of urban-rural social linkages.
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198 Regional Development Dialogue, Vol. 35, 2014
Examining the Urban-Rural Linkages in China
Li Sun and Zhi Liu
INTRODUCTION
Over the past 35 years, China has achieved unprecedented economic growth.
For much of this period, the gross domestic product (GDP) has grown by
over 10 per cent per year. The growth propels the country into the upper
middle-income status from the lowest, and results in rapid poverty reduc-
tion. Over 500 million people, mostly rural, have been lifted out of pov-
erty. Accompanying this growth is an unprecedentedly rapid urbanization.
Between 1980 and 2014, the share of population living in urban areas rose
from 19.4 per cent to 54.8 per cent, and the total number of urban popula-
tion increased from 191 million to 749 million. While the overall progress
is impressive, the per capita income gap between urban and rural population
remains wide. The social development gaps between urban and rural resi-
dents are even worse. For example, migrant workers from the rural areas
do not have access to many urban public services enjoyed by urban residents,
and many have to leave their children and aged parents behind in the rural
villages. Their incomes may have increased due to urban jobs, but their
families suffer separation, isolation, loneliness, and even breakdown.
This article aims to discuss the above highlighted issues by examining
the transformation of urban-rural linkages (URL), with a focus on the social
dimension. The primary social linkages that we examine are related to
rural-to-urban migration and rural land conversion for urban use. We view
the land conversion issue as a social one, as it arises from the urban-rural
inequality imbedded in the legal framework.
URL matters greatly in developing countries,1 because their dynamics
greatly impact the well-being of urban and rural populations, as well as the
environmental quality and social cohesion where they live. The URL are
not only driven by the process of economic development and urbanization,
but are also influenced by policy. This is especially true in China where
state interventions are strong.
The following text is divided into four sections. Section two provides
an overview of the changing URL in the history of the People’s Republic
of China since 1949, and presents the current social issues that resulted
from past urbanization. Section three explains the characteristics of rural-
© 2016 United Nations Centre for Regional Development (UNCRD)
All rights reserved.
Examining the Urban-Rural Linkages in China
Regional Development Dialogue, Vol. 35, 2014 199
to-urban migration from the social aspects, including social insurance of migrant work-
ers and its impact on left-behind groups. Section four explores the social function and
legal dilemma of urban housing without full legal titles. Finally, section five discusses
whether the New Urbanization Plan recently initiated by the government will help im-
prove urban-rural linkages. We argue that the past urbanization under the economic
growth-oriented policy in China has helped strengthen urban-rural “economic linkages”
to a great extent, but urban-rural “social linkages” lag behind and, in some cases, are
even worsened. We advocate that the policy priorities should be given to improving
urban-rural social linkages in China’s New Urbanization Plan (2014-2020).
A HISTORICAL OVERVIEW OF URBAN-RURAL LINKAGE IN CHINA
China is one of a few countries which have long formulated and attempted to implement
national economic development strategies. Its urbanization and the characteristics of
urban-rural linkages bear significant marks of state interventions. Based on the policy
orientations adopted by the government at different times, we divide the trends of ur-
banization since 1949 into four stages, each with a distinctive characteristic of urban-
rural linkages: policy-forced urban-rural cleavage, labour-driven urban-rural interface,
land-driven urban-rural tension, and attempted urban-rural integration (table 1).
TABLE 1. FOUR STAGES OF URBANIZATION
Period Characteristic of URL Key Feature
1949-1977 Policy-forced
urban-rural cleavage
Rural sector subsidized urban sector, and labour mobility was
strictly controlled by policy
1978-2000 Labour-driven
urban-rural interface
Cheap rural labour flooded into cities for jobs, but gained little
access to urban services due to hukou constraint
2001-2012 Land-driven
urban-rural tension
Rapid, large-scale conversion of rural land for urban use through
state expropriation and driven by land-based municipal finance
2013 onwards Attempted
urban-rural integration
People-centered urbanization with a focus on welfare improve-
ment for rural population and migrant workers
Source: the authors.
The Phase of Policy-Forced Urban-Rural Cleavage (1949-77)
The first phase was characterized by strictly state-controlled urban-rural cleavage with-
out free rural-to-urban migration. China was then an isolated, closed, centrally-planned
economy. The government adopted a national economic development strategy to boost
industrialization at the costs of the rural sector. The household residential registration
(hukou) system, the rural people’s communes, and the state grain procurement system
played significant roles in this strategy.
The hukou system was set up to identify a citizen as a resident of a particular rural
or urban locality, but it was also used by the government as a tool to control the change
of hukou from rural to urban status. With the system, the government was able to limit
the rural-to-urban labour migration and keep sufficient numbers of farmers on their land
in order to feed the urban sector. The system was also used to link people with access
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to the public services (such as social insurance and public schools) provided by their
district, township, or village. A rural hukou holder was not entitled to the urban public
services which were available only to urban hukou holders.
The people’s commune system was set up in rural areas in 1958 and ended in the
early 1980s. It was an organizational form of strict collectivization for agricultural pro-
duction. A commune typically included a number of traditional villages. The land of a
commune was collectively owned by all members of the commune. The farmers in the
same production unit worked together as a team and followed the mandate given by the
commune leadership. This organizational form made it easy for the state to control the
farmers’ mobility to cities. Without obtaining government permission, no farmer would
be able to take an urban job.
The state procurement system for agricultural products was set up for the state to
procure grains and other major products at a pre-set low price, and then sell or ration to
urban citizens. Essentially it was a subsidy mechanism for the rural sector to subsidize
the urban sector. Except for the small local markets for rural household products (such
as vegetables, eggs, and chicken), there were no markets for grains and other major items
of agricultural products.
