Governance, Environment and Socio-Economic Imperatives
Edited by François Gipouloux
Chapter 14: Fiscal constraints and their impact on financing urbanization: the case of Kunming
Over the past 30 years, China’s urbanization has developed rapidly, its rate increasing from 17.92 per cent in 1978 to 53.73 per cent in 2013. This remains much lower than in developed countries, which stand at a rate of 75 per cent. Northam’s curve shows that urbanization in developed countries has by and large followed the same pattern. The fastest stage of urbanization is between 30 per cent and 70 per cent, a prominent feature of which is the mass migration of populations into cities and towns. This generates tremendous demand for urban infrastructure, entailing a great number of investments needed for their construction. Should urbanization advance at an annual growth of 0.8 to 1.0 percentage point, China’s urbanization rate will exceed 60 per cent by 2020. At that time, 400 million to 500 million farmers in the country will undergo full citizenization in many aspects such as employment, housing, social security and living. Let us suppose the cost for the citizenization of each migrant worker is RMB 100 000. It will require at least RMB 40 trillion to RMB 50 trillion. Central government and local governments will have to support great expenditures in order to provide basic public services. Local governments in particular will face greater pressure. Due to the current imperfect national finance and taxation and distribution systems, local governments’ revenues are on the tight side and the urbanization development is increasingly constrained by limited sources of capital.
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