If urbanization is "cold", what will it bring to the economy?

From July 31 to August 1, the 2015 (Summer) Chongli China Urban Development Forum was held in Zhangjiakou. Cai Fang, vice president of the Chinese Academy of Social Sciences, delivered a speech at the forum. The following is a transcript of the speech:

China's urbanization is developing rapidly, and so is urban research in China. Recently, I saw a TV news in which the host asked Nobel laureate Paul Crudman to recommend a book called "the Victory of the City". The main content of this book is that the city is one of the best things that mankind has ever invented, and its core is that the city achieves the most intensive use and the most efficient allocation of production factors and resources. As a result, the best and most economical output is obtained. Therefore, such a platform, a carrier, is the best invention, will eventually win. Therefore, the city will always be a theme of our study.

But so far, I don't think Chinese cities have won. Although we have urbanized at the fastest rate in the world in the past 30 years, you can't find any country with such a growth rate. However, up to now, according to our development level, development stage and per capita GDP level, our urbanization level still lags behind. Lag, first of all, refers to the urbanization rate of 54% of the resident population.

What is the city for? The city is not only the collection of elements, but also the improvement of people's quality of life and the training environment of human capital. Therefore, we should look at the proportion of people who have a sense of participation, equal access to basic public services and basic equal economic opportunities in cities. China happens to have an indicator with Chinese characteristics, called "the proportion of registered urban population", which is only about 37% so far. Therefore, according to the 37% urbanization rate, our population urbanization has lagged behind and is not in line with our stage of development. Therefore, we also have to study cities and towns.

Therefore, I would like to talk about two viewpoints on how our urbanization can be promoted to a deeper level from the perspectives of connotation and denotation.

First of all, compared with urbanization, we are now faced with two huge challenges. The first challenge comes from the slowing down of urbanization. Although I haven't looked at the statistics, I'm sure it will slow down in the future. The slowdown of urbanization and the slowdown of economic growth are cause and effect of each other. Looking at the speed of urbanization and economic growth, we have decomposed China's rapid economic growth for more than 30 years in the past. Economic growth comes first from the input of various factors of production.

The second challenge comes from the allocation efficiency of these factors, that is, total factor productivity, which is improving. In the past, our economic growth mainly came from the contribution of capital, which is partly a manifestation of the concentration of factors of production. It seems that reform and opening up are moving from places where capital is rich to places where capital is scarce, but this is not the case. It's all from the poor to the rich. For China, all the important factors of production, whether capital, labor or land, are concentrated in the city. Therefore, the contribution of capital, the contribution of labor, the contribution of land, and the contribution of resource allocation are the process of changing our labor force from rich agriculture and rural areas to cities itself. it constitutes an important reason for the improvement of our total factor productivity, that is to say, urbanization is a reason for rapid economic growth. If we make a model, we will completely support the economic growth of urbanization. In turn, economic growth will also affect urbanization. When the speed of economic growth slows down, the ability to absorb, attract and gather all kinds of high-quality factors of production will be weakened, so urbanization will also slow down, which is a cause and effect for each other, which constitutes a new challenge to China's economy.

We have made a simple judgment on the speed of urbanization and economic growth in China. We believe that urbanization is a process of the transfer of agricultural surplus labor to non-agricultural cities, but this sentence is only academic, and the real phenomenon is not the transfer of agricultural labor, because those who work in agriculture are all too old. most of them are 40 or 50 years old, and they no longer transfer. When we talk about transfer, we actually mean the newly graduated middle school students in rural areas who choose to go to cities instead of farming after graduation. Originally, we assumed that he should be farming, but as a result, he did not, so we said that he was farming to transfer labor. Therefore, the real transfer of the rural labor force is the population between the ages of 16 and 19.

We recently looked at the forecast of the age structure of the population and found that the total number of junior and high school graduates aged 16 to 19 in rural areas reached a peak in 2014, that is to say, from this year on, this part of the population will have a negative growth and will continue to grow forever. If you draw a picture of the age population, after reaching its peak in 2014, it is an inverted "U" curve, which is related to the growth rate and total number of migrant workers. Therefore, to draw a picture of migrant workers, the two figures coincide with each other a few years ago, and they are the same. Naturally, you can judge whether the rural population between the ages of 16 and 19 will have a negative growth in the future. We think that migrant workers are likely to have negative growth. What we saw in the first quarter of this year was negative growth. Although it recovered in the second quarter, it grew by 0.1% in the first half of the year, compared with 1.3% last year and 4% a year before 2010. Therefore, the slowdown in the transfer of migrant labor is also a reason for the slowdown in urbanization, which will further affect the growth rate of China's economy. The future rate of improvement in productivity can be assumed that during the 12th five-year Plan period, our potential growth rate has dropped from about 10% in the past 30 years to 7.6%. Next year, we will enter the 13th five-year Plan. Assuming that the reform effect has not been released, without other factors, the potential growth rate during the 13th five-year Plan period may only be 6.2%.

We do not want only 6.2% economic growth, so we are exploring the dividend of reform. A very important part of the reform dividend comes from urbanization, which contains a lot of reform content. But urbanization has also slowed down. What can stimulate it? I think urbanization faces a challenge. The first challenge is deceleration; the second challenge is that at a particular stage of development, the capacity of urban management and resource allocation is limited, because this capacity is the product of the stage of economic development, or a function of the stage of economic development. In other words, first, the speed of urbanization itself will slow down; second, urbanization and the economy are cause and effect each other, and the decline of China's economic growth will lead to the slowdown of urbanization, which constitutes a new challenge to China's economy.

Although we are constrained by resources, human capital can improve these constraints. The simplest one, Beijing is so short of water that every one of us is using tap water like air. The price of tap water is equivalent to none in our lives, which is caused by the ability of management and governance. Therefore, at this stage of development, you should not expect it to have such a strong ability of resource allocation and urban management. Therefore, there will inevitably be "urban disease", pollution, PM2.5, the environment has become more than 1000, traffic jams, housing-based cost of living has soared, the result of the surge is not that we complain, but more importantly, it reduces the attraction of high-quality resources here. Good people may still come, but when they come, do they use real human resources in creative activities? For example, people who should be down-to-earth in learning and think tanks have no choice but to use more resources to earn extra income because of the pressure of life. I think these are all a manifestation of urbanization.

Therefore, at this particular stage of development, due to the lack of capacity, the marginal return of the city begins to decrease, and the allocation of resources is not so high. Therefore, at this time, we must promote urbanization, otherwise the rate of economic growth will be lower and lower. But on the other hand, the marginal return of our urbanization has been diminishing, what should we do? With regard to this pair of contradictions, I think there are two ways out, one is connotative, that is, we no longer look at the percentage of permanent residents, we look at the percentage of registered residents. In other words, if we turn the existing migrant workers and their families who are already living in the city into a registered population, we will get the continuation of the demographic dividend and the growth of new potential growth. Therefore, I think this is an immediate demographic dividend.

The other is the road of urbanization in extension, that is, the development of regional integration, such as the coordinated development of Beijing, Tianjin and Hebei. In other words, Beijing may have CBD, Financial Street, but no ski resorts, no Chongli environment; it has Jinshan and Silver Mountains, may not have green waters and green mountains. Therefore, different production factor endowments will give us some new opportunities for reconfiguration. In the past, the efficiency of resource reallocation accounted for nearly half of the productivity gains in China's economic growth. Therefore, if we want to improve our productivity in the future, we will rely even more on the reallocation of resources. So, the greater the difference, the more opportunities we have to reconfigure.