Hukou, communes, and grain procurement system were three of the key elements
for the centrally-planned economy. Under these systems, the Chinese rural and urban
areas functioned like two separate societies, with the state controlling and regulating the
urban-rural linkages, i.e., the flows of people, goods, capital, and natural resources be-
tween the rural and urban areas. Conversion of rural land for urban development was
also controlled by the state. Because of the urban-rural cleavage, the urban-rural eco-
nomic linkages were tightly controlled, and the urban-rural social linkages largely non-
existent.
During this period, the level of urbanization grew slowly from 10 per cent to 18 per
cent, or on average under 0.3 percentage points a year. The rural population mostly lived
in poverty without social welfare. They were trapped in poverty because of the increased
population, limited farmland resources, and low productivity. While the rural population
rose from 553 million in 1958 to 804 million in 1982,2 the amount of farmland per
capita decreased by 61 per cent. The urban residents were relatively better off and en-
joyed state-subsidized food, education, employment, housing, and other welfare benefits
such as healthcare and pensions.
The Phase of Urban-Rural Interface (1978-2000)
The second phase was marked by a major economic reform spear-headed by Deng Xi-
aoping. The reform aimed at transforming the centrally-planned economy to a market
economy, and opening the Chinese economy to the outside world. The first reform ini-
tiative was to replace the commune system with a household responsibility system (HRS)
at the village level. Under the HRS, farmland of a village was collectively owned, but
was subdivided and allocated to each household for farming under a responsibility con-
tract between the household and the village committee. The contract gave households
land-use rights for agricultural production. The households assumed full responsibility
for profits and losses. The old state procurement system was also phased out, and markets
for agricultural products developed. Facing the new incentives, farmers worked hard
and optimized their production. This immediately brought about significant productiv-
ity gains and income growth for the rural households on one hand, and abundant food
Examining the Urban-Rural Linkages in China
Regional Development Dialogue, Vol. 35, 2014 201
supply to the urban areas on the other hand. As the farmers made independent decisions
as to agricultural production and labour input, some family members were liberated from
the land and became ready to shift to other sectors. Surplus labour thus emerged, setting
the stage for rural labour migration to the cities.
More reform actions followed the successful introduction of HRS. These included
the new policy allowing rural townships and villages to participate in industrial produc-
tion, establishment of special economic zones (SEZs) in the coastal cities, emergence of
privately owned enterprises, and reform of urban state-owned enterprises. As a result,
a large number of township and village enterprises (TVEs) emerged, absorbing the rural
surplus labourers for non-farm activities. This is a form of URL known as “moving to
the non-farm sector while remaining in the village.” Meanwhile, the SEZs and other
coastal cities successfully seized the opportunities of globalization, and attracted a large
volume of foreign direct investment (FDI) for manufacturing and a large number of mi-
grant workers. In this context, the countryside was no longer isolated from the cities,
and the labour market-driven urban-rural interface gradually began. The number of
rural-urban migrants rose sharply, reaching 90 million in 2001 compared to only 3 mil-
lion in 1983.
Deng Xiaoping’s reform policy was to allow some people to get rich first and let
their success motivate other people. The policy also stated that areas with better growth
conditions could develop faster than others, and then they should help the lagging areas
to develop, so that the whole country would eventually advance. In the 1990s, when the
urban economy became more viable, urban employment opportunities were seen as a
driver to bring up the nearby rural areas. This urban-rural economic linkage actually
worked: per capita incomes for both urban and rural population increased, although
urban per capita income increased faster than rural per capita incomes.
However, the hukou system continued to function. As the migrant workers still held
the rural hukou, they did not have access to many urban public services even though they
worked and lived in cities. Most of them were unable to bring their dependents to live
in the cities where they worked, resulting in the problematic urban-rural social linkages.
During the Spring Festival holiday – the most important holiday in China – millions and
millions of migrant workers travelled by train to return to their rural homes and families.
The extraordinary scenes of crowded railway stations and trains were a demonstration
of the kind of URL. As the hukou determined where a hukou holder received his or her
entitled public services, the migrant workers often had to travel back to their villages for
small matters such as applying for marriage certificate and renewing personal ID.
The Phase of Urban-Rural Tension (2000-2013)
This phase was marked by the most rapid urban sprawl. Several major events set the
stage for the urban sprawl. First of all, with China’s accession to the World Trade Or-
ganization (WTO) in 1999, the manufacturing sector entered a new phase of rapid growth.
In anticipating sustained growth, cities were busy in expropriating rural land for the
development of industrial parks. The second event was an urban housing policy reform
initiated in 1998, which changed the mode of housing supply from public provision to
market provision. In 2004, the government further emphasized the urban housing sector
as one of the pillar industries of the national economy. Since then, housing markets
across the country have entered a golden decade of rapid growth. The third event was
China’s economic stimulus package in response to the global financial crisis of 2008.
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The public fund of RMB 4 trillion injected into the economy was substantially channeled
into the real estate sector – the most profitable business at that time.
As a result, many cities witnessed rapid expansion of urban land use. Between 2001
and 2011, urban construction land expanded by 17,600 km2, and 90 per cent of the
newly developed urban land was acquired by the state through the expropriation of rural
land.3 According to China’s Land Administration Law, urban land is state-owned, rural
land is collectively owned, and only the state – which is represented by the municipal
governments – has the legal power to convert rural land into urban use. However, the
compensation to expropriated rural land was set on the basis of agricultural production
value, instead of the much higher “market” price (if there is a market) that would include
locational premium. Such a legal basis for state expropriation puts the farmers on a
socially and politically unequal status.
