China’s Urbanization: City Population Surpasses Rural Population

China’s urban population has surpassed the rural population for the first time.

The Economist writes,

FOR a nation whose culture and society have been shaped over millennia by its rice-farming traditions, and whose ruling party rose to power in 1949 by mobilising its put-upon peasantry, China has just passed a remarkable milestone: its city-dwellers now outnumber its rural residents. New data from the National Bureau of Statistics show that of China’s 1.35 billion people, 51.3% lived in urban areas at the end of 2011. In 1980 less than a fifth of China’s population lived in cities, a smaller proportion than in India. Over the next ten years the government remained wary of free movement, even as it made its peace with free enterprise. Touting a policy of “leaving the land but not the villages, entering the factories but not cities”, it sought industrialisation without urbanisation, only to discover it could not have one without the other. Even now, its ratio of city-dwellers is, if anything, low for an economy at its stage of development. America reached the 50% mark before 1920. Britain passed it in the 19th century. Go further back, however, and China’s cities dazzled the world. It is likely that one thousand years ago, the Song Dynasty capital of Kaifeng was the world’s most populous city. Marco Polo, who visited China in the 13th century, claimed that Hangzhou was “the most splendid city in the world” with 13,000 bridges—although later estimates suggest the true number was 347.

Count me as a skeptic of the continuity of urbanization trends, a phenomenon derivative of the industrial age.

Basically urbanization has been driven by economic opportunities, the economies of scale and centralization of facilities all of which may be changing.

The dynamics of urbanization, according to Wikipedia.org (bold emphasis mine)

People move into cities to seek economic opportunities. A major contributing factor is known as "rural flight". In rural areas, often on small family farms, it is difficult to improve one's standard of living beyond basic sustenance. Farm living is dependent on unpredictable environmental conditions, and in times of drought, flood or pestilence, survival becomes extremely problematic. In modern times, industrialization of agriculture has negatively affected the economy of small and middle-sized farms and strongly reduced the size of the rural labor market.

Cities, in contrast, are known to be places where money, services and wealth are centralized. Cities are where fortunes are made and where social mobility is possible. Businesses, which generate jobs and capital, are usually located in urban areas. Whether the source is trade or tourism, it is also through the cities that foreign money flows into a country. It is easy to see why someone living on a farm might wish to take their chance moving to the city and trying to make enough money to send back home to their struggling family.

There are better basic services as well as other specialist services that aren't found in rural areas. There are more job opportunities and a greater variety of jobs. Health is another major factor. People, especially the elderly are often forced to move to cities where there are doctors and hospitals that can cater for their health needs. Other factors include a greater variety of entertainment (restaurants, movie theaters, theme parks, etc.) and a better quality of education, namely universities. Due to their high populations, urban areas can also have much more diverse social communities allowing others to find people like them when they might not be able to in rural areas.

These conditions are heightened during times of change from a pre-industrial society to an industrial one. It is at this time that many new commercial enterprises are made possible, thus creating new jobs in cities.

The transition to the information age extrapolates to more specialization, as commerce will evolve along with improvements in technology. This means reduced cost advantages of centralized organizations which simultaneously has been accelerating and deepening the trends of business outsourcing.

Moreover real time connectivity should enhance this process, which again reduces the motivation for commerce to congregate in specific areas—or cities.

Also business focus will increasingly be directed to specific needs (niche marketing) rather than mass production and also on where the consumers and markets are.

In the Philippines, shopping malls have sprouted not only in major cities but also in capitals of provinces or secondary cities. Take for example the largest shopping mall chain the SM Group which has 43 malls nationwide and growing. This is a noteworthy example of the deepening dispersion trends, where facilities have been mushrooming outside of mega cities.

Also this serves as an example of the evolving location based markets—businesses locating and providing goods and services where the consumers are.

On the supply side, the call center industry, whose firms have been looking for agents to fill up outsourcing jobs, has been spreading outside the metropolis (Metro Manila). According to Wikipedia.org, there are 788 call centers in over 20 locations, where growing number firms are being established again in secondary cities and in the provinces.

All these suggest that the snowballing forces of decentralization should dampen urbanization trends--that depends on the dynamics of centralization--over the long run.