The state expropriation system gave the municipal governments an opportunity to
obtain handsome revenues from selling the use rights of the expropriated land to real
estate developers at the time of real estate boom. Usually, the municipal governments
provided industrial land to firms at a price much lower than the market price, thus incur-
ring deficits. But in many cases, the revenues from land concessions for commercial
and residential real estate were more than enough to cover the deficits. This provided a
great incentive for cities to fund urban development through land-based finance – an
incentive so great that prompted many cities to expropriate rural land excessively. The
national total revenues from land concessions increased dramatically from RMB 51 bil-
lion in 1999 to RMB 4.3 trillion in 2014, which was as much as 45 per cent of the mu-
nicipal revenues from taxes and inter-governmental transfers. Moreover, municipal
governments also granted land to their local finance platforms as collateral for borrow-
ing from commercial banks to finance public infrastructure. Local public debt soon
began to mount up.
While municipal governments were the winners in this process at least in the short-
term, the farmers were obviously the losers and suffered losses for a much longer time.
They lost their land at low compensation, which was often far from adequate for them
to enter a different livelihood. They had no choice or much bargaining power under the
law on public expropriation. Many of them suffered significant hardships in adjusting
to a new life. More importantly, they saw the value of their land increased many times
after expropriation and conversion to urban use, and felt that their rights and benefits
had been misappropriated. As a result, tension over land-taking between the farmers and
municipal governments grew, and a number of mass protests and violent conflicts oc-
curred across the country. It should be noted that the urban-rural tension over land-
taking was not happening everywhere. Farmers living in the peri-urban areas of a
richer, more vibrant city could receive much better compensation due to the willingness
of the municipal government to negotiate in exchange for speedy completion of expro-
priation. However, these were limited cases.
The Phase of Attempted Urban-Rural Integration (2013 onwards)
By 2013, the economic and social consequences of urbanization under the growth-ori-
ented policy over the previous three decades became clear in the public policy debates.
As figure 1 shows, both urban and rural household incomes had grown significantly over
this period, but the urban-rural household income gap continues to widen. If the private-
ly-owned assets (mainly housing) are accounted for, the urban and rural household wealth
Examining the Urban-Rural Linkages in China
Regional Development Dialogue, Vol. 35, 2014 203
gap would be even bigger as urban housing properties are many times more valuable
than comparable rural housing properties.
Figure 1. Urban and Rural Household Incomes (CNY), 1978-2012
Source: Organisation for Economic Co-operation and Development (OECD), OECD Urban Policy Reviews:
China 2015 (Paris: OECD Publishing, 2015), pp. 55. (Available at http://www.oecd.org/publications/
oecd-urban-policy-reviews-china-2015-9789264230040-en.htm)
By 2012, 52.6 per cent of the Chinese population lived in cities (figure 2). How-
ever, 17.3 per cent of this urban population lacked an urban hukou. If this part of the
population (mainly migrant workers and their family members who lived with them) is
excluded, the urbanization level would be only 35 per cent. As mentioned earlier, the
migrant workers do not have access to many urban public services, and thus could not
fully enjoy the benefits of urbanization.
Figure 2. Urban Residential Population and Urban Population with hukou, 1978-
2012
Source: Government of China, “National New Urbanization Planning (2014-2020)” (2014) (Available at http://
www.gov.cn/zhengce/2014-03/16/content_2640075.htm; retrieved on 28 November 2015).
Per cent
Urbanization rate for permanent
residents
Urbanization rate for residents
with urban registration
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Regional Development Dialogue, Vol. 35, 2014
It is increasingly recognized that the mode of urbanization over the past three dec-
ades is not sustainable. Policy consensus was formed to address the problems of access
to urban public services, excessive land-taking, local public debt, and tension between
the farmers and municipal governments. In fact, some limited effort was made to ad-
dress the problems through what is known as “urban-rural integration”. It was basi-
cally a concept of development planning that views the functional role of cities and rural
areas as complementary and synergetic, and treats the cities and rural areas within a
region as an integrated entity. The objective of this planning is to form a basis for local-
ity-specific public policy interventions that would facilitate the flows of people, goods,
services, resources, capital, and information in a mutually beneficial way. In practice,
urban-rural integration was mainly attempted through greater budget allocation to ensure
equalization of basic services in rural areas.
More fundamental policy reform was initiated in 2013. The Central Committee of
the Communist Party of China announced a decision on major issues concerning com-
prehensively deepening the reform. The decision explicitly addresses the importance of
improving the integration of urban and rural development, and calls for improving the
institutions to form new relations between urban and rural areas in which urban areas
support rural development, agriculture and industry benefit each other, and urban and
rural areas achieve integrated development. In order to ensure that development benefits
all people more equally, the government promises more property rights to the peasants,
a fairer and more sustainable social security system, and a deepening of reform in health-
care services.
The decision also sets the directions for reform in hukou, land policy, and municipal
finance, which will fundamentally shape the new URL in the future. On hukou, the de-
cision calls for speeding up the reform of the hukou system to help farmers become
urban residents, and efforts to make basic urban public services available to all permanent
residents in cities, including all rural residents. This would include the affordable-
housing system and the social security network. On land, the decision calls for the de-
velopment of an integrated urban and rural land market, under which the sale, leasing,
and demutualization of rural, collectively-owned buildable land under the premise that
it conforms to planning would be allowed. The scope of land expropriation by the state
would be limited to clearly defined public purposes. On municipal finance, the decision
calls for the reform of the taxation system, and speeding up property-tax legislation so
that property tax will become one of the major source of municipal revenues in the future.
In 2014, the government further announced the New Urbanization Plan (2014-2020).
The guiding principle for the New Urbanization Plan is to put people’s well-being at the
centre, which is termed “people-centred urbanization.” Among a number of policy
measures, the plan suggests removing the hukou constraint on migrant workers and their
families in a phased approach, starting with the small cities and gradually extending to
the larger cities. This is a practical approach, as small cities offer few decent urban pub-
lic services, while the quality services in the larger and first-tied cities are hotly sought
after by the people. Moreover, the plan suggests that cities be the providers of basic
public services not only for the residents with hukou, but also for migrant workers and
their families. On land use and housing, the plan suggests that municipal governments
expand the coverage of affordable housing to migrant workers, and form a partnership
with peri-urban villages to co-develop public rental housing on collectively-owned rural
land, without going through state expropriation. Obviously, the New Urbanization Plan
Examining the Urban-Rural Linkages in China
Regional Development Dialogue, Vol. 35, 2014 205
is going in the right direction to strengthen both urban-rural social linkages.
SOCIAL WELFARE OF MIGRANT WORKERS AND LEFT-BEHIND
GROUPS
Currently there are 274 million rural-urban migrant workers in China, representing the
largest human mobility in the world. They have played an indispensable role in linking
rural and urban China. On the one hand, they have made a significant contribution to
China’s urban economy since they are the main cheap labour force in many industrial
sectors in receiving cities, especially in the labour-intensive sectors. On the other hand,
remittances represent the most obvious and direct impact on the sending villages, mak-
ing up two-thirds of the household income in sending areas.4
Rural-Urban Migrant Workers as a Marginalized Group in Chinese Cities
Migrant workers have made a great contribution to China’s economy. However, because
of the hukou constraint, they are marginalized in cities. Their hukou status remains that
of “farmer” (or “agricultural hukou”), even when they have worked and lived in cities
for years. Registered under the agricultural hukou, migrant workers are excluded from
urban social welfare systems such as social security.5 In order to solve these problems
(i.e., balance this unequal treatment) related to hukou statuses, from early 2000 onwards
the Government of China introduced a series of migration policies to explicitly facilitate
farmers’ rural-urban migration, presenting a historic and fundamental breakthrough.
These polices require employers to purchase five types of urban social insurance for their
migrant workers, including work-related injury insurance, endowment insurance, urban
medical insurance, unemployment insurance, and maternity insurance.
In reality, a majority of employers did not do so and the coverage of migrant work-
ers’ social insurance ranges from low to negligible. In 2014, the proportions of employ-
ers covered with various insurances were as follows: work-related injury insurance, 26.2
per cent; migrant workers’ endowment insurance, 16.7 per cent, medical insurance, 17.6
per cent; unemployment insurance, 10.5 per cent; and maternity insurance, 7.8 per cent.
It is worth noting that a labour contract, as a legal proof of migrant workers’ employment
status in cities, is the prerequisite for migrant workers’ enrollment in these social insur-
ances in urban China. In fact, in 2014 only 38 per cent of migrant workers across China
had signed a labour contract with their employers although according to the Labor Con-
tract Law:
An employment contract shall become effective when the employer and the
employee have reached a negotiated consensus thereon and each of them has
signed or sealed the text of such contract.
Without the labour contract, migrant workers are informally employed and are excluded
from the formal urban social security system.6
The Huge Social Cost of Rural-Urban Migration: Left-Behind Groups in
Rural China
When discussing the impact of rural-urban migration on migrant workers’ families, the
left-behind group attracts considerable attention.7 Nationally, only 13 per cent of migrant
workers move to cities with their families, while a majority of migrant workers leave
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their families behind. Moreover, since two-thirds of migrant workers are men, their out-
migration leaves villages dominated by the so-called “38-61-99” group, which applies
to the women, children and elderly who make up the majority of the villagers who are
left behind (the numbers 38 refer to 8 March which is Women’s Day, 61 to 1 June which
is Children’s Day, and 99 to the ninth day of the ninth lunar month which is “Respecting
the Elderly Day” in China).8
Left-behind children. In China, the government’s subsidies for children’s education
are linked to each person’s hometown, that is, the place in which their hukou is located.
As the local governments of the receiving cities do not have sufficient budget to host
those migrant workers’ children, migrant workers’ children normally cannot enjoy these
educational subsidies in the receiving cities of their migrant parents. If they would like
to study in schools of the receiving cities, a high tuition must be paid, which is unreal-
istic for migrant households to be able to afford.
Due to these institutional barriers, most migrant workers choose to leave their chil-
dren in their hometown, who are then known as “left-behind children.” The most wide-
ly used definition of left-behind children is that of children below the age of 18 who
remain at the place of origin while one or both parents migrate to a city for employment.
According to the Sixth National Population Census, the number of left-behind children
reached 60 million in 2010, accounting for 38 per cent of all rural children and 22 per
cent of all Chinese children.
The left-behind children growing up either with a single parent or with grandparents
or others suffer from a lack of ordinary parental care, which may have a broad range of
negative effects on their school performance and health. Based on the data of the 2006
China Health and Nutrition Survey, it was found that left-behind children were worse
off in educational outcomes compared to children whose parents both stay in the town
of origin. The parental absence and long-term separation considerably affected left-
behind children’s mental health. For example, they are likely to suffer from a combina-
tion of depression, anxiety, and loneliness. Their quality of life and level of happiness
are also lower than that of ordinary children. Sometimes, they may even encounter
unexpected problems, such as for example the sexual abuse of left-behind girls in rural
areas. In Huazhou City of Guangdong Province, 94 per cent of sexual assault cases in-
volved left-behind children.
Left-behind women. “Left-behind women” refers to those women whose husbands mi-
grate to cities, leaving them behind. In China, the total number of left-behind women
was around 47 million in 2010. After the men’s out-migration, left-behind women are
left to face high labour intensity, heavy family burdens, mental health problems, and
sexual repression, all of which leads to a low level of life happiness.
Firstly, the increasing burdens of work and family. After a man’s out-migration, the
wife remains in the home village. In addition to all domestic tasks that she continue to
perform, she must now also take over the tasks her husband used to take care of before
his migration, such as agricultural production. Secondly, low emotional satisfaction.9
The absence of husbands negatively affects left-behind women’s mental health. A research
by the China Agricultural University showed that 63.2 per cent of interviewed left-behind
women often felt lonely, 69.8 per cent felt agitated all the time, 50.6 per cent often felt
anxious, and 39 per cent often felt depressed. Only 12.1 per cent of women reported not
experiencing any negative motions.10 Thirdly, sexual repression. In general, a husband
only returns home once every year during the Chinese New Year. Due to the long-term
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Regional Development Dialogue, Vol. 35, 2014 207
separation, left behind women have severely repressed their sexual needs, which affects
their physical and mental health. Furthermore, as the topic of “sex” is still regarded as a
taboo in conservative rural areas, this makes left-behind women keep it a secret, unable
to talk about it or deal with the problem.
Left-behind elderly. The “left-behind elderly” are those over the age of 60 who have at
least one adult child who has out-migrated. In 2010, the number of left-behind elderly
had reached 58 million. Since the Confucian tradition of “filial piety” has given rise to
a system of family-based care and support for the elderly in China, adult children’s mi-
gration is weakening and challenging this age-old practice. This is exacerbated by the
fact that the formal elderly care system in China is still lacking, especially in the coun-
tryside.11
According to the data from the Chinese Longitudinal Healthy Longevity Survey,
out-migration of adult children affects monetary, instrumental help, and emotional sup-
port of left behind elderly. To be more concrete, the impacts of migration on left behind
elderly includes the following: First, the residential arrangements are changed. Many
left-behind elderly (48.5 per cent) who used to live with their adult child now live with
their grandchildren or live on their own. Second, after the adult child’s out-migration,
both the left-behind elderly’s work and family burdens increase dramatically. Third,
left-behind elderly’s financial situation improves due to the remittance from the migrant
adult child. Fourth, like the other left-behind groups, the mental health of these elderly
is negatively affected, mainly because they keep worrying about the migrant workers in
urban areas. Fifth, although a majority of left-behind elderly have the ability to perform
activities of daily living, some of them suffer from debilitating-illnesses and thus long
for the resumption of care from the migrant adult child.
URBAN VILLAGES AND ILLEGAL HOUSING
Land is one of the most challenging policy issues in China’s urbanization process.
According to China’s land law, urban land is state-owned, rural land is collectively owned
by the villages, and only the state has the power to convert rural land to urban use through
expropriation. This legal arrangement essentially takes the land development rights and
the associated benefits away from the farmers. Social tension develops when urban land
development generates significant amount of profits to the government and developers,
but leaves the farmers to struggle for a new life without sufficient compensation for the
lost land.
Land is fixed in space, unlike people, goods, and capital that can flow across space.
However, with the change of land use from rural to urban and transfer of land-use rights,
land becomes a significant form of URL. In this section, we examine this form of URL
through the discussion of urban villages, illegal construction, and small property rights
housing – all are related to rural to urban migration and housing needs of migrant
workers.
The Formation and Function of Urban Villages
When a city expands spatially, the municipal government often first expropriates farm-
land and other rural public land, avoiding the village settlements. This is because the
compensation for expropriated farmland is set at a low price on the basis of agricultural
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production value. If the village settlements are expropriated, the compensation – which
includes both the costs of land and buildings on it – would be much higher. As the city
continues to expand, more and more village settlements become surrounded by the urban
high-rise real estate development.12 Except for the original villagers, many migrant
workers choose to live there. This spatial phenomenon is called an urban village. A
number of urban villages exist in all major cities in China. In Beijing, there are over 100
urban villages.
Physically, there is a sharp contrast between an urban village and the surrounding
real estate development. An urban village is highly recognizable. Unlike the modern,
shining real estate development, urban villages are crowded with low-rise houses and
residents, construction quality poor, streets narrow, and sanitation inadequate. While the
urban villages are within the urban built-up area, their residents – the original villagers
and renters of their housing units (mostly migrant workers) – are still rural hukou hold-
ers, and the land under the village is still collectively owned. This is a situation known
as “one city, two worlds.”
Even within the urban village, there is “one village, two worlds,” too. One world
comprises the original villagers, and the other the migrant workers who come from oth-
er rural areas and rent residential space from the villagers. Typically, an urban village
houses hundreds or even thousands of original villagers and many thousands of renters.
With rental income, the original villagers are generally much better off than the migrant
workers. Although the original villagers do not have the land development rights over
the housing plots they sit on, they benefit from the premium location of their village.
When their farmland was expropriated by the municipal government, they lost their
farming livelihood, but they were able to generate rental income by leasing their resi-
dential space to migrant workers. In fact, each original villager household managed to
accumulate in order to create more rental units. As the rural residential plots are close
to each other and villagers make full use of their plots to expand residential space, the
buildings in urban villages are typically very close to each other, often just within 1 m.
These are known as “hand-shake” buildings, taken from the fact that two people in the
adjacent buildings can shake hands through the windows.
The urban village rental prices are determined by the free market. The rental price
per m2 of living space in the urban villages is only a fraction of the rental price for the
urban residential units. This offers affordable housing for the lowly paid migrant work-
ers. Even so, many migrant workers are unable to afford a rental room and have to share
with others to reduce rental payment. The living conditions for migrant workers are thus
simple and crowded. It is not unusual that a few migrant workers share a room, or a
couple lives in a room of 10 m2 It should be noted that Chinese cities have built consid-
erable amounts of affordable housing units. But apart from very limited cases, migrant
workers generally do not have access to these units due to their rural hukou.
Since 2004, when the government designated urban real estate as one of the pillar
sectors to drive the economy, urban housing markets have experienced a “golden” growth
period. In just 10 years, housing market prices have increased 4-5 times on average, and
most urban households find housing increasingly unaffordable. Obviously, urban vil-
lages provide migrant workers the affordable housing at the locations that are not too far
from their urban jobs. This is the social function that both the former urban housing
market and the government affordable housing programme are unable to accomplish.
Examining the Urban-Rural Linkages in China
Regional Development Dialogue, Vol. 35, 2014 209
Unfortunately, many municipal policymakers fail to see the social function of urban
village housing. Some see urban villages as a symbol of backwardness and want to re-
develop them into modern urban neighbourhoods. In fact, some cities have already been
re-developing urban villages. Some redevelopments followed land-readjustment ar-
rangements, under which the municipal government designates a real estate developer
to carry out the redevelopment in a commercial way. The developer would come up with
a redevelopment which include residential apartment buildings, commercial office build-
ings, public facilities and infrastructure, and negotiate with the villagers for compensa-
tion and benefit sharing. Part of the resident apartment units would be given back to the
original villagers as compensation for their demolished old houses. Some of the newly
developed office space would also be given to the village collective as productive assets
from which all villagers would receive an annual dividend in the future. The usual com-
pensation is roughly 1 m2 of old housing space for 1 m2 of new housing space. The
villagers are generally satisfied with the deal as the prices for the redeveloped space
would be several times higher than the prices of old space. The government would gain
from the redevelopment by getting the public facilities and infrastructure without invest-
ing public funds. The developer would profit easily through the much higher floor-area
ratio. The only losers are the migrant workers. They can not afford the new rental pric-
es, and have to move to other urban villages further away from the city centre. Their
mass arrivals to other urban villages also push up the rental prices there. The process is
expected to marginalize the migrant workers to the city edges and peri-urban areas and
increase their costs of living not only in terms of rent but also commuting costs.
Illegal Housing Construction
A common scene that one would easily see from urban villages and peri-urban rural set-
tlements is the small, multi-story residential houses crowded together. This is considered
illegal construction because local regulations do not allow rural residential buildings to
be higher than three or four stories. The regulations were developed out of concerns of
building safety in the rural areas as the construction methods are often indigenous. In
seeing the rapidly rising demand for housing from migrant workers, the local villagers
ignore the regulations and build up to between five and eight stories from their own plots.
Enforcement of building regulations in rural areas is very low or none at all.
This has been a difficult legal issue. The widespread phenomenon simply makes it
impossible for the government to enforce the regulations. On the other hand, the gov-
ernment has to tolerate it due to the large number of rural residents and migrant workers
involved. The public infrastructure there is not adequate, but not too inadequate either.
Supply of electricity, tap water, basic sanitation, and telephone services is not a problem.
The key concern is building safety, fire protection, and disaster escape channels. Today,
there is no feasible solution.
Small Property Rights Housing
In China, it is legal for villages to provide rental housing as there is no change of owner-
ship over real estate properties. However, the sale of residential housing units on rural
land is in violation of the Land Administration Law. Small property rights (SPR) hous-
ing is a kind of housing built on rural land and sold to individuals whose household
registers are elsewhere. The buyers are mostly migrant workers, but some are urban
residents. They purchase the housing units from either the village committee or indi-
210
Li Sun and Zhi Liu
Regional Development Dialogue, Vol. 35, 2014
vidual villager. As the purchase contract for SPR housing units is not legally recognized
by the government, the housing units are popularly called “small” property rights hous-
ing, or housing without full legal titles. No official statistics are available, but it is
widely believed that the number of SPR units is about 70 million, accounting for one-fifth
of all housing units in urban China.
The village committees and villagers themselves understand that building and sell-
ing SPR housing does not comply with the law, but they are willing to test the legal
limits under the lure of profits. The large-scale emergence of SPR housing took place
in the period of 2008-2013, the time when urban housing prices skyrocketed. The SPR
housing is typically 50-60 per cent less expensive than the formal urban housing, it at-
tracted a large number of buyers.13 As the practice quickly spread across China, mu-
nicipal governments are very much concerned because SPR housing reduces the demand
for formal urban housing, thus lowering the demand for government-supplied residential
land, as well as revenues from land concessions. However, the government found no
easy measures to enforce the law that would impact so many households. Meanwhile,
public policy debate started to recognize the social function of SPR housing, question
the rationality of the law, and calls for its amendment began.
MAJOR CHALLENGES IN THE NEW URBANIZATION
Urban-rural linkages can be seen from both economic and social interconnections.
China’s URL have experienced major changes under strong policy interventions. For
the first three decades after the 1949 founding of the People’s Republic of China, the
rural sector was suppressed through hukou control and food price policy in order to feed
industrialization in cities. Over the following three decades, China experienced another
unique urbanization process, which is unprecedented in both scale and pace. It is heav-
ily driven by urban growth-oriented economic policies. Again, strong policy interven-
tions dictate the characteristics of URL.
As the above discussions show, while the growth-oriented urbanization process helps
strengthen urban-rural economic linkages to a great extent, the social linkages are great-
ly weakened and even suffer from systemic breakdowns at the household and village
levels. Per capita incomes grow steadily both in urban and rural areas, but urban-rural
income gaps actually widen, not to mention the urban-rural wealth gap. Many rural
migrant labourers work in cities, but have to leave their dependents, children, and aged
parents, in the villages due to lack of affordable access to urban services. The left-behind
children may enjoy better material living thanks to the urban earnings of their parents,
but are growing up without companionship of their parents and often suffer from loneli-
ness and neglect. The urban social welfare system has not improved fast enough to serve
the migrant workers, leaving them vulnerable to economic shocks and personal health
risks. As the younger generation of rural population continues to migrate to the cities,
villages decline and shrink, farmland is increasingly abandoned, and the rural social
fabric begins to disintegrate. Moreover, urbanization results in the large-scale conver-
sion of rural land into urban land, but farmers are not adequately compensated and often
have to struggle to adapt to new lifestyles after their land and livelihood are taken away.
As they are not given land development rights by law, they have to violate the law in
order to share the benefits of urbanization, as in the case of illegal constructions and
Examining the Urban-Rural Linkages in China
Regional Development Dialogue, Vol. 35, 2014 211
small property rights housing.
The social problems arising from the policy-distorted urban-rural linkages are a
subject for heated policy debates. In recent years, some provincial governments initi-
ated and implemented what is known as an urban-rural integration policy within the
provincial jurisdictions. It was yet another strong policy intervention that attempted to
correct the distortions caused by strong policy interventions in the past urbanization.
The gaps in social services to the rural sector have been narrowed to some extent, thanks
to increased public expenditures aimed at basic service equalization. But these have
failed to address the more fundamental issues such as hukou and land property rights.
In 2013, the government initiated a new round of economic reform that includes reform
initiatives on hukou, land, and municipal finance. This was followed by the announce-
ment of the New Urbanization Plan (2014-2020) which aims to achieve a more people-
oriented urbanization process and better urban-rural social interconnections.
The reform on hukou is already underway in many smaller cities. Very recently,
Chongqing, a megacity in southwestern China, also initiated a reform action to unify
urban and rural hukous into just one resident hukou. In contrast, the reform on land will
be more difficult and more challenging. The reform decision offers a number of meas-
ures, including establishing a unified construction land market for both urban and rural
areas; allowing transfer, lease, and stock sharing on rural collective construction land,
and allowing such land to enter the urban market with the same rights and prices as state-
owned land if the planned land use conforms to urban planning; reducing the scope of
land expropriation, standardizing land expropriation procedures, and completing a rea-
sonable, standardized, and multi-element guarantee mechanism for farmers under land
expropriation; enlarging the compensated use of state-owned land and reducing the al-
location of non-public welfare land; building a land incremental benefits distribution
mechanism that combines the state, the collective, and the individual, and properly
improves individual income from the benefits; and perfecting the secondary market of
land lease, transfer, and pledge. All these sound reasonable, but their implementation is
difficult as rural land is a crucial source of revenue for the current municipal finance.
The linkage between rural land and municipal finance is one of the key factors that
enables the urbanization model over the past three decades. The new round of eco-
nomic reform and the New Urbanization Plan aim to weaken this linkage. Thus a criti-
cal question is: where do cities get land and finance and at the same time implement the
New Urbanization Plan with increased public expenditures to cover public services to
migrant workers and their families? There is no one answer to this question. All sensi-
ble and promising means may be needed, such as improving the efficiency of public
expenditures for basic service provision, promoting private-sector financing for public
infrastructure, encouraging peri-urban villages to use a “land re-adjustment” approach
to develop the use of urban land, and introducing urban residential property taxation.
The real bottleneck for municipal governments to adopt the new means is lack of know-
how and inadequate institutional capacity to manage partnerships with the private sector
and rural communities.
Another key question is whether, and how soon, these reform initiatives will be
implemented. These reform initiatives are about structural changes, and structural
changes will bring short-term pain before eventually paying the expected dividends.
Unfortunately, China suffers from excessive productive capacity as a result of stagnation
of the global economy, and domestic consumption is not yet strong enough to signifi-
212
Li Sun and Zhi Liu
Regional Development Dialogue, Vol. 35, 2014
cantly strengthen the domestic economy. Investment remains the major option to GDP
growth. Unfortunately, this option has been excessively deployed under the current
growth model. China’s economy has recently entered what is called the “new normal”
stage, which means moderate annual GDP growth of between 6 per cent and 7 per cent.
However, very recent macroeconomic indicators seem to suggest that China’s economy
is losing steam. It will be a particularly challenging time for China to implement es-
sential reforms at this most difficult time.
NOTES
1 R. Sietchiping et al., “Role of Urban–Rural Linkages in Promoting Sustainable Urbanization,” Envi-
ronment and Urbanization Asia 5 (2:2014):219-34.
2 National Bureau of Statistics of China (NBS), China Statistical Yearbook1983 (China Statistics Press,
1983), p. 103. (in Chinese)
3 International Bank for Reconstruction and Development (IBRD), Urban China: Toward Efficient,
Inclusive, and Sustainable Urbanization (Washington, DC: World Bank, 2014), p. 271. (Available
at https://www.worldbank.org/content/dam/Worldbank/document/EAP/China/WEB-Urban-China.
pdf; retrieved on 28 November 2015).
4 C. K. Lee, Against the Law: Labor Protests in China’s Rustbelt and Sunbelt (London: Berkeley, 2007),
p. 210.
5 K. W. Chan, Cities with Invisible Walls (Oxford: Oxford University Press, 1994), p. 39-135.
6 L. Sun and T. Liu, “Injured but not Entitled to Legal Insurance Compensation –Ornamental Institu-
tions and Migrant Workers’ Informal Channels in China,” Social Policy & Administration 48
(7:2014):905-22; and L. Sun and T. Liu, “Occupational diseases and migrant workers’ compensation
claiming in China: An unheeded social risk in asymmetrical employment relationships,” Health So-
ciology Review 25 (1:2016):122-36 (DOI:10.1080/14461242.2015.1099113).
7 B. Xiang, “How Far Are the LeftBehind Left Behind? A Preliminary Study in Rural China,” Pop-
ulation, Space and Place 13 (3:2007):179-91.
8 N. Bai and J. Li, “Migrant Workers in China: A General Survey,” Social Science in China XXIX
(3:2008):97.
9 L. Sun, “Women, Public Space, and Mutual Aid in Rural China: A Case Study in H Village,” Asian
Women 28 (3:2012):75-102.
10 H. Wu and J. Ye, “Analysis on the Psychological Impacts of Husbands’ Migration on the Women Left
at Home in Rural China,” Journal of Zhejiang University (Humanities and Social Sciences) 40
(3:2010):138-47.
11 T. Liu and L. Sun, “An Apocalyptic Vision of Ageing in China: Old Age Care for the Largest Elderly
Population in the World,” Zeitschrift für Gerontologie und Geriatrie 48 (4: 2015):354-64; and Liu
and Sun, “Pension Reform in China,” Journal of Aging & Social Policy 28 (1:2016):15-28. (DOI:
10.1080/08959420.2016.1111725)
12 L. Sun, “Homing City Migrants,” RICS Land Journal 4 (2015):16-7.
13 L. Sun and Z. Liu “Illegal but Rational: Why Small Property Rights Housing is Big in China, Land
Lines 27 (3:2015):14-9, 34.
... In the absence of the urban hukou, these migrants are considered as non-hukou migrants and are counted as 'floating population' (ibid.). Sun and Liu (2014) noted the share of such rural hukou holders started increasing since the 1990s. According to OECD (2015) estimates, in the 2000s, almost four-fifths of the newly arrived migrants in the urban area were unofficial in nature, i.e. they did not possess urban hukou. ...
... These people got absorbed in the second tier of the labour market-in the mining, manufacturing and construction industries (OECD 2015). Most of the rural-urban migrant workers do not possess any legal contract, thus employed as informal workers, devoid of any social security provisions (Sun and Liu 2014). This led to segmentation in the labour market, and a large income gap between the urban residents and the rural migrants emerged. ...
... On the other hand, the 'left-behind women' suffer from increasing responsibility and workload, lack of emotional satisfaction and sexual repression. Lastly, the 'left-behind elderly' also suffer from lack of care (Sun and Liu 2014;OECD 2015). Again, those who bring their family along them, most of the time cannot provide good-quality education for their children that reinforces the segmentation process (OECD 2015;Okamoto 2017). ...
Chapter
Full-text available
Over the past few decades, China has experienced unprecedented urbanisation and economic growth, in terms of its both scale and pace. However, this economic boom has not resulted in equitable growth. Due to the housing registration (hukou) system, rural migrant workers are excluded from social welfare systems in cities. Many migrant workers have to leave their children and elderly behind in the rural areas. The negative consequence of family separation is becoming a pressing social problem. Land ownership is another issue of urban–rural social linkages. According to the law, rural land cannot be used for urban development without state expropriation. However, a substantial share of urban housing is built on rural land informally and without full legality providing affordable urban housing to the low- to middle-income groups. To address these problems, the government initiated a ‘New Urbanisation Plan’ (2014–20) which aims to achieve a more people-oriented urbanisation process. Also, there has been a recent shift in the focus of the policies from market-oriented approach to people-centric development towards achieving sustainability. Based on a review of urban policies and programmes, this article advocates that the priorities of national urban policy should be improvement of urban–rural socio-economic linkages and integration of the migrants in the mainstream policy framework.
... The Hukou mentioned here refers to the Chinese national household registration system used to identify a person as being a resident of a particular area, therefore classifying residential groups between locals and nonnatives. Usually, migrants without Hukou identification do not have full access to the limited public services provided only for urban hukou holders (Sun & Liu, 2014). Since this migrant population tends to be less skilled, more youthful and have lower education levels and income, they are more likely to live in affordable urbanizing villages (Tong et al., 2020). ...
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  • Li Sun
  • Zhi Liu
Li Sun and Zhi Liu Regional Development Dialogue, Vol. 35, 2014
Analysis on the Psychological Impacts of Husbands' Migration on the Women Left at Home in Rural China
  • H Wu
  • J Ye
H. Wu and J. Ye, "Analysis on the Psychological Impacts of Husbands' Migration on the Women Left at Home in Rural China," Journal of Zhejiang University (Humanities and Social Sciences) 40 (3:2010):138-47.
Homing City Migrants
  • L Sun
L. Sun, "Homing City Migrants," RICS Land Journal 4 (2015):16-